The idea that increased competition within the Health Service can drive up standards was arguably first introduced by Mrs. Thatcher’s government. A system of compulsory competitive tendering was introduced in the early 1980’s, which eventually resulted in services such as hospital cleaning being delivered by private contractors. This type of approach to delivering services was built on by the NHS and Community Care Act, 1990 which established the ‘internal market’ within the service.

One of Tony Blair’s most prominent and most controversial policies for reforming public services after 2001 was the creation of Foundation Hospitals. These institutions were in many ways operationally autonomous from the Department of Health, in particular in relation to their proposed ability to raise funds from the markets to finance capital expenditure. The proposals were later watered down, but despite this the number of Foundation Trusts grew to over one hundred by October 2008.

The history of recent healthcare reform in the UK has been key to framing the debate over the current proposed reforms. Supporters of the reforms claim that the Health and Social Care Bill follow in the tradition of past reforms and will create a more flexible service which will be able to deal with the twin challenges of an ageing population and more expensive healthcare drugs and treatments. Opponents, on the other hand, see the proposals as representing a fundamental shift away from the founding principles of the NHS, and could lead to a process of ‘cherry picking’ of healthier patients by private companies.

Healthcare provision is also proving to be a key issue internationally, with both the USA and China undertaking reform measures in recent years. Whatever approach countries take to health reform, delivery of health services will undoubtedly be vital in determining the overall form public service delivery takes in the future.

Michael Dowsett

Social media served as a main rallying tool for many of the UK’s recent student protests over the anticipated increase in university tuition fees. (http://tinyurl.com/CNN-YouTube-UK-social-media).

Similarly, with the increased likelihood of southern Sudanese succession, student groups are organizing on Facebook. (http://tinyurl.com/Sudan-Youth-for-Change).  Social media continued to serve as an organizational tool in Tunisia’s protests and currently those in Egypt. (http://tinyurl.com/Facebook-in-Egypt).

Communication has transitioned from away from the mass dissemination of information into an interactive and reciprocal conversation where public engagement is necessary. This is made evident in the press where every online news article offers the reader a chance to leave commentary. The average blogger can now be a citizen journalist.  Rubert Murdock and Apple just released the first digital newspaper, The Daily, which is available through the iPad. ( http://tinyurl.com/The-Economist-Blog-onThe-Daily).  This also includes necessary transition within public relations where the industry is based on both counsel to clients and technicians responsible for producing and circulating messages to various media channels.

To remain relevant in today’s social media landscape, the public relations industry must recognize how their publics and stakeholders have evolved. (http://tinyurl.com/YouTube-video-Socialnomics).   There is a greater public scepticism from decreased trust in businesses, political institutions and the media.  People now expect a relationship with brands, companies and politicians. There is larger attention and concern for corporate and social responsibility and economic and environmental sustainability. The distribution of news happens faster and it is also unpredictable as public relations agencies have less control of the message.  Accordingly, the public and especially stakeholders must be contributors in the dialogue that is the news cycle. The interaction must be a multifaceted channel of communication that is frequent, informing, credible, engaging and transparent. Public relations practitioners must now go to the people.

The public relations industry needs to contribute to the conversation purposefully develop mutual trust with increasing unpredictability and embrace bottom-up communication. Public relations has the opportunity to be a strategic curator in the social change that is growing out of social media.

Kate Hudson

However, Taoiseach Brian Cowen is desperate to resist the humiliation of a bailout which, with his government’s majority already wafer-thin, may lead to a heavy defeat in the general election that looms next year. Many others believe that by accepting such a bailout, the Government would not only be compromising Ireland’s independence, but may also lead to certain conditions that allow France and Germany to force tax rises. With the current level of corporation tax at 12.5 per cent being fundamental to the country’s rise as a ‘Celtic Tiger’, measures to increase this to a comparable rate to that of Germany at 29.4 per cent, would be devastating to the promise of further investment from transnational corporations.

