Evan Davis
Hello, everybody, to those watching live, to those watching the recording of this Corporate Leaders Series: Business Conversation. Delighted to have Kevin Ellis with us of PwC. The plan is for Kevin and I to chat, I don’t know, for up to maybe half an hour, and then to open up to those who are watching live. This is on the record. If you want to leave a question, please, you can put it in the Q&A box. We prefer that to the chat facility. The chat facility has been disabled. Put your question in the Q&A box. I might call you to ask your question. If you’d prefer me just to read your question, I will just read it. Let us know, as you put your question on the Q&A facility, and you’re very welcome to tweet about this event using #CHEvents.
Now, at this point, I would normally give a long biography of our guest, but Kevin Ellis has had a rather PwC career, so I can’t outline the 20 other firms he has worked for on his way. He joined PwC in 1984, on the graduate training programme, qualified as an Accountant, specialised in turnaround and crisis management support to organisations. Crisis management, the most fascinating bit of any role, I think, in consultancy. Has been working on that in the public and private sectors for more than a couple of decades and then went into management at PwC.
Kevin, I have to start, probably dredging up a rather painful experience of PwC, the Oscars 2018. Talk about crisis management. This was PwC handling all the backstage logistics, handing the wrong envelope to Warren Beatty and the wrong Oscar being awarded. PwC probably more in the news that week than any time in its entire history, I’m imagining.
Kevin Ellis
I think we get challenges in any leadership role, in all kinds of shapes and sizes. I think, probably, the story that I always reflect on is that when it was all said and done, we were appointed the following year and we’re still doing it today.
Evan Davis
I didn’t know that, actually. I thought the contract had changed, so that’s fine.
Kevin Ellis
Useful to know.
Evan Davis
You’ve worked a lot on crisis, but you actually became involved in the management – Managing Partner, I think in – just after the referendum, the Brexit referendum. So, you’ve been through what one might call the turbulent years, I guess.
Kevin Ellis
Yeah, no, 2000, we – I was appointed six days after the referendum as a Senior Partner. And you can imagine, I mean, I think, basically, nearly all of the corporate clients, which is our main bread and butter, sat on their hands for about three or four months. So, it was incredibly turbulent time, when you’re in a leadership role, to keep the confidence of what is a people business, there’s 22,000 people, during turbulence, when you’re in it as a kind of, as a newbie. So, that was really quite challenging. I got re-elected a year ago, or a year and a half ago, and literally straight after I got re-elected, we had COVID. So, as I say, every time I think the decision’s made and I’m in these leadership positions, we have something to deal with.
Evan Davis
Hmmm, and you had experience in crisis management and maybe that came to help, I don’t know. We’ve – big crises, corporate crises you’ve worked on, maybe you’re not allowed to tell us, but presumably, you knew how to, kind of, manage things at turbulent times?
Kevin Ellis
Yeah, I think, actually, probably the most interesting thing was the COVID crisis, because we got 22,000 people, went sent them home to work from home a week before the lockdown in March 2020. And what you really learnt then was the uncertainty that washed throughout 22,000 people. Average age of 31, but a lot of them were in their first year, living in accommodation that they chose to sleep in and not work from, and not necessarily with friends, just with flatmates, and there was a real fear out there at the time. And what we found, and I learnt as a leader, was you have to fill the vacuum. So, we were doing constant livestreams and webcasts with Psychiatrists alongside me, talking about personal resilience, talking about the actions people can take to look after themselves, we thought that was really important.
And at the same time, people were really nervous about their jobs. And I originally said, “Look, everyone’s job’s safe. We’re not going to use furlough; we’ll see it through. We’re strong enough to and it’s the right thing to do.” No-one believed me. So, what I actually did then, was I actually went to Sky and did Sky News, and I did opinion pieces in both the Daily Mail and the FT, so that our staff and their families heard me say their jobs were safe, to, kind of, if you like, reach through that uncertainty and give them that comfort. And then, I think people began to believe they could focus on their work and working from home and all the challenges we faced as a world, then, in a pandemic, rather than worrying about whether they could pay the mortgage or put food on the table for their families.
So, that was a really weird time. I don’t think anyone had a playbook, no-one had a crystal ball, and no-one knew how long it was going to go on. But I think, as you said at the start, having been involved in a number of insolvencies and restructurings, a lot of it is about communications and making sure that you fill the vacuum and don’t let uncertainty and speculation cause undue stress. There’s enough stress around, anyway.
Evan Davis
Yeah, it’s actually – that is a really important business insight that not knowing and it feeling like it just is adrift, is a massive cause of stress and sometimes, even when you don’t know, you just have to say clearly that you don’t know and…
Kevin Ellis
Yeah.
Evan Davis
…what it is you don’t know and what it is you do know and what you’re thinking about what you don’t know.
