Brexit & beyond - looking forward to 2021

BREXIT & BEYOND

CONTENTS

INTRODUCTION

18 January was this year’s ‘Blue Monday’, the day which is popularly asserted to be the most depressing day of the year, due to post Christmas debt, long dark nights, and the annual failure to keep bold new year resolutions.

This year that is overlaid with a new national lockdown and the ongoing stress of the pandemic, alongside uncertainty about how the new Brexit deals will pan out in practice. As we review the tumultuous events of last year and consider the future, it would be entirely understandable if there was a collective desire to retreat under the duvet and wait it out. We also have to acknowledge that lawyers, like everyone else, have proved poor at future predictions –especially those made in January 2020.

Nevertheless, a group of Anthony Collins Solicitors (ACS) experts from across our various client sectors have gazed into their crystal ball and given us a view on how 2021 is looking in housing, charities, social care, local government, and social business. We can see some key themes likely to emerge over the next 12 months.

Many of the uncertainties over the Brexit process were resolved in the deal eventually concluded on Christmas Eve. Whilst the agreement avoided the ‘cliff-edge’ of a no-deal Brexit that many had feared, the UK has still left the EU single market and the customs union, and the free movement of people, goods and services has come to an end.

For clients of this firm, many will be interested in what will happen around public procurement and what was called state aid, now referred to in the Brexit agreement as ‘subsidy control’. Our technical briefing will follow in the next few days for those who want to understand the detail!

The worlds of work and retail seem unlikely to return to ‘normal’ even once it is safe for us to mingle again. As Olwen Brown and Emma Watt both explore in their respective pieces, this leaves both a challenge and an opportunity around town and city centres, and our clients –local authorities, social enterprises, and housing associations among others – will surely be at the heart of rethinking what a town centre is for.

Across the sectors we serve there is both a recognition of the impact of the pandemic, but also the remarkable resilience of our clients and those they work with. Do have a look, and more importantly, tell us if you recognise our thoughts from where you sit. One of the things we have appreciated about the last 10 months has been the engagement we have had electronically with our clients and contacts; we enjoy feedback and conversation!

And finally – we do wish you a happy, prosperous, fairer and greener 2021. Despite where we might have found ourselves on Blue Monday, there are reasons to be optimistic about the new year. We look forward to supporting you on the journey.

David Alcock

Partner, social business sector lead 0121 212 7431

david.alcock@anthonycollins.com

Cox Partner, housing sector lead 0161

470 0311 jonathan.cox@anthonycollins.com

SOCIAL HOUSING

“Covid-19 has shown the need for a different approach to planning; it is too early to say whether the move away from city centre living is a permanent change but in any event everyone now values their local environment in a way they didn’t before.”

Jonathan

After a tumultuous 2020, it feels like we are back at the beginning of the first lockdown; however, we go into 2021 with all the knowledge that we have learnt and the experiences we have gained. So essential repairs and maintenance will continue to happen. Support will be given to vulnerable residents. And we all look forward to widespread vaccine roll-out.

But for the housing sector, 2021 will be more than the immediate response to Covid-19; it will mark a turning point on a number of long-standing sores.

Homelessness and private rented sector (PRS)

The pandemic exposed a number of fault lines running through housing policy, none more so than the issues of homelessness and the private rented sector.

Homelessness – The Protect Programme, and the funding for what is effectively a large scale roll-out of Housing First, we must hope marks the beginning of the end of a very difficult chapter in how the country has tackled homelessness. Housing First tenants will provide challenges to associations and the strength and determination that was shown last March in the response to Covid-19 will need to be seen again here.

PRS – Covid-19 exposed the fragility of the position of PRS tenants. The eviction ban has been extended but will the Government take the opportunity to completely reform the PRS sector, by following through on its original 2019 proposal to abolish Section 21 notices (no-fault evictions) and effectively assured shorthold tenancies? If the Government doesn’t do this, it is reasonable to assume (given the current turbo-charged residential housing market) that there is likely to be a tsunami of evictions in a couple of months time.

Building safety reform

With the Building Safety Bill, the Fire Safety Bill and changes to Building Regulations coming into law, building issues will dominate social landlords’ inboxes; providers will be getting ready for their introduction; alongside a series of ebriefings we did as the various announcements were made we will shortly be introducing a tool to assist with compliance.

The charter for social housing residents: social housing white paper

The long-delayed White Paper finally saw the light of day but what will the Government do and when will they do it? With Brexit out of the way and Covid-19 hopefully retreating by the summer it is likely building issues will dominate so the various policy proposals outlined in the paper may well come into being. Some might say that Covid-19 has led to a change in the relationship between landlords and their tenants. Whilst the paper outlines the additional rights tenants have, and the sector has reached out to its most vulnerable residents, those calls to tenants have also seen landlords discover many residents, in return for their rent,

simply want a safe and well-maintained home. If that resonates then landlords should be asking themselves how they should reconfigure their services to concentrate their support on those who need it.

