Pandemic proves opportunity for industry power grab

The UK government has been “incredibly receptive” to businesses lobbying to shape its response to Covid-19

The decision to allow pubs and restaurants to reopen on July 4, before schools, and to relax social distancing, are the latest concessions to the alcohol industry during the Covid-19 crisis, after the government classified off-licences as “essential” and pubs were allowed to operate as takeaways during the lockdown.

The lobbying campaigns launched by various industries in response to the pandemic – from aviation to zoos – are mostly hidden from public scrutiny, despite their potential impact on public health. The Bureau of Investigative Journalism can reveal how businesses use their access to politicians to seek to influence the government’s response to the coronavirus crisis and shape post-pandemic Britain.

The decision to reopen pubs puts policymakers at odds with many public health experts concerned about the speed with which England is exiting lockdown. While the easing of rules was welcomed by many drinkers and landlords, pubs have been called “very high-risk premises” by the Chartered Institute of Environmental Health.

Social-distancing measures have been the major sticking point. The hospitality sector has lobbied for the two-metre rule to be halved to allow enough customers to make premises financially viable.

But bars have been at the centre of new clusters of the disease in several countries. Last month South Korea was forced to close bars and nightclubs again after they were tied to outbreaks. Bars in Germany and Florida are also thought to have been sites of new infection.

While today’s circumstances are exceptional, the government has a history of caving in to the alcohol industry. The industry has won past public health battles over advertising regulations, labelling of health risks and minimum price controls. Even as the coronavirus pandemic took hold in the UK, the chancellor, Rishi Sunak, shelved plans to increase duty on spirits following intense lobbying by the UK Spirit Alliance.

Pubs have been allowed to serve takeaway drinks and will soon open again Gavin Rodgers / Alamy

Crisis as opportunity

“We’ve never been busier,” said George McGregor of the global lobbying agency Interel. The UK’s estimated £2bn lobbying industry is thriving. Speaking in a webinar from his home, McGregor, who is also co-chair of the Public Affairs Board, explained how lobbyists have sought to influence the many interventions the government has introduced to support companies through the crisis.

“Government recognises it needs to listen to business and adapt,” he said, adding that he could cite “lots of examples” where such adaptation had benefited his clients.

“The government deserves a huge amount of credit,” he says. “The officials, MPs and ministers we deal with have been incredibly receptive to the needs of business.”

For lobbyists, a crisis presents risks but also plenty of opportunities. Effective PR tops the list. Many companies have been quick to position themselves as part of a “national effort” to combat the virus, either through direct offers of help or financial gifts. Hanover, the communications agency, advises clients to seed the press with “positive news … of companies doing something significant, generous and non-self-serving”.

Advice on communicating effectively with worried employees is also part of the lobbyists’ offer. Chief executives need to become “chief empathy officers” and focus on the emotional needs of employees, according to Edelman, a global PR and lobbying firm. While there are obvious moral and business reasons for companies to attend to the wellbeing of their employees, companies that are seen to have done the right thing may well get a better hearing in government. According to the consultancy Headland, “being well positioned will help add authority” to corporate voices, which will “help them to guide public policy so that they can be in a stronger financial position in the wake of the crisis”.

Guiding public policy is what lobbyists do, even in lockdown. Pagefield, a PR consultancy, is providing advice to companies on “how best to handle conversations” with, for example, the Treasury on specific government interventions. It is also advising on how they can input into the government’s four coronavirus implementation committees.

Lobbyists can also identify opportunities for corporations to shape post-pandemic public policy as the government seeks to kick-start the economy. According to the UK consultancy WA Communications, the “government is already looking for ideas”, adding that “positive policy ideas that can help support the economy will be listened to”.

The Adam Smith Institute, which works “to promote free-market, neoliberal ideas”, is already on the case, writing to supporters to solicit ideas. “We want to hear from you of every tax cut that can lift a burden, every regulatory change that can lighten the load on businesses… every bureaucratic impediment that… might be suspended or permanently extinguished.” These ideas will constitute, it says, a “blueprint for the new Britain that must emerge”.

Drinking through it

Alcohol retail sales have risen sharply in the UK since coronavirus restrictions were imposed. There was a 22% rise in supermarket alcohol sales by volume in March. Off-licences saw a 31% increase. With pubs, restaurants and the rest of the hospitality sector locked down for months, however, manufacturers could be facing an overall decline in sales.