Kevin Ellis
And that’s exactly true. I mean, you’ve never got perfect information when you’re in a situation like that. But again, my learning was if you leave it silent, then the worst case of catastrophisation will take over and with the day’s world of WhatsApps and tweets and Twitter and the like, then that just envelopes everyone. So, I think I found it was really important to say what I didn’t know, what I did know and, kind of, deal with their questions.
We did a livestream, I think in week one, with a Psychiatrist, Dr Hopley, and we did it as a livestream and he answered questions. We talked about resilience, and he talked about catastrophisation and the need to exercise and the need – you know, the basic, kind of, obvious things, but is important to talk about them and, also, I talked about what I was doing. We thought it was important to, kind of, humanise it. It was important that it was the leader humanising it, ‘cause I felt the uncertainty and we had to share that. 12,000 people watched that live, we could tell from the screen, and immediately we saw that, we realised that this was really important to fill the vacuum. So, we got the kind of, if you like, live feedback on the reaction and that, again, kind of, helped form our – formulate our thinking about how we addressed uncertainty in what was a unique time.
Evan Davis
Right, now, our main theme tonight, Kevin, is really, I suppose, the business landscape and we’re thinking – I – of three important challenges, really: climate, skills and levelling up, I think is the phrase that everybody’s using at the moment. Rebalancing, I suppose you might call it. You conduct regular surveys. PwC does regular business surveys and how much – in terms of these business challenges, how – what is business thinking at the moment? They’re all saying a lot about climate change, I know, but is that really what’s causing them to lose sleep, or is it cybersecurity, which I know came out very highly on the recent survey? What – where do you think business is on everything that is coming their way over the next decade or two?
Kevin Ellis
I think the – look, there’s an immediacy about certain things, and the immediacy at the moment is what we’re all feeling, which is the, if you like, the structural imbalance of the workforces of the UK. Means everyone I speak to at the moment is short of staff. They’re busy and they haven’t got enough people. It’s not just the fact we’ve all now learnt that the average age of the HGV driver is 56, the average age of the butcher is 53 and what does that mean for, if you like, Christmas turkeys and deliveries? It actually goes beyond that. Businesses like mine, we’re significantly under headcount. Nearly all my clients are, as well. And if you like, we – when we looked for the 4th Industrial Revolution a few years ago, you could see that loads of jobs were going to be lost. I think it was – the estimates at the time were about 30% of more manual labour and simple lab – simple jobs were going to be lost to technology and automation, but they will be replaced by other jobs. And therefore, the big challenge wasn’t the job losses, it was the need to reskill.
I think through the COVID pandemic and working from home and the use of technology at home, I think we’ve all learnt that technology jobs are more fluid, and you can actually reskill, and they become location agnostic. But the retraining that’s coming now with the carbon challenge, we’re going to see sunset industries in the carbon space, effectively, have to shrink, and sunrise industries and the technology and the new green industries will rise, but there won’t be a complete match. And what you’ve got is a lot of regional clustering around those sunset industries, extraction industries, energy industries. And so, I think there is a real risk that unless we intervene and get the insights about what’s happening, then you could have that regional disparity, that fear of being left behind, coming again, as we saw in – back in the 1980s, for anyone who’s old enough. And then, if you like, the political answer from my local MP, Norman Tebbit, was “Get on your bike,” and it didn’t work then and it won’t work now. And so, I think there is a real need, as we deal with the shortages, the retraining, it’s like the war to create talent, rather than the war for talent. I think understanding that regional disparity is really important. You know, we exist in the UK in 20 offices right across the country and you can see that you’ve got to rebalance the country to get the jobs in the right places for us as a business, ‘cause you get a price advantage and economic advantage, and at the same time, it’s the right thing for those regions.
Evan Davis
Is it – I do wonder whether, though, what you might call the green jobs opportunity, whether that might be more spread out? Those jobs are not going to be in London, are they? They’re definitely not going to be in the big city of London, the services capital of the UK. They are going to be spread around, aren’t they? Jobs on maintaining offshore windfarms, I don’t know, carbon capture, cap – hubs that are being created in two to five different parts of the country, one would’ve thought these might be quite spread around, some of these jobs. They might be, like, almost, like, new manufacturing jobs.
Kevin Ellis
Sure, but you’ve got to be skilled to do them. So, we’ve just done a survey on this, and we looked at where the jobs are that are being created and where they’re being lost, and doing it by region. We’re going to publish that in a few weeks’ time. But the kind of, if you like, the headlines I can already see coming out of the survey is, “Where are you seeing the reskilling going on?” and there is reskilling going on. It’s in technology, it’s in professional services and it’s for Scientists. It’s not the people in the extraction industries that are losing their jobs. So, though the jobs might be regional, unless you reskill people for those jobs, we have an imbalance, again, as we have today in the shortages of lorry drivers and the butchers, and that’s the really key…
A really good example of that is we opened an office in Bradford in 19 – in 2019, and we did it in Bradford because our outreach programme for schools was showing that there was a significant cold spot in Bradford and people in Bradford weren’t going to our office in Leeds to work. We weren’t having employees moving 20 minutes by train to the Leeds office. We opened an office in Bradford. We found the quality of people we managed to recruit there for that office was really high. We have trebled the size of that office in two years and, again, we can have no trouble recruiting. When you ask the question of why people go there and don’t go to Leeds? They come from a lower social economic class. You find it – you haven’t got the confidence to leave your postcode for work. You haven’t got the cashflow to leave your postcode for work, and you don’t know that work exists in Leeds, ‘cause you don’t go to Leeds. And so, therefore, you need to create the ecosystem.