At present, the Irish Government is pursuing a strategy of asking the ECB for money in the name of the country’s banks, a request which would undoubtedly be less politically explosive than an appeal for a national bailout. According to data released last Friday, some €130 billion in loans to Irish banks were outstanding at the end of October. It is therefore hoped that money injected into this sector would eventually help to benefit and rejuvenate the wider Irish economy.

Through whatever means, it is essential that Ireland accepts some form of funding as it remains a country gripped in recession. With a national debt of around €75 billion (£63.5 billion), almost 94 % of its national output, and an unemployment rate almost double that of Britain at 12.2 per cent , this ‘Celtic Tiger’ has lost its claws, and a bit more. Having set out the choices in such stark terms, the government is now finding it difficult to adjust to mounting pressure from its European partners to make a formal request for assistance, which is required if it wants to access the European Financial Stability Facility. Although the reality is that the Irish government does have sufficient funds to pay for essential public services up until July 2011, at present, the country needs an external force to break out of the downward spiral in which it finds itself. This will only be achieved if the Irish government looks toward the EU and in particular, the ECB for assistance.

The latest economic reports being released from Portugal are similarly bleak and suggest a country that is already on the brink and seeking help from Brussels.  The EU’s fear of financial contagion already appears to be taking hold, this coming alongside reports from Greece who, despite receiving a £93 billion bail-out in May 2010, today disclosed its economic problems are even worse than previously thought. Meanwhile, the German Chancellor Angela Merkel has warned “If the Euro fails, the Europe fails”, a statement that, even when removed from any context, demonstrates the overall extent and depth that EU leaders are worried about.

Miguel Angel Fernandez Ordonez, the Bank of Spain governor and member of the ECB’s governing council, has claimed that it is entirely up to Ireland as to whether they accept the offer of a bailout. Whilst it is not difficult to read in between the lines as to what the majority of Europe desire, the decision has been firmly placed in the hands of the Irish Government. Meanwhile, the rest of the EU awaits with an expectation that the proper conclusion is reached.

Tom Drummond

The recent trade delegation to China was the largest ever sent from the UK and demonstrates just how important the Government considers this bilateral relationship. With four Cabinet Ministers, and around 50 business leaders in tow, David Cameron set out to double the trade between the two countries to £63bn by 2015.

China represents an enormous opportunity for the UK as the fastest growing economy in the world. As China becomes richer, it will consume more goods and so offer UK exporters a huge marketplace to sell their wares. The importance of this should not be overlooked since it forms a ‘big slice’ of Cameron’s growth plan.

Currently, the UK exports more goods to Ireland than it does to China, Brazil, India and Russia combined, so there is clearly huge room for improvement. We are also running up the largest trade deficit with China than with any other country. At £18bn, it is a figure that the UK would strongly benefit from shifting in our favour. 

To start re-adjusting this balance, several deals were announced during the high profile visit. Rolls-Royce received a timely boost by revealing the order of £750m for their aero-engines. Other deals included a £45m agreement to sell breeding pigs to China, a £2m contract for coal technology and a decision to ensure that only Scottish-made whisky is labelled as Scotch. In a move that signals the start of a growing trend in schools to improve language skills, the UK Government also agreed to divert money to train 1,000 new Chinese language teachers in England over the next five years. 

During the trip, Cameron had a fine balancing act to play in boosting trade but at the same time raising concern for China’s human rights. Certainly compared to his visit to India, his comments were far less controversial, which many have found disappointing. Although Cameron did pick his opportunity to cause a stir; when talking to students in Beijing to say that growing economic freedom should go instep with political reform to ensure prosperity.

However, the benefits of this trade mission look like they could be overshadowed by the currency war that shows no signs of abating. China has been intervening to keep the value of the Renminbi low to keep Chinese exports cheap. Beijing sees the most recent bout of US quantitative easing as a retaliatory attempt that will harm domestic producers in China. Whatever the outcome, it would be wise to heed the sage advice of Confucius that before acting out of revenge it is best to dig two graves.

