Recent Forum: Hausfeld
Our thanks to Tom Bolster and Julia Peretz of Hausfeld, who hosted our meeting on 21 January 2020.
Tom Bolster reminded us that Hausfeld is a leading international firm with particular expertise in antitrust, financial services, and commercial litigation. Its London office was established only 10 years ago by its founder Michael D. Hausfeld, to specialise in cases concerning the abuse of market dominance, and since then has grown from six to sixty people. Julia Peretz outlined some significant aspects of the firm’s activity:-
Competition litigation: it has the largest team in Europe and is one of the few claimant firms with substantive experience in taking cartel damage claims to trial.
Commercial litigation: its team handles complex, high value disputes, often with an international or multi-jurisdictional angle. In recent years it has been instructed the highest profile banking litigation cases arising out of LIBOR manipulation and interest rate swap miss-selling.
Human rights/consumer/environmental litigation: it litigates and advises individuals and groups, who have suffered human rights and/or environmental harms, and works extensively on climate justice.
The firm also carries out significant pro- bono work, representing, for example, Greta Thunberg on climate issues, individuals in employment cases, small companies in disputes with suppliers, and those with benefits claims against government.
Our first speaker was Professor Alison Wolf Baroness Wolf of Dulwich. She is the Sir Roy Griffiths Professor of Public Sector Management at Kings College London, and sits as a cross-bench peer in the House of Lords. She specialises in the relationship between education and the labour market with particular interest in training and skills policy, universities, and the medical workforce.
She outlined the changes that have occurred in the UK’s education system for 16 to 18 year olds. A hundred years ago European systems tended to be quite similar. Students generally ceased full time education in their teens, when they left school or took up apprenticeships. Post school education focussed on the demands of employers and was responsive to local labour requirements. In the UK, despite there being a large number of independent schools, few students carried on to further education. Only a very small number went up to university and these were the future elite.
But the picture has changed dramatically over the past fifty years or so. In the early 1960s, only 4% of UK school leavers went to university, by the end of the 1970’s, this was 14%, and today more than 40% start undergraduate degrees. As a consequence funding has come under ever greater pressure. Student loans, larger class sizes and increasing student numbers have been part of the response, resulting in almost exponential growth in international students, who pay significantly higher fees.
The U.K. has a global reputation, and ranks second only to the USA in the number of international students that it attracts, differentiating itself not only on the quality of its education but the variety of courses that it offers. But as nations compete for international students are rigor, or standards compromised? With increasingly commercial operations and dependence on certain nations for students can our universities send such students home without good degrees? In 1970 one-third of students were awarded firsts or 2:1’s. Last year over two-thirds of students were awarded these grades.
Today’s students leave university with debts of £40,000 and upwards, but this does not appear to be a disincentive. More graduates are produced than needed. In nearly all countries, over one third of all jobs which do not require degree level qualifications, are carried out by university graduates. This is partly because university education has become an aspiration (often that of middle class parents) and partly due to the failure of apprenticeships to create attractive skilled trades. Apprenticeship programmes have declined in all but a small number of countries such as Germany, Austria, Denmark and Switzerland, although decline elsewhere has been mitigated by educational based training. Swiss apprenticeships are regarded as the best, but the funding of these is increasingly difficult due to the large increase in its population of those who were not born in the country.
So the trend in university education has been away from educating a relatively small national elite, to a significant proportion of the national population, and a global elite, but Baroness Wolf warned that universities are likely to come under even further funding pressure. Philip Augar’s government commissioned review of post 18 education recently concluded that it is not the universities that need focus, but further education (FE) colleges and other vocational training providers. He sees that FE, too often ignored in favour of the more prestigious higher education sector, holds the key to boosting social mobility and productivity, and recommends that this sector receives an extra £3 Bn of funding annually.
Reminiscent, perhaps of Baroness Garden’s dismay (IF meeting on 29 Nov 2019) during her tenure at the Ministry of Education in 2010, at its complete focus on academic attainment over the advantages of apprenticeships.
Ben Maruthappu, MBE is a British physician, academic researcher, health policy specialist, entrepreneur and co-founder of Cera, a tech-enabled homecare company. He was appointed Member of the Order of the British Empire (MBE) in the 2020 New Year Honours for services to health and social care technology.
Born in London in 1988 to two doctors, both refugees from the Sri Lankan civil war, he told us that he tried at first to resist his parents calling but ultimately saw how medicine could change people's lives and followed in their footsteps. He was too modest to mention that he studied preclinical medicine at Selwyn College, Cambridge, (graduating with a triple first class) before studying clinical medicine at Green Templeton College, Oxford, