Following the Chancellor’s statement this afternoon, WA Communications have set out 5 pieces of advice for businesses as they plan public affairs and corporate communications activity over the coming months.
1. Rishi the realist – Rishi Sunak is using the stark OBR forecasts to claim the Conservative mantle of fiscal responsibility and sound economic management. He needs to shore up support for the Treasury mission to, at some point, restrain, reduce and eventually repay state largesse. This framing will help the Treasury to introduce more precise measures in future.
2. Multiple fiscal events in 2021 – The next three to six months of fiscal planning will be like no other. The Spending Review and Budget processes will coincide with Brexit and the Covid-19 exit. The Treasury won’t have finished spending on COVID-19 emergency measures by end of March. By that point, the future will still be foggy. Economic data will give us only a cursory insight into the state of the economy as we won’t yet have seen a bounce back and the vaccine’s impact will still be unclear. Expect more short-term spending interventions that feel like firefighting, between now and Easter, with longer-term decisions most likely in Autumn.
3. Walking the tightrope – The Chancellor has a balancing act to manage between raising revenues and sticking to Conservative manifesto promises on no rises to personal taxes and VAT, whilst spending on levelling up and infrastructure and any further Covid-19 measures. He’s looking at less visible measures like Corporate and Capital Gains taxes but faces steep opposition from his backbenchers. At the same time, the public sector pay freeze will infuriate many former Red Wall voters.
4. The Treasury will rely on business more than ever – With the Treasury in such a difficult position, it will rely on business to help shape the economic recovery. The priority will be releasing pent-up consumer demand and business investment. Treasury will be looking to business to come forward with solutions to help unlock that potential: regulatory changes, targeted government co-investments, tax reliefs and R&D funding will all be open for discussion. Treasury will be in the mood to spend – within reason – on schemes that can show specific ROI.
5. Creating dialogue between Treasury and business – Businesses that want something from Treasury always need to be crystal clear on their ask, and what they can offer in return – anything that helps restart economic activity will go to the top of the pile. Now, more than ever, it’s essential for these interests to demonstrate a clear vision for what they want that chimes with the sort of longer-term economic recovery the government wants: jobs, jobs, jobs, reskilling and how to lift productivity, particularly through technology and innovation.
by Marc Woolfson, Partner, Head of Public Affairs