                                                                Jamie Pinkham

The new reality of the CRC becoming a tax for business is very straight forward. The cost to business will be based upon the price of carbon and the cost of the allowances in the CRC scheme. With the carbon price hovering around € 15 the estimate today is between £780 million to  £1 billion per year.  The CRC league table will still bring reputational risks which companies must pre-empt and deal with. These are the challenges that the top 4,000 -5,000 companies in the UK now face.

The new reality means that that the coalition  government are seeing the reduction of carbon as a way to reduce government debt and raise money for the treasury. Yesterday, Greg Barker, Minster For Energy and Climate Change, was in no way apologetic when he commented “There is no way to disguise that this will be a new charge on businesses,”. Barker continued this is “It is needed to plug the gap in the public finances. We have come through with a very strong position from which to deliver our core low carbon objectives. It is a real display of the fact that when we talk about being the ‘greenest government ever’ we mean it.”

Over the next two weeks New Century Media is hosting a series of Environment and Sustainability seminars. The first series will focus on the CRC and we will be presenting with the Carbon Trust.

The briefings will address the following:

• The CRC: The mechanism, Emissions reporting requirement, the Carbon price
• Business and reputational risks to companies in the CRC: The league table how it works and how to improve ranking.
• The Green Advantage: How to raise your profile and benefit from the CRC
• Action points for now and timeline for the future
• Internal Communications strategy; change management and mobilising the workforce
• The CRC as part of mandatory carbon reporting by 2012
• Case studies: companies that have maximised their sustainability to build their brand

Dates and Times: (Booking on a first come first served basis)

8.15 for an 8.30 start (Coffee, tea and French breakfast will be provided on arrival). The event will conclude at 10.30 am on the following dates:

Wednesday 27th of October 2010

Thursday 28th October 2010

Wednesday 4th of November 2010

If you would like to attend e-mail  bethanhalls@newcenturymedia.co.uk

The total UK debt was £1.4 trillion in March 2010, which represents 71.3% of the UK’s GDP. The state is currently spending £43 billion servicing this debt each year, which is more than is currently spent on schools.

George Osborne set out in his speech how the Government would cut spending by £81 billion by 2014-2015. The June Budget already identified savings of £30 billion and this speech described where the remaining spending cuts would fall. The Government remains committed to protect spending on health and overseas aid. Consequently, other Departments will see average real budget cuts of 19 per cent over the spending review period.

The headline figures that will capture the most attention is the ‘official announcement’ that 450,000 public sector jobs are to be cut but this will apparently be achieved through natural turnover of staff and reducing recruitment. In addition, the state will save £5 billion by increasing the state pension age to 66 years by 2020. The Chancellor also revealed a further £7 billion of welfare cuts through getting public sector workers to contribute more to their pensions and other interventions. Osborne made it clear that even the Royal Family will have to contribute and Royal Household spending will fall by 14% in 2012-13.

The winners in this review will be the NHS, DFID, DES, as well as transport projects. The NHS was ring-fenced from cuts early on and its budget will rise above inflation from £104 billion to £114 billion by the end of the spending review period. Seeking the moral ground the Government will also protect the overseas aid budget. This will increase to 0.7% GDP from 2013 and be better targeted than in the past. The Chancellor announced that the schools budget would rise in real terms with a £2.5 million pupil premium to help disadvantaged pupils. The Spending Review also protected transport projects for road improvements, Crossrail, Network Rail as well as the London Underground. The Science budget will be maintained in cash terms over the period of the spending review with resource spending of £4.6 million. Social care also appears to have dodged the axe with an additional £1 billion by the fourth year of the spending review and a further £1 billion for the NHS to provide social care in collaboration with the local councils.