The spirits industry has followed the lobbying playbook to protect both the supply and demand side of its business.

The most visible response from alcohol companies has been generous pledges to produce or donate alcohol to make into hand sanitiser as part of the “national effort”. Drinks giant Diageo, for instance, promised to donate up to two million litres of its product, including 500,000 litres of alcohol, for hand sanitiser destined for the NHS and UK and Irish workers.

Diageo-made hand sanitiser, donated as part of the "national effort" 3x1 Group

It has also established a £1m fund to help pay the wages of British bartenders facing a prolonged shutdown. “We want to help our communities when they need us most,” Diageo’s UK managing director said, urging other producers to “do what they can to help British pubs”. Pubs can apply for a maximum of £600 each from the fund. Last year Diageo recorded profits of £4bn and its CEO took home more than £11m.

Many alcohol industry employees, however, have been required to work through the lockdown. Arguing that spirits are part of the vital food supply chain and therefore “essential”, companies have lobbied to maintain full “uninterrupted ... production and distribution” during the pandemic.

The influential Scotch Whisky Association has been accused by the GMB union of “cosying up” to the British and Scottish governments to stay open for as long as possible. Workers have voiced fears that they were being asked to risk their lives “for a duty-free packaging box”.

The Scotch Whisky Association told the Bureau: “The health and wellbeing of the Scotch Whisky industry’s employees is our primary concern. As a result, the industry has significantly scaled back operations to protect the safety of our workforce during the Covid-19 crisis.”

The alcohol industry has also lobbied the government to amend restrictions and maintain consumer access to alcohol under lockdown. Following the government’s decision to add off-licences to the list of “essential” shops, pubs, bars and restaurants were given permission to sell alcohol to take away.

The alcohol industry also wants online sales restrictions lifted around the world. This is in spite of World Health Organization advice that governments restrict access to alcohol during the pandemic because of its impact on the immune system and behaviour, and to resist demands to relax regulations.

The boldest demand to come out of the crisis, however, is for a “moratorium” on new laws affecting the alcohol industry. The Wine and Spirits Trade Association (WSTA) is lobbying for all UK governments to “suspend the introduction of any new legislation” that comes with a cost to the drinks sector “until we are well clear of the current crisis”.

The demand is a reaction to the Scottish government’s decision last month to press ahead with a longstanding plan to introduce a deposit return scheme. First proposed by Nicola Sturgeon in 2017, the new law to tackle waste and carbon emissions will see shoppers pay a refundable deposit of 20p on drinks bottles and cans and will see more of the costs of managing waste passed from taxpayers onto the companies that produce the goods.

The drinks lobby, which has fiercely campaigned against the scheme in its current guise, has slammed the decision to proceed with it during the pandemic as “completely insensitive”.

The WSTA declined to comment.

Influential moves

While lobbying regulations in countries such as the US mean that Americans can see which corporations are spending near-record sums petitioning Washington, there is no oversight of who is pursuing influence in the UK. This is by design. David Cameron’s government refused to introduce an effective register of lobbyists.

Access to government is essential for lobbying to be effective. And some industries are perceived to enjoy more access than most. For example, both of Diageo’s lobbying agencies are run by former Number 10 communications chiefs. The former boss of Scotch Whisky Association, of which Diageo is a member, is David Frost, Britain’s chief Brexit negotiator. The departing chief executive of the civil service, John Manzoni, is joining Diageo’s board later this year.

Lobbyists such as George McGregor argue that “ethical, open and transparent public-affairs activity” is an “essential part of our democratic process”. Oliver Foster, Pagefield’s chief executive, said: “Now more than ever, it is critical that any individual or organisation wanting to change government policy finds ways to make their voice heard.”

However, Sarah Clarke of campaign group Unlock Democracy described lobbying in the UK as "opaque”, and that “the public is in the dark about how the government is being influenced and how much is being spent to do so.

“Those who can afford to lobby can exert disproportionate influence,” she added, “leading the government to make political choices that favour private profit over public interest.

“This crisis has seen a suspension of many democratic processes and while some measures are necessary, this shouldn’t be used as cover to roll out a corporate-driven agenda.”

This report is part of our Global Health project, which has a number of funders including the Bill and Melinda Gates Foundation. None of our funders have any influence over the Bureau’s editorial decisions or output.

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