And then, what we’ve seen on top of that, and it fits with exactly, if you like, the experience of the 80s, is that you then find that the people who actually get the jobs move on quite quickly, because they’re on the social mobility escalator and once they get a job, they get cashflow, they get aspiration, they get opportunity. And actually, we have a faster turnover rate in Bradford than probably anywhere else in the country and we find other jobs and businesses set up around us take our staff, which is not great from our point of view, but in terms of the talent in that market, it’s very strong.
Evan Davis
This is Bradford, yeah, yeah, yeah. In the 80s, and it’s an interesting comparison, obviously, the shakeout was in a lot of routine manufacturing jobs. There was more of that in the 2000s, when a lot of manufacturing was offshore, it wasn’t there. Is your view at PwC that next time, it may be the turn of more skilled white-collar workers who perhaps think they’re invincible, but are not invincible? Working from home teaches us geography may not be as important as we thought, so maybe we can open up services to more international recruitment than we thought. When I say to my employer, “I don’t need to work – I’m going to be working from home and I’ll be up in York doing my London job from there,” the employer may say, “Yes,” but the employer may be thinking, yeah, well, why does – why do I need someone in York? I mean, I can get someone in the United States, or in India, or in any English language speaking place. So, that’s one.
And the other is whether AI, the technological development on that front, may be hitting the white-collar jobs, the Actuaries, possibly the Accountants, I don’t know. Whether those are the kind of, the next round of jobs that go through massive transformation.
Kevin Ellis
Yeah, I think that was, kind of, the thinking a couple of years ago. If you look at the most recent surveys, the World Economic Forum survey of that issue was saying that, really, “As many jobs are going to be created as lost in those sectors, because with AI, you do need the human impact, the human insight.” And if you look at my business, or you look at, actually, most of the clients I’m talking to at the moment, I think most people are underestimated their need for people and therefore, that’s why you’ve got significant job shortages, people needing to retrain more. You know, we recruit about, in the past, probably about 1,800 school leavers, apprentices and graduates, and that gradually has dropped down to 1,400 with robotics and AI, and now we’re moving back up again. And that wasn’t what we expected, but that human insight, that human connectivity, is really important.
But the second point you make about that working from home, or working remotely, I firmly believe that the only long-term, sort of, advantage of any organisation is its culture, and we need our people in the offices at least three days a week, or they don’t learn, they don’t network. We’re trading off past capitals of learnings and at the same time, you lose something in culture. And so, I think, you know, for me, and I’ve spoken quite a lot about it, I would like to think that people we recruit save their train fare and lose out on their careers because their careers are blighted because other people who do come into the office three days a week get those benefits, get those networks, get those observation learnings. It’s not the book learnings, it’s, effectively, the observation and learning from their peers and other people around them as to how to do the job. So, I think we make – must make sure people understand that, so they’re making the right choices about how they use office and how they use home.
Evan Davis
And is three days the hybrid benchmark at PwC, three days…
Kevin Ellis
Well…
Evan Davis
…in the…?
Kevin Ellis
Yeah, it’s interesting. I – the – again, no-one’s got a crystal ball, I wouldn’t claim to.
Evan Davis
No.
Kevin Ellis
What we did, though, was we surveyed our people and we said, “Well, how many days do you think you want to come in?” and effectively, the average was two to three days. So, we said, “Right, okay, that works for you. Let’s see if it works for us.” I’ll give you a better view in a year’s time as to whether that’s working overall, but definitely, not coming in at all, not getting the ability to network, not getting the ability to learn from others, and at the same time, there’s a mental health resilience point about people being on their own and, again, catastrophising whether it’s a text, an email or a message, and as a result, not making the right decisions.
Also, there’s a hierarchy point, as well. I must admit, I had noticed, and I think you’ve done a lot of Zoom meetings, like I have, you do lose out on the flattening of hierarchy that happens in an office, when people can ask questions and discuss. You do find a lot of Zoom meetings do become show and tell and more hierarchically driven. So, I think…
Evan Davis
Do you think…?
Kevin Ellis
…for younger employees…
Evan Davis
Whereas some employees…
Kevin Ellis
…and our average age is 31, it’s really important.
Evan Davis
So, some think the Zoom is – has made the office less hierarchical. I think there – it’s a sort of, interesting question, that.
Kevin Ellis
Not on meetings it hasn’t, because now, what I find, I don’t know about you, but a lot of people will tell me the same, is that when I’m working from home, I don’t get a lot of junior people organising calls with me. If I’m in the office, they’ll walk in and ask me a question.
Evan Davis
Yeah, and it’s the serendipitous exchange, isn’t it, that we miss now?
Kevin Ellis
Which is important for innovation and ideas and that’s really the lifeblood of business, is inventing new ideas and the serendipity and effectively, that uncertain, kind of, sharing of knowledge around the coffee machine or a water cooler is actually quite an important part of business life.
Evan Davis
Absolutely, absolutely. Let’s talk about the green agenda. We’ve talked a little about, you know, the change in jobs. COP26, starting in three days now, I mean, are you hopeful the world is going to rise to the challenge and are you hopeful that business will do its bit as contribution to that?
Kevin Ellis
I think, as I say, at the moment, I think the jury’s out for COP as to how it happens, but I do think business is moving very fast. You know, I would say that it’s probably now the number one conversation topic, both in terms of commitments, but also now people putting money behind it, putting data behind it and evidencing the journey they’re on, because their employees and their consumers, and now the investors, demand it. And that’s a switch in the last six months. Number of people have said to me, particularly in certain industries, like construction, that decarbonisation is now alongside health and safety for them. That’s a massive switch. So, I think – I’m not sure what the governments and the Politicians will do at COP, but I think there will be a lot of noise and movement, in terms of business and business actually evidencing the journey they’re on and trying to, effectively, get competitor advantage, in the eyes of the consumer and investor, by the steps they’re taking. That’s quite a big switch.
Evan Davis
The most interesting thing you said there, for me, Kevin, was it’s become this conversation “in the last six months,” ‘cause you’re really saying it’s quite a recent, not conversion to the issue, but a recent intensifying of effort, concentrating of the mind on the issue.
Kevin Ellis
Yeah, I think, as I say, as the world has, kind of, put everything on hold with the pandemic, every conversation you had prior to that was, kind of, pandemic and uncertainty of cashflow, supply chain and everything else related. I think as that, kind of – as we make the small steps back to normality last six months, then effectively, everyone now is focused on that, and I think the consumer demand is there. I mean, I did a livestream with our staff on this topic with an outside expert and it was interesting, all our staff’s questions was about what could they do and how do we determine what the right product is? You know, behind that mobile phone, is that mobile phone’s part created by child labour or by an adult’s labour, whose return enables them to pay for their child to go to school? Once that becomes transparent in the eyes of the consumer, it will make a massive difference? And that’s where people are going. They’re going there for competitor advantage for business reasons.
Evan Davis
I do have to say, though, Kevin, I do worry, ‘cause you do hear a lot of talk about carbon neutrality and “We’re going net zero, we’re going to do this” and “Our flights are going to be carbon neutral flights by 2030,” and this kind of stuff. And I do have two worries and one is that business will drown in waffle about – and hot air of talk and chat about all of this, and it won’t be quite as substantive, and there will also be a lot of phoney green accounting. Now, I don’t know who the green accounting Auditors are. I don’t know whether PwC do that, but I just – it really feels as though we need some objective Auditors to say, “This is co…”
Kevin Ellis
Yeah, no, I think it’s – and I think you’re right and I think it’s easy to be cynical, and I think because it’s been a debate that’s going for a long while, that cynicism exists. But I think you’ve actually got to then say the mood of the consumer and the mood of the investor, and particularly the investor community, has moved. And when people are looking at the fact that you don’t want to be investing in something where the price will go down because the consumer has moved, and that is infecting the investor community. They’re looking now for consumer signals as to where they put their pots of money. That’s quite a big switch.
I agree with you on the cynicism, because this is all having to move quite fast. For example, if you take the FTSE 350, 71% of the FTSE 350 have made commitments on net zero. Only 4% so far have put data behind it. So, before you even get to who the green Auditor is, you’ve got to actually have the numbers. But that will move once you see the consumer signals moving and the investor coming into everything. In the past, there hasn’t been the demand. Once the economic demand points to there, because of consumers and because of investors, corporates won’t have a choice.
Evan Davis
Let’s talk just briefly about the levelling up agenda. The Prime Minister uses this phrase a very great deal. Do they talk to you about this? Do you know what it means? They’re – do you – are you part of this?
Kevin Ellis
No, the levelling up, I mean, look, for us, really, it’s this. We’re the number one social mobility employer in the UK, so I know, ‘cause we ask people to join us and we have 4,000 joiners a year and we’ve got 22,000 people. You know, and it’s somewhere about 8% who join us from free school meal families, and that evidence is something which matters to us. But again, for a business like mine, the reason you do it is not just ‘cause it’s societal good or it’s, kind of, a nice thing to do, it’s economically critical. My 26,000 clients are drawn from right across the UK, all kinds of backgrounds and people are chosen not because they’re technically good. That, kind of, comes with the brand. They’re often chosen because they speak the same language and have the same values of the person buying. So, therefore, if my workforce is not representative of the market that I serve, i.e., 26,000 clients, a lot of which are entrepreneurs, majority of which are private business, then I won’t be relevant.
And, you know, once I explain that again to my partners that we’re not doing this because it’s important to be diverse, both gender, sexual orientation, colour of skin, it’s important that we actually meet our market, otherwise, we won’t be economically successful. And therefore, as a result, we share that data on our pay gap, both our Black pay gap, our ethnicity pay gap, disabled pay gap, our – and gender pay gap and we’ve done that for a number of years and it actually, on our Annual Report, it’s the most read part of our Annual Report. More read than my Chairman’s statement, amazingly enough, hmmm, not that I take that personally.
But I mean – so, we know that everyone that wants to join us knows about it, but we also know our clients are watching it and our clients want us to be like them, because if we’re not, we’re not economically successful. That, I think, is more important than words like levelling up, ‘cause I think once there’s an economic driver for a business to do it, then it becomes longevity and not a, kind of, a fashion.
Evan Davis
Now, I want to remind those watching live, you’re very welcome to submit questions. I’ve got a couple here and I’ve got more – I’ve got quite a lot more for Kevin, but I’m going to take a – I’m going to put these couple to Kevin, ‘cause they actually relate to something we’ve already talked about. Any questions in the Q&A equivalent of the chat box, but not the chat box. These are working from home questions, Kevin. I mean, I’d – obviously, this is an absolutely enormous societal change we are potentially going through and people are fascinated in it. So, this is Lauren Cornwall and, Lauren, if you don’t mind, I’ll just ask it, and Lesley too, because we’re going to take these two together. Lauren says, “What’s the best way to tackle the fact that many women have left the workforce since the pandemic? Do you see examples of organisations able to successfully attract and retain women?” And then Lesley asks – so, that is an interesting one around how wrongs were gendered at home during working for home and perception that that played to that.
And then, Lesley asks, “A lot of employees who thrive with working from home now feel pressured to come into the office, so as not to miss out on opportunities. What hybrid models and methods are you considering to accommodate those who want to work from home, but still gain soft skills and access to learning opportunities remotely?” So, are you really going to force people to come in for the sake of their career, or what are you doing to accommodate those who really do just want to work from home, maybe ‘cause they have long comm…?
Kevin Ellis
Yeah, well, I’ll take that one first and then I’ll go back to the gender question. But on that one, I think as long as people know what they’re missing out on, there is a risk. I mean, we’re a business that makes a lot of judgment calls. There is no doubt that judgments call is safer if you have your team in the room discussing it. At the same time, our average age is 31, but I take on 1,400 school leavers, apprentices and graduates every year and the year that joined in 2020 aren’t coming into the office as much as the year that joined in 21. The year that joined in 2020 joined virtually, the year that joined in 21 joined in person. Now, they might all be benefitting from working from home, but there’s a risk that they don’t know what they’re missing out on, in terms of that ability to network, that ability to observe. So, we’ve been very productive from home. I do worry that people are going to lose out in their careers because other people will have better connections, better observations and better learnings. So, I think, from my point of view, people can work from home. We’re not forcing them to come in, but I think we need to say that there is a risk they’re missing out and as I say…
Evan Davis
Actually…
Kevin Ellis
I’ve got 85% of my people back in the office, compared to pre-pandemic, on Tuesday, Wednesday and Thursday. But actually, if you look at the age range, the under 30s have come back less than the over 30s, and that’s what worries me, because the over 30s probably have a more – a better understanding of what they get from the office than the younger staff. And so, I think it’s, kind of, making sure that all our employees know the choices they’re making, so they don’t lose out and say afterwards, “I wish you’d told me.”
Evan Davis
I think Managers will find it always easier to make judgments about people they’ve worked with face-to-face than only worked with online. And if you’re making choices about people and you’re confident of a choice about this person and not confident about that person, you’re – it may be a negative choice about somebody, but if it’s – if you feel positive about yourself, you’ll want that choice to have been made.
Kevin Ellis
Yeah, and also, I think, although I speak from my own personal experience, I learnt most by observing how other people did things than I’ve learnt out of a book. Whether it’s running a meeting, whether it’s making an assessment, and that ability to watch someone else do something live is much – is impossible, virtually, online. It’s impossible online. And so, I think there is an element that you can do brilliantly from home, and that’s why the three days is, for me, quite an interesting indicator. I mean, it’s not written in stone and people make their own choices.
On the gender point is really interesting, again. I mean, so, we measure the gender pay gap and the gender pay gap has closed for us and actually, we haven’t seen that loss of female talent during the pandemic accelerated. But we’re very concerned that, if you like, as we employ more Technologists – we’ve just launched our tech hub in Manchester a few weeks ago, as we employ more Technologists, we know that the STEM subjects, from where those people will be drawn, are less attractive to girls in school, and they make the decision quite early. So, what we’ve done is, we’ve reached into schools and done what we call “Tech She Can.” We’ve included another 150/200 companies in it to try and change that debate very early in the school education process. And at the same time, we do target a more balanced recruitment in technology to avoid the pay gap getting worse as you employ more Technologists going for this, kind of, switch in employment skills. And so, we’re finding we’re recruiting 30% female in the tech space, which again, more role models and again, helps that, kind of, if you like, the risk that technology becomes a non-female sport and therefore, in future the pay gap widens, and you have less role models.