The cuts have left many disappointed that the Government’s commitment to being the greenest ever is not being fulfilled. Investment into Carbon Capture and Storage and for the Green Investment Bank was much lower than expected. For energy efficiency, improvements to heating and insulation will allow the Warm Front programme to be phased out, saving £345 million by 2013-14. However, the Review indicated that the Renewable Heat Incentive will be introduced in 2011-2012 pleasing many who were anticipating this may be scrapped. Finally, the CRC Energy Efficiency Scheme will be simplified for businesses with the first sale of allowances to be one year later than anticipated. As expected, the sale of allowances will no longer be returned to participants but passed to the Treasury.

Sweeteners for pensioners include universal benefits such as free eye tests, prescription charges, bus passes, TV licences for the over-75s and winter fuel payments.

The CRC as predicted is a revenue earner for the Treasury
The good news for business is that the CRC Energy Efficiency scheme will be simplified to reduce the burden on businesses, with the first allowance sales for 2011-12 emissions now taking place in 2012 rather than 2011. In September the Committee on Climate Change had called for this to be done and it is good that the government is still listening to Lord Turner and David Kennedy.
As we predicted at the start of September revenues from the CRC will go straight to the Treasury the revenue from allowance sales is expected to total £1 billion a year by 2014-15. This will be used by the government to support the public finances, including spending on the environment, rather than being recycled to participants which was the original idea.
Companies should take note of this change. The coalition government obviously views ‘carbon’ or ‘green’ taxes such as the CRC as good ways to raise revenues and reduce carbon. This move opens the door for the government to implement mandatory carbon reporting for companies in the FTSE 2050. If the carbon price was to reach the level of €80 euro a tonne this will make a significant amount of money for the government in green taxes. These changes could in theory arrive as soon as 2013 so the time for companies to prepare is now.

Carbon Capture and Storage (CCS)
The chancellor announced funding of “up to” £1bn for a single commercial scale carbon capture and storage (CCS) plant to capture emissions from coal power stations. Three more test plants have been sidelined for the time being. With this level of funding they might stay there. The investment by chancellor seems a little pointless.
The world’s largest steel company has estimated that the testing of one plant is £1.5 bn. So this level of funding appears frivolous in comparison to the real level of funding which is required. The government now needs to make a decision. They are either going to invest in full into CCS or they are not. There is no point in half measures. The money can be spent elsewhere on energy efficiency, nuclear, off-shore wind and other low carbon technology options.

Green Investment Bank
George Osborne has disappointed all on the great green hope: the green investment bank the coalition promised gets £1bn in funding, half of what was expected and a sixth of the amount many observers say is needed to deliver the green energy necessary. We need to see the details about whether the bank really is a
bank. This proposal seems to be very different from Bob Wigley’s report which was submitted to the chancellor in June 2010.
It will be seen if this amount of money will even be enough to give the long term investment in clean technology and energy efficiency measures which will reduce carbon. The investment cycle required for these technologies is between five to ten years at a minimum.

Feed-in-Tariffs: Government will pick the Technologies
Feed-in tariffs, which allow anyone generating electricity to sell it to the grid at a premium rate are set to go ahead but look likely to take a £40m cut. This will be a 10% saving for the government between now and the end of 2010. In 2012 the government will be running a consultation on the FIT. This is when the government will decide which are the most effective at carbon abatement and the technologies that will benefit the most. The government will effectively start picking the winning technologies.

The Renewable Heat Incentive
The Renewable Heat Incentive, funded from AME, will be introduced from 2011-12. This will ensure the UK meets its 2020 renewable energy targets while making efficiency savings of 20 per cent, or £105 million a year, by 2014-15 compared with the previous government’s plans.

