I have been working with and advising Finance Directors and CFOs of businesses large and small for forty years, often forecasting and planning ahead. I cannot imagine any one of them making "hope for the best" their primary strategy when they are able to strongly affect the situation. It would always be accompanied by "But prepare for the worst". Which the Government has not done. A matter of Risk Management, a key skill of any person responsible for corporate Finance.
It is not as if the second wave was not predicted. It's what has always happened with severe respiratory infections, including the influenza pandemic of 1918-19.
Anneliese Dodds, the Shadow Chancellor, made several pertinent points in her response to the Chancellor's Commons statement, including:
- 11min20 saying the lockdown was "many weeks after SAGE and Labour called for a circuit breaker"
- 11min50 "SAGE presented the evidence on 21 September"
- 12 min 10 "that delay in implementing measures has cost livelihoods and lives"
- 12min40 "the fourth version of his Winter Economy Plan in just six weeks"
- 12min45 "we need a Chancellor who is in front of the problems we face"
- 13min55 "How many jobs could have been saved if this Government had recognised reality and let businesses plan for the future?"
- 14min10 "I called on the Chancellor... to set out a proper plan for the next six months"
- 16min20 "This Government simply won't acknowledge that until it gets a grip on the health crisis it won't be able to deal with our economic crisis"
This last point is critical. The Government's strategy has been, and continues to be, "too little, too late". Responding to events rather than controlling the virus.
This was reflected in Rishi Sunak's response, which included:
- 16min55 "There is no perfect moment at which to enact measures". But which is the government body that pulls together all medical, economic and other assessments before reaching the Cabinet?
- 17min05 "We should only enact measures...when it becomes truly unavoidable" That means letting infections get out of control.
- 17min30 "At first it was a circuit breaker for two weeks...then three weeks... and then it might be something that would need to be re-imposed again, again and again...not a plan that would support the businesses and the people of this country". Sorry to break it to you, Mr Sunak, but repeated waves are inevitable according to historical experience, and that means repeated responses . Even if you take the initiative.
- 18min40 "...the party opposite has not put forward a six-month plan of their own". But I proposed a six-month plan some weeks ago. Indeed into the summer.
- 19min10 "the Government must be flexible to ever changing-circumstances" Indeed, if are not in control
Rishi Sunak has displayed credentials suitable for being a CEO. But these are not the credentials for a CFO. Far from it.
Sunak, the Government, MPs and the rebel back-benchers must understand that they need to be in control of the virus if they are to be in control of the economy, and for the economy then to thrive.
That means setting a proactive strategy that establishes control over the virus, whilst recognising its power to propagate.
SCIENTIFIC ADVANCES
We know there are three main scientific answers to this virus in prospect:
- TESTING: Faster, cheaper tests that allow for mass testing, to help to identify who need to self-isolate before they display symptoms. In principle I agree with Operation Moonshot, suggesting it three months ago, long before it was announced. But feedback from the Salford trial is apparently poor, and sadly it is therefore unclear whether the Liverpool trial will be successful. In reality, we await further advances next year for more reliable tests that are also fast and cheap.
- VACCINES: There is a lot of work on vaccines and a lot of good news. The possibility of first vaccinations before Christmas, but mass vaccination not expected to be available until the Spring. Then only if at least one vaccine is proved safe and effective. However not guaranteed.
- DRUGS: Dexamethasone is helping treat people in hospital, but little advances yet in home treatments. Vitamin D perhaps. Hopefully a really effective home treatment next year, whether that is to tackle symptoms or to address the virus itself. Unfortunately drug developments have long timescales to be proven safe and effective, .
Herd immunity takes many months at any reasonable rate of infection. So the virus will be around until at least these scientific advances have occurred. That means having to live with the virus for at least six months until and beyond April 2021, across the winter when respiratory viruses traditionally run high.
Indeed vaccinations have not eliminated influenza, so we may need to live with the virus for years. Planning for the worst means planning for years, with the option to release restrictions if and when the situation improves.
SO HOW DO WE PLAN FOR THE FUTURE?
It makes best sense for lives, livelihoods and the economy to:
- Aim for a very low level of infections, #NearZero, given that zero is impractical:
- Start with a 17-day Firebreak, like Wales, or preferably 21 days and Enhanced
- Implement measures to keep infection rates down as far as possible, including:
- Mass testing using existing or new technology, especially for local outbreaks
- Control on people and high-risk goods arriving from abroad
- Repeat Enhanced Firebreaks at intervals, depending on experience. Probably every three months to correspond to half terms in February and May, to minimise loss of schooling
The Government, however, has no obvious plan for England beyond 2 December. We as individuals and businesses cannot plan ahead for Christmas nor beyond.
It also looks like this half-hearted 'Lockdown Lite' will not get infection rates down far. That means a higher rate of deaths and LongCOVID than using FireBreaks, and allowing little of the economy to re-open. That just isn't good enough.
A series of Enhanced Firebreaks would be far better for lives, livelihoods and the economy. Doesn't this have to be the way forward for the next six months?
ABOUT THE AUTHOR
My scientific and business
experience means I can take a far broader yet in-depth view than a typical University professor. I'm able
to
take a unique 360 degree view of the COVID-19 situation, having a
background in
science, business processes, finance and much else besides:
- For the last 40 years I have been solving problems and implementing solutions for Board level personnel in FTSE, AIM, private and start-up businesses. Plus the UK subsidiaries of multinationals such as Sony and Alcatel, including doubling profits of their UK business
- That work is leveraging technical, financial, systems, commercial and people expertise and understanding. Often for biotech and other hi-tech businesses.
- This is based on being:
- Achiever of top Oxbridge degree in sciences, including cells, genetics, chemistry and spectroscopy
- The
Thames Valley overall first prizewinner in final ICAEW examinations,
covering all the various financial and management subjects
- Member of Institute of Management Consultants
The
tough problems require taking an all-angles view of the situation, and
all the available evidence, before proposing a solution. I only ever
propose a solution that I would be happy to implement. I have been
studying COVID-19 and the responses internationally for more than six
months now.
In that sense, I regard how best to tackle COVID-19 as just another problem. Not as tricky as some I have solved, which had stumped other CAs or the directors thought the problem was insoluble.
That's not to say how best to tackle COVID-19 is easy. There is no painless solution. But balancing lives, livelihoods and the economy to allow education, the health system and business to flourish, whilst minimising the net cost to the Treasury, does have a far better solution than the UK government has proposed, as outlined above.
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