Evan Davis
Yeah. Well, you mentioned skills in that answer, Kevin. We’ve got another question here. This one is from Kristen. I’m not going to ask – I’m not going to pronounce your second name, Kris, but Kristen asks, “What type of skilled education and training does the UK need, and particularly now, outside the EU?” And so, this is the – well, this is such a big agenda, isn’t it?
Kevin Ellis
I think that…
Evan Davis
Well, what do you mean? Do you mean…?
Kevin Ellis
…there is a…
Evan Davis
It’s going for some many decades, I don’t know where, you know, where it has to change. We get T Levels and then another – NVQs and every three years you get a whole new set of reforms. But what needs to happen on skills?
Kevin Ellis
Yeah, I don’t think anyone’s going to solve it. I don’t think governments are going to solve it on their own. This has to be a collaboration between governments, business and educationalists. And whether you’re taking school leavers or you’re identifying areas where you can collaborate around recruitment, like the tech hub in Manchester, working with the universities up there and working with the Mayor, Andy Burnham, and ourselves, we can make a difference. And GCHQ have moved an office there, NatWest have got offices there. So, you can, effectively, create, in fact, the only eco – your own, kind of, technology ecosystem. But I think the – at the moment, there is a danger that everyone assumes that this has all got to be – say, it’s got to be changed by policy at government level.
I think business has got a huge role to play in that training agenda, alongside educationalists. So, I think technology’s massive. You know, I said – I was with these university students on Tuesday doing a talk about exactly this and my two messages to them was, one, “Choose your employer who can give you the technology skills you might need when you change jobs in five years’ time, just making sure that you are, effectively, relevant, ‘cause technology is moving at such a pace and will change your jobs and change – you invest in your degree. Don’t lose the learning as you go into employment.”
And the second point was really interesting. I was asked about, you know, “What’s the biggest learning in, kind of, work, coming from university and education into work?” And I said, “It’s the resilience to fail.” I said, “For me, people assume that people who are successful at work never fail.” I said, “Most people at the top of industry have failed many times. Only through that have they got both the resilience and the experience. You learn more by failure than by success.” And that was quite an interesting debate with the university students on Tuesday.
Evan Davis
Yeah, indeed. We had a budget yesterday in this country, Kevin. I don’t know whether you have any particular budget thoughts. Obviously, the big macro picture was Chancellor really just choosing to put money back into public services and something of a repair job going on, on there. Was there anything you took out of the budget? He’d certainly referenced skills and levelling up and business investment and didn’t mention much about net zero, but he gave green investments a nod. But what did you take out of the budget?
Kevin Ellis
I think a lot of it had been leaked ahead of it and there were a lot of important giveaways to public sector and support public sector. I think the minimum wage was important and that 1.7 billion, if you like, into levelling up and, effectively, trying to support the regions in many different ways. We mentioned earlier about that need to be able to move around regions and again, that investment in local transport in regions I thought was quite a smart way of trying to, effectively, both make an infrastructure investment, but at the same time, acknowledge the need to be able to have that agile workforce and give people freedom to move. So, I think there were some good things in there. I think – I was asked quite a few times by Journalists yesterday, you know, “Did it go far enough?” I said, “The trouble is, you are trying to correct for a pandemic, and I don’t think any one budget statement is going to do that in one go. But I think it’s really about what happens, kind of, to the economy in the future, over the next year, that will make the biggest difference.”
Evan Davis
Yeah. I guess one of the fears businesses had is that the Chancellor, or maybe even more the Prime Minister, doesn’t have quite such a constructive view of the relationship. It was very interesting in the March budget when there was a fiscal repair job to be done, taxes just had to go up 20 billion, really, back onto corporation tax and on business. Yesterday, no, there was a little cut in business rates, but basically, the Chancellor needs the money. There wasn’t going to be the big, massive reform of business rates that business would like, and I wonder whether you think the relationship, the government-business relationship, is working well at the moment?
Kevin Ellis
We have a lot of connections with government. I mean, you see it a lot internationally. So, we do a lot of – we have a lot of back offices, we have a lot of overseas work, and quite often, now, what I notice post-Brexit is we’re making a big investment, for example, in the Middle East at the moment and the Foreign Office are really interested in that. ‘Cause again, it’s a source of soft power and influence when companies from the UK are doing things in Cairo, in Saudi Arabia, around that part of the world and the UK Government wants to have influence there. They’re very keen to link up with business there. So, I think you’re seeing in, if you like, in the reality, quite a lot of connectivity with business, but sometimes, in the headlines, it’s easier to be slightly more soundbite rich.
Evan Davis
Well, that brings me to another couple of questions I want to ask you, which are really about Consultants and government and the role of Consultants with the private sector. By the way, don’t let me hog this, folks. If you have a question, put them in the Q&A box, but yeah, we have a few minutes left. I wonder, Kevin, whether you worry, as someone running a big firm of Accountancy Consultants, do you worry that we have reached peak public sector consulting role? That Test and Trace, which is not perceived to have gone well, maybe it gets an unfair rap, maybe it was never possible for it to deliver what people hoped it would deliver, but – and maybe no-one else managed to get it to work, either, but we certainly pumped in tens of billions of pounds on something with a lot of Consultants wrong. And a big criticism, really, of how much was being paid, the prices that were being paid and the delivery that we got and the value we got out of Consultants. I wonder whether government is going to look back at the pandemic and say, “You know what? We need a capacity to govern within Whitehall, within actual public sector, within the civil service, and we cannot, as soon as anything needs to be done, be calling up PwC or any of the other Big Four and expecting them to do it all for us.” Does that worry you? Is that a fair – is there a fair criticism to be made of the Consultants?
Kevin Ellis
I think where we try and focus our consult to the government is in areas where we’ve got expertise that they don’t have. We were involved in setting up British Business Bank. You know, you needed very detailed regulatory knowledge, you need specialist banking knowledge, you need specialist technology knowledge. It’d be unlikely that that would be sitting around in Whitehall, ‘cause they never would’ve done it before. So, where you need that kind of knowledge, which is specialised, that absolutely fits with our model, and I can see that being used. I think where the fair criticism comes, when people say, “Oh, you’re just getting body shops. You just need volumes of people,” and probably they’re more existing around Whitehall.
And so, we saw last year loads of comments on the work we did for government, whether it was pro bono or for fees. What was interesting in our growth, and we grew our business significantly last year, it was mainly in the private sector. Our public sector, kind of, stayed static through COVID. But again, I think it’s, kind of, making sure, and I think government will have their enquiries into that, but I think where they’re specialist skills, it’s unlikely that you’re dealing with unique situations that those skills will exist in government. I mean, like, to set up a bank, I mean, they won’t have those skills. Test and Trace likewise, it’s unlikely they’ve got those skills, because they’re building something from scratch. Whether what they did was right or wrong, that’s a decision for government. That’s a decision for Politicians. But when you actually need those skills, you’ve got to go and buy them somewhere.
Evan Davis
I mean, obviously, the interest for government is, and a lot of the emphasis is on delivery. There’s no point in having dreams, if you don’t actually deliver them, and there’s no point in throwing money at things, if you don’t spend it wisely and you don’t deliver it well. So, maybe there’s a role for Consultants in delivery. But I mean, I’ll pick – just picking up, you actually did some pro bono work for the UK Government.
Kevin Ellis
Yeah, and again, you know, again, it goes throughout – for a people point of view, we did that around the vaccination programme. You know, what – one of the things they wanted to do was to make sure that they could have the public support for ensuring that elderly people would come in to get their vaccines at the start and therefore, they had to vet people and the like. And that was an easy thing to do, because again, when you’re spread across 20 offices across the UK, you can provide that support quite easily. And again, it’s quite important for our people. Our people were really keen, from a kind of, purpose point of view, to see the role that they’re playing. So, again, it’s a win-win for us. If you’ve got your people satisfied and engaged ‘cause they’re playing a role that they can see is being important to the country, they’ll do it. And of course, from our point of view, it’s useful to us to be seen to doing that from both the client and our people point of view.
Evan Davis
You actually said, you said last year was a busy year, interesting, and secondly, private sector was a bigger portion of the growth, so to speak.
Kevin Ellis
Yeah. Yeah, no, I think last year was really interesting, as again, you go back to March 2020, the start of the pandemic, you know, when we were trying to, kind of, keep everything together. We saw, kind of, revenue drop month-by-month, about 15% a month and you couldn’t quite see it turning. And then, what you saw happen in October was that, suddenly, it was a health pandemic and not a financial crisis, as we’d all sat through in the past, and therefore, private equity, sovereign wealth and companies were awash with cash, and this was a deals-led recovery. So, you, kind of, saw, kind of, FOMO, if you like, fear of missing out, driving deals activity like you’ve never seen. That, combined with the digitisation agenda, and then combined, in turn, by the supply chain, caused us to be incredibly busy. So, our year, which normally runs from – it does run from July to July, if you like, July to June, had a kind of, two halves. The first half was dreadful, and we were, kind of, hoping to manage through, and the second half was incredibly busy. So, we’re really pleased that we actually made a decision to hold onto all our people, ‘cause suddenly, we found ourselves understaffed, rather than overstaffed. But that’s the…
Evan Davis
Yeah, well…
Kevin Ellis
That’s the business, isn’t it? It changes in a nanosecond.
Evan Davis
Yeah, no, I mean, I asked whether the public would reach peak Consultant in the public sector? Do you think you reached peak Consultant in the private sector, that the…
Kevin Ellis
This isn’t a [inaudible – 42:25].