Mike Weir MP, Angus, Scottish National Party, SNP Spokesperson for Trade, Industry and Energy and for Environment

John Gummer, Lord Deben, former Secretary of State for the Environment

Sir John Harman, Director, Aldersgate Group

Steve Wallace, Head of Environment, National Grid

Steve Waygood, Head of Sustainability Research & Engagement, Aviva Investors

Paul Dickinson, Chief Executive, Carbon Disclosure Project

Colin Baines, Campaigns Adviser, The Co-Operative Group  

Summary:

On the 13^th of October 2010, the All Party Group on climate change met to discuss the future of reporting of carbon emissions. The committee all agreed that voluntary carbon reporting had not worked and it was now time for a ‘step change’. They supported the call for governments at a national and international level to enforce mandatory carbon reporting via legislation.

Steve Waygood, of Aviva, described climate change as a “threat to our purpose of providing, prosperity and peace of mind to customers. Mandatory reporting for all large organisations would help drive a reduction in carbon emissions. Action is needed by government today”.

Mike Weir MP, said “there was support for this new approach despite the coalition’s view towards cutting red tape and regulation. He described mandatory reporting as a very different type of regulation outside the ‘stupid red tape of health and safety’ regulation which is a burden to business.“

Weir noted that such legislation would put a burden on business to come clean about their emissions and they would need to invest in change. This move would come with its merits and give the government much needed revenue ensuring the polluters would pay the most. At this stage when ninety five per cent of the FTSE 100 companies are reporting via the Carbon Disclosure Project the committee did not see why taking the step to make reporting mandatory would be anything but positive.

Mandatory carbon reporting presents operational challenges for organisations. National Grid in the UK and US spend between 5% and 10% of the time of their global sustainability team reporting on their energy efficiency and the CRC. The committee agreed that the idea of linking carbon reporting and reduction with all employees’ remuneration was one clear way of enforcing change. This is already in place at National Grid and now Aviva are looking into introducing the same system.

Complexity in reporting needs to be sorted out by government. Industry and government need to strike a balance between reporting and the call for full disclosure. Simple things such as reporting on the fiscal or calendar year need to be ironed out.

The situation is simple, if there is going to be a significant reduction in carbon and for the UK to meet its 2020 carbon budgets the UK needs the data from industry. The collection of data and benchmarking will make it easier for organisations to reduce carbon, invest in clean technology alternatives and make the transition to a low carbon economy.

Carbon price at present is £12 per tonne and $3 dollars in the US. The panel called for the government to move and CAP emissions at €80 by 2012 – 2015. Goldmans Sachs research has indicated that this is the type of figure that the market expects. This level will present a significant cost for companies that are not prepared and do not have the processes in place to make the changes. The financial penalties and the investment required to decarbonise their operations will deplete their profits and reduce the payouts to shareholders and pension funds. If carbon reporting is to cover a company’s upstream and downstream suppliers then the SME sector and financial services sectors will feel the knock on effects and they will need to take action.

 In support of the debate Martin Haywood has put down the Early Day Motion in parliament (799) which calls for the Corporate Mandatory Reporting for Carbon Emissions by 2012.

Jonny Mulligan

Director of Environment and Sustainability

Jonny.mulligan@newcentury.co.uk

The UK government’s proposed ‘Green Deal’ is designed to radically overhaul the energy efficiency of homes and small businesses and could support the creation of a quarter of a million jobs over the next 20 years. If the government is to succeed on the one hand it must start supporting wining technologies that will increase energy efficiency and reduce carbon. They must also ensure that they protect the consumers and businesses that want to take part in the ‘Green Deal’.

The motivation behind the Green Deal is very good. It is to create a market for energy efficient measures and technologies that will lower the UK’s carbon emissions. If rolled out correctly, it will create jobs in the construction, manufacturing and R&D. Companies in the heating, lighting, insulation, smart metering and ground source heat pumps should be winners. Consumers businesses will benefit from lower energy bills as they lower their energy usage and UK will lower its carbon emissions.

Greg Barker, Minister of State for Energy and Climate Change, has admitted for the first time that the Government might need to offer incentives to encourage greater participation.”We’re aware there are many difficulties in persuading people to take up this stuff,” said Barker, citing those who “could not be bothered, did not have time to plan and supervise the work, and were nervous about poor workmanship.”