Environmental, social, governance (ESG)

Is it possible Covid-19 marked the point when ESG factors became mainstream? The fact that some lenders will now acknowledge the benefit of ESG factors by reducing the cost of borrowing means that associations will become even more attractive as borrowers Some lenders are now charging lower interest rates for borrowers meeting ESG factors; which is especially helpful to social landlords given that this coincides with the need to undertake energy improvements in many properties. The sector will want to at least match the ban on new PRS lets above band C post-2025 and then for all tenancies from 2028 (not to say whatever might be required in the new Decent Homes Standard). We are likely to see a greater focus on sustainability issues.

Planning for the future

Covid-19 has shown the need for a different approach to planning; it is too early to say whether the move away from city centre living is a permanent change but in any event, everyone now values their local environment in a way they didn’t before. The timeline for reforming planning feels more like a challenge to be done by 2024 rather than 2021 but there will be an ongoing engagement with the sector.

Social care

As Matthew Wort notes, the Government finally has to ‘step up’ and address the funding of social care. There is a place for the housing sector here in providing reasonably priced extra care accommodation. Will we see new associations enter this market?

We are looking forward with confidence into 2021; look for us at: Housing Finance Conference and Exhibition 2021 National Housing Summit 2021

CHARITY SECTOR

“For service charities, reliant for the most part on public funding and donations, it has been a time of crisis management with extreme changes to the way in which they interact with service users in a locked-down, socially distanced society.”

Dominic

Like all organisations, charities are facing a number of challenges as we move into the new year. Brexit may not affect the third sector as directly as others, but the broader economic impact of Covid-19 and any impact of the new position with the EU will undoubtedly lead to financial impact on the voluntary sector. However, the funding position is just one of a number of areas where charities will be considering how to respond this year.

Charities are finding, and will continue to have to find, new ways of working, of communicating and fundraising, speeding up moves into a digital age – one where data is king but where that data needs to be secure. The Charity Commission estimates that fraud costs the sector £1.9bn every year and fraud reporting was up 400% at the start of the pandemic. The challenge facing many charities will be adapting further to this digital age – a new normal.

Both regulators and funders have shown themselves to be pragmatic and approachable in a crisis, but the requirement for rigorous compliance with regulation (be it by the Charity Commission, Fundraising Regulator or the Information Commissioner’s Office to name but a few) is here to stay.

There will continue to be increased scrutiny of charities, their trustees and activities, recognising the high (almost idealised) standard to which charities are held to account, particularly when the initial grace period for pandemic firefighting has ceased.

This is reflected in the newly revised Charity Governance Code with its updated integrity principle that emphasizes the need for charities to practice what they preach, operating along ethical lines and creating welcoming and supportive cultures in which to do so; organisations that are shaped by the personal behaviours of their leaders. The new code, with its revised equality, diversity and inclusion principle also recognises that diversity remains a key issue that many charities have yet to fully get to grips with. The code throws down the gauntlet to trustees and charity leaders to make a concentrated effort to address imbalances of perspective, power and opportunity in the coming year.

For service charities, reliant for the most part on public funding and donations, it has been a time of crisis management with extreme changes to the way in which they interact with service users in a locked-down, socially distanced society. The call on them is to work leaner and smarter and we will no doubt see some fall by the wayside, unable to adapt when they cannot go about ‘normal business’.

For the rest, the process of change management will take up large swathes of strategic management and operational time, no doubt, over the coming year. For charities reliant on investments, the initial economic hit of the pandemic and the potential further economic impact of Brexit means a period of ‘battening down the hatches’ rather than of strategically planned growth, with charities looking to consolidate and collaborate, rather than expand activities, keenly aware of the uncertainties we all face in the year ahead. Charities working internationally, as well as charities working in arts, culture and heritage, have been hit particularly hard by the pandemic.

But one thing is abundantly clear as we look back at 2020 and forward to 2021; we are a values-driven society – the way communities reacted to the pandemic showed that very clearly – and charities still have a key role to play within that (hopefully levelled up) society. For those that are able to be creative, innovate and tap into the swell of community spirit that many rediscovered in 2020, there is much to do but much to look forward to in 2021!

Above: Charity Governance Code 7 principles

Wort

Partner, health and social care sector lead 0121 214 3501 matthew.wort@anthonycollins.com

SOCIAL CARE

“An unexpected development in 2020 was the increase in the availability of people to work in social care... However, people joining the social care workforce will not be retained for the long-term until the sector is no longer treated as second class to the NHS.”

Matthew

2020 was an opportunity for much of what is good about the social care sector to shine. The huge resilience, passion, creativity and commitment of the people who work in social care has shone through as the sector worked collectively to continue to deliver high quality care, striving to keep people safe.

Increasingly the sector has worked collaboratively to find solutions, addressing shortcomings in Government guidance as it unfolded, and sector bodies have played a key role in helping the Government keep up with the approaches being adopted on the ground. However, whatever the commitment of the people working in the sector, ultimately if there is not enough money in the system it can’t deliver. Many fear 2021 will be a tipping point.

So what should we see in 2021? Our key hopes for the sector are:

Attracting and retaining people in the sector joining from other industries

An unexpected development in 2020 was the increase in the availability of people to work in social care. This significantly reduced the recruitment and retention challenges that were a key risk at the start of 2020. This will also mitigate some of the impact of Brexit on the recruitment of workers into the sector. However, people joining the social care workforce will not be retained for the long-term until the sector is no longer treated as second class to the NHS.

Parity of pay and esteem with the NHS

It should be a national outrage that care providers who are delivering publicly funded social care are not funded to meet a national minimum pay scale. Why does the NHS have agreed pay scales but not social care? A national standard needs to be agreed and public funding then needs to recognise the costs of delivering it. If ever there was a time when the public at large would understand the need for fair reward it is now.

Implementing the Dilnot reforms

Capping care costs and ending the arbitrary distinction that people with dementia have to meet their own care costs but those with health issues such as cancer do not. This will clearly come at a cost but it will be 10 years since the Dilnot commission and no-one has grasped the nettle. Many families continue to sell off their assets to fund treatment, giving huge disparities in where the costs of care falls.

Pay parity and cost capping

Pay parity and cost capping cannot be delivered without more funding for the sector. We all need to accept and be prepared to accommodate tax or national insurance increases to fund the costs of delivering high quality care.

Politics being parked

As a starting point, if all political parties could agree on the need for significant extra funding it would move the debate forward significantly.

A public enquiry into the handling of the coronavirus pandemic

It is clear that there are many lessons to be learned from the pandemic, many of which will shine a spotlight on systematic flaws in our current disjointed system and the impact funding sources have on the ability to access the right care at the right time. The long delay in the Government’s plans for social care show they don’t yet have a solution, and we consider learning from the outcome of a public enquiry should play a key part in helping design a more efficient and effective system for delivering care and responding to future pandemics.

Collaboration from the regulator

Through the pandemic, the Care Quality Commission (CQC) has been largely silent whilst providers strived to manage many competing risks. If ever there was a time that providers need a supportive regulator that helps providers achieve the best outcomes, it is now.

LOCAL GOVERNMENT

“There is a future out there for town centres and councils need to be at the heart of it. To thrive, and I absolutely believe that they can, town centres have to be truly multifunctional, like many places we see on holidays in mainland Europe.”

Olwen

Last year was a strange one for local government and there is still a sense of insecurity about what the future will bring, given the enormous expense of Covid-19 and the continuing challenges that has brought with it. There is however a growing sense that things will not, in many situations, ever be the same again.

Taking a swift straw poll of colleagues, we all agreed that whilst we enjoyed seeing our colleagues and looked forward to seeing them in person again, rather than via a Zoom or Teams set up, we would be reluctant to again spend the time and money on commuting into the office five days a week; or to spend the three or more hours it can take each way either on train or by car for a meeting with clients.

In this world that has to make sense, and the pandemic has probably truncated the time it would have taken for an acceptance of a virtual rather than face to face world of meetings, forward by half a decade. Because now for us, that’s normal. So yes, let’s go into the office, but one or two days a week only, please. And only then if we can do it at a safe distance.

So we will have to coordinate our presence, value our time together and talk to each other to do that to the best effect. Make the most of our time together; because it’s pointless travelling to only achieve what can be done as effectively remotely. We might regret the many hours on public transport…but that was the way then.

There’s also a changing picture for our villages, towns and cities. The 2019 local government elections ushered in a number of purely local candidates. By that, I mean candidates that weren’t aligned to any of the established political parties, but who had stood on the strength of their local passion and vision. They wanted to do their best for where they lived and to use the power of the democratically elected council to help them do that. With the pandemic and the associated lockdowns, we have seen this local focus grow. And that focus is not on retail; it is on a much rounder life model for the high street.

Research shows that whilst footfall that was purely or significantly retail-based fell over this year, there was a much smaller fall in high streets which were multi-functional. People still and will always want to get together, what they don’t want (based on a straw poll of friends and family here but I would be surprised if it wasn’t typical) is to have a purely robotic retail experience that they could have in the comfort of their own home, online.

So there will have to be a reason to get out there (when we can); to make visiting your town centre worthwhile; whether it’s because it’s only there you get the freshness of the Farmers Market; or it’s only there where you get a great lunch; or it’s only there you get a fabulous artistic event or can buy clothes from someone you know and trust to have understood what you want and look good in and searched in their suppliers for them. Just for you. And yes, its profit for them but it’s surely better than that 80p rag from you know who…with no added value at all.

There is a future out there for town centres and councils need to be at the heart of it. To thrive, and I absolutely believe that they can, town centres have to be truly multifunctional, like many places we see on holidays in mainland Europe. That means that they have to have residential places, eating places, shopping places, bars, cafes, parks, arts venues and everything which say people live and work and shop and enjoy themselves here.

Councils need to partner with other organisations, housing associations most likely, to provide needed homes in town centres, on a range of different tenancies; some owned, some rented, some socially rented. And, instead of investing in business parks, like so many have done, or in shopping centres far far away, councils should invest in their area. Not somewhere else. And that, I think is what many of the newly independent councillors want. “Put your money with your high street; that’s why they voted me in”.

To be clear, this is not in the pursuit of maximum income for councils, because that will not be the outcome. But over time a local authority shouldn’t lose; it should win big time. Because every council I have ever known wants sustainable growth for its area; wants regeneration, wants more jobs, wants better housing, wants these things for their residents. And there are different ways of achieving this, but that is politics.

So, what should councils do? Focus on local, invest in local, think local. Put money into local housing, local retail, local multi-functional hubs that are easy to get to, easy to spend time in, easy to live in. Invest in soul, rather than the soulless. Enjoy and exploit the idiosyncrasies of your locality. Be local. Be brave.

SOCIAL BUSINESS

“There is an opportunity here to rethink how the high street serves the community by reflecting a more diverse, more inclusive, more locally based offer and by valuing connections that go beyond shopping.”

For those involved in doing good through enterprise, 2020 was a year with some encouragements amongst the enormous challenges and gives us some signs of hope going in 2021 amidst the gloom.

The pandemic brought a new focus on the responses from business, and there was a new sense of public awareness on the ethics of that response, veering from outrage (Sports Direct seeking to be regarded as an ‘essential’ retailer in the first lockdown) through to warm approval (Leon providing free meals for health care workers).

We expect scrutiny of business ethics to continue, as business and consumer customers become more and more aware of the reputations of those they buy from. Indeed, a YouGov survey in July 2020 showed 85% agreed that they would prefer to buy from businesses that had a strong record for good conduct, with 38% agreeing strongly.1

This challenge was reinforced by the Black Lives Matter movement, and the associated conversations around diversity, social mobility, and the treatment of BAME people in the workplace. Again, corporations have struggled to respond, and those who can demonstrate a genuine commitment to a diverse workforce (rather than paying lip service and floundering to come up with a strategy) will surely do well.

In our view, there has never been a better time to be a distinctive, impactful business. The report ‘ Rebuilding Business for Society’, from a coalition of organisations active in the sector, notes that as “the country seeks to rebuild after the pandemic, there is an opportunity to develop a business landscape that drives more broadly-based prosperity”. We agree; now is the time for that moment to be seized.

Alongside these signs of hope, there remain huge challenges, but also opportunities.

The future of town and city centres has been thrown into doubt by the pandemic. As our head of local government notes in the previous section, the future working environment will undoubtedly change, and far more quickly than we might have expected. This will have a huge knock-on effect in historic centres.

We have already begun to see the fundamental re-shaping of the high street. In Birmingham’s Grand Central development, the flagship John Lewis store will not re-open. Debenhams, Laura Ashley, Monsoon and Cath Kidston have all either closed completely or are winding down. What is the future for the town centre, even after the pandemic threat has receded?

There is an opportunity here to rethink how the high street serves the community by reflecting a more diverse, more inclusive, more locally based offer and by valuing connections that go beyond shopping. Social businesses have a key part to play alongside local authorities and community-led housing providers in this rethinking process.

And, of course, there is Brexit. Our technical briefing will follow, but for those of our clients who rely on a large and readily available workforce – such as food, retail, hospitality (which will surely recover once we are able to mix safely again) and other similar industries – there will be a sea change. There may be a gradual loosening of the rules on procurement in the public sector, but don’t hold your breath.

In summary, 2021 has started with a major set of challenges but it also presents an opportunity to throw out the rule book and embrace the benefit of change. There is much to consider, but also much to work on, and much to hope for in the new year.

1 Cited in ‘Rebuilding Business for Society’, published by the Association of Financial Mutuals, the Building Societies Association, Cooperatives UK, the Employee Ownership Association and Social Enterprise UK, September 2020.