The Public Sector Steps Up

John Keyes • 24/03/2020
Government and the Public Sector are self evidently at the centre of the COVID-19 response. 

There is the immediate need to respond but already a recognition that the public sector will need be more proactive over the longer term to support people and the economy as we emerge from the worst of this and also so that we can become better prepared to deal with anything similar in the future.

The Short Term

Hospital services and hospital buildings are being re-purposed to respond to immediate, expected pressures on resources. There is a lack of intensive care capacity being addressed at the local hospital level but also at a city-wide level (including London) whether individual hospitals are being selected and undertake a dedicated role in providing the required specialist respiratory services. Hospitals are seeking additional accommodation, including hotel rooms, additional storage space and key worker beds. 

The most novel solution on a UK wide basis has, however, been the deal the NHS has struck with the private hospitals to acquire an extra 8,000 beds, nearly 12,00 ventilators and nearly 20,000 qualified staff.

For the rest of the public sector, the current agenda is one of supporting “business as usual” and continuing to deliver core services. Local councils will have a particular task in local crisis management and the maintenance of basic services. It is hoped that their IT infrastructure is robust for a sustained period of agile working.

Short term maintenance of services is going to be critical to both central and local government, not least to mitigate the impacts on the economy. The 11 March Budget seems an age ago but it provided a major fiscal stimulus. The programmes announced – such as major infrastructure investment - need to continue to gear up and to deliver.

Local and central government can support in a number of ways and a cocktail of approaches will likely be needed. Government lease covenants will be one effective tool – even if only in the short term – to sustain projects, property viability and investments stimulating economic growth.

Other public sector bodies are facing some more mundane challenges. Universities, colleges and schools will need to manage empty – or near empty – buildings for long periods of time. The summer vacation is traditionally a period to fast track capital projects and building refurbishments. If we face longer vacations, as seems inevitable, should larger projects be brought forward? But, is this a good time to make additional capital commitments?

The Long Term

We are only starting to understand the longer-term consequences of the pandemic. Some things seem certain, others need to be monitored.

  • Investment will be needed in the hospital estate to create greater resilience to any future pandemics.
  • Will specialist isolation hospitals be needed to guard against a return of this pandemic or future ones? Where might these be located?

  • Will the move to digital medicine accelerate and what does this mean for the overall NHS footprint?

Re-Booting the Economy is Going to be Essential

  • Central government investment is going to be needed, far beyond what was announced in the recent Budget.

  • Local Councils will play a central role in ensuring the resilience of local services. Will some essential businesses “go bust” and will Councils have to replace them, even if just for the short term?

  • What will happen to the High Street if online shopping further accelerates? Do local councils have the toolkits and resources to respond?

  • What happens to the international market for students? Do Chinese, South Asian and Middle East students (in particular) return in significant numbers? What does this do to university funding and the demand for student beds?

  • With our largely privatized transport operators seeing revenue all but disappear, what will be the role for the public sector in their renewal. Will our railways end up nationalized by default?

The challenge for government will be to support the economy but on the back of an inevitably substantially larger public debt position. One thing is certain, however: we will have a relatively larger public sector over the next 5 years than we have had in the last 5 years.

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