The challenge for the Government is to offer a new way of making energy efficiency measures a reality and the technologies affordable for those in the domestic (households) and non-domestic (SME’s) sectors – particularly to those that are not currently encouraged to take up these measures by the Climate Change Levy and other low carbon policies. In theory these groups should be easier to make the transition as they have smaller property portfolios and less bureaucracy to deal with.

While part of the problem is with the finance, there are other behavioural barriers and inertia that any future policy must also overcome. Now is the time for landlords and tenants to get around the table and solve who is responsible for making the changes to buildings and work who is responsible for the emissions. If a resolution cannot be found then legislation that will force landlords and owners of large property portfolios in both the public and the private sector to adopt energy efficiency measures or to retrofit their building stock could be considered.

Upfront finance will be provided by a ‘Green Deal’ organisation to allow them to invest in energy efficient measures. These measures will include installing technologies and measures that will be tied to the property. These measures will not be removed from the property and cover heating, lighting and insulation. Repayments will be linked to the property itself, most likely through a charge on the energy meter.

The possible repayment periods may vary by type of customer, with shorter timeframes for the non-domestic and perhaps up to twenty to twenty-five years for domestic sector. To make it work the green deal will need an initial cash pot of seven billion of investment with an expected return of investment of between 3% -6%.
The details are still being worked up and policy makers do not yet have a final proposal. The government will consult via the Energy Security and Green Economy Bill which is launched in November 2010 and will close in the spring of 2011.

Jonny.mulligan@newcentruy.co.uk

On the other, the growing row over child benefit and tax allowances has highlighted the huge challenge the party faces over paying down the mountain of debt it inherited from Labour. Boxed in all sides by the sheer complexity of a tax and benefit system and the coalition agreement with the Liberal Democrats, many senior Conservatives were heard to be muttering:
“If it’s like this now – what will it be like after 20 October?” (The date pencilled in for the Comprehensive Spending Review that could see departmental budgets slashed by as much as a quarter.)

The fact that this coincided with a noisy but good humoured demonstration by public sector workers outside the conference hall, served to underline the scale of the task ahead. Many now believe early public acceptance of the need to cut spending could be starting to melt away on the realisation of what this might mean for front-line services.

Finally add in the effect of the likely relentless attacks from the new Labour leader, Ed Miliband. He will, unsurprisingly, take his time before revealing his own policies – so much better a position from which to attack the Conservatives. The child benefit row has given him the perfect opportunity – or has it? Can the Chancellor, the Tories uber-strategist, really have made such a simple mistake?
Just remember for a minute how the Conservatives have been hankering for that “Clause 4” moment. When ministers can deliberately provoke the wrath of high earners so that come the spending cuts they can turn round and boast that they’ve already whacked the “fat cats”.

This would be a straight lift from the Blair play book. And it shows that nearly three and half years after he left Downing Street the former PM’s shadow still shrouds the political agenda. Try and hang onto floating voter by showing how mean you can be to the party’s core. Blair would certainly have approved.

For Cameron, it means added cement and binding for his coalition project. It sends a message to the more left-wing Liberals that they are being listened to. But strangely, for Ed Miliband the child benefit changes pose a danger. It shows a Prime Minister prepared to take a risk with his party faithful “in the national interest”.
Contrast that with the Labour leader elected on the votes of trade union members, where the party’s recent internal politics mean extreme danger to express views other than those of a narrow strand of Labour thought. “Weakness” and “pandering” will be the words thrown about by the Conservative press (and a few Labour-leaning ones as well).

Seen in the round, this week’s fireworks merely highlights the axis around which British politics continues to rotate – the almost fanatical search and retention of the centre ground. If it fascinated Blair, it now fixates Cameron.
So Birmingham certainly sparked a row but then it was meant to!