Evan Davis
…[inaudible – 42:26] well, kind of, intellectual property in-house?
Kevin Ellis
No. No, I can see there being a huge boom now, both – in all of those three markets and then, supply chains are all going to have to transform because of, as we said earlier, the decarbonisation. People are now going to take an interest in what their supply chain actually does, in terms of carbon footprint. That will cause transformation of business. When people transform, they’ll need Consultants because they’ll be doing it for the first and only time. So, as a result, I think there’s going to be huge growth in the consulting and support clients’ world, probably for the next four or five years. I can’t see it ending any time soon.
Evan Davis
Yeah, so, the Consultant – when things are going well, everybody wants Consultants to help them with the expansion and when things are going badly, everybody wants Consultants to help them with the contraction.
Right, last call for any questions on the Q&A box. I’ve got one more, because we’ve talked about consulting, Kevin, and we’ve talked about the kind of, national agenda of everything that’s changing. There’s one other thing, we should go back to your roots as an Accountant, ‘cause accountancy’s had a difficult time in some respects. I mean, I – plenty and plenty of major, major cockups in accountancy that have not spotted horrors. Probably the worst, nothing to do with PwC, I don’t think, it was Wirecard, the German company, that despite warnings from Journalists, was – the Accountants seemed to be the last to know. Where is – where – what is PwC’s thinking about the big Auditors, the conflicts of interest issue, when you’re Consultants, you’re hired by the company you’re auditing, the change in structure of the Financial Reporting Council into a new body that will be, by all accounts, expected to be a bit tougher, really, on – in its regulation of the accountancy profession? What – how big a headache is that for those of you running PwC?
Kevin Ellis
Look, I mean, it’s all about quality. I mean, at the end of the day, the investment in the UK and investment in the markets need the confidence in the governance of the UK, and that audit plays a major part. And therefore, the investment in quality that we’re making, and other firms I know are making, is really important. What you’ve always got to remember, and I’m not belittling it, is that we sign 4,500 audits a year and, you know, if a few go wrong ‘cause of human error or because of a fraud, no-one’s ever going to talk about the ones that go right. And those ones that go right create the jobs, underscore the financial markets. My job is to make sure that they all go right. I mean, there will always be human errors, there will always be business failure, ‘cause we’re in a market economy. The trouble is every time there’s a business failure, everyone says, “Where’s the Auditor?” My worry more than that is that it actually deters people from being Auditors and that will cause a bigger problem in the long-term, from a quality point of view, ‘cause what you want to do is make sure the profession is as attractive as possible, to get the top talent into it, ‘cause by that, you improve the quality and therefore, we make the UK and the auditing profession that underscores the financial markets even stronger and even safer.
Evan Davis
I mean, I’ve got to just – won’t pick a fight with you on what you’ve just said, but I’ll just pick you up on it. Of course, 4,000 go right and one goes wrong, I absolutely accept that, but it may be that the 4,000 would’ve gone right without you and we only discovered that the other…
Kevin Ellis
Yeah, but…
Evan Davis
…had not…
Kevin Ellis
Yeah, you can…
Evan Davis
Not…
Kevin Ellis
…say that, but…
Evan Davis
If one goes wrong, ‘cause only one was going to go wrong. Do you know what I mean? It’s…
Kevin Ellis
Yeah, but I know the effort that goes into it, ‘cause I hear and I see the number of times that either we qualify accounts or we challenge accounts and accounts get changed because of our challenge, and that happens a huge proportion of the times. Not ‘cause everyone does anything wrong, than sometimes it’s more complicated, but we spot things. But that never reaches the external world, because that’s not in the interests of either the governance of the company or the external markets. So, you can only really focus on the ones that go wrong and that’s normal. It’s like Plane Lands Safely is never going to be a headline.
Evan Davis
So, PwC here to stay in its current form, a pretty big tens of thousands employer in this country and, you know, massive globally?
Kevin Ellis
Yeah, no, look, and the other thing on the – on that point is that the world is never going to get simpler. It’s only going to get more complicated and therefore, the need not just to be an Auditor, but to be an Auditor, which is a multidisciplinary firm with the insights that being – doing insolvency give you, in terms of uncertainty, or consulting in specific industries give you, in terms of the insight for that audit, is really important. An audit only firm would be far more risky, in terms of quality than a multidisciplinary one.
Evan Davis
I think that is a good note for us to end this. We should keep these Zoom experiences a little shorter, perhaps, than we would if we were face-to-face, because we know it’s a little bit more taxing to the viewer. But Kevin, I really appreciate this conversation. We’ve had a very good broad brush – broad ranging conversation, from the Oscars through to accountancy consulting and Britain’s mission to level up, go green, and improve skills. We’ll leave it there. Kevin Ellis, it’s been a great pleasure. Thank you so much.
Kevin Ellis
Thank you very much. See you.
Evan Davis
Thanks, and thank you all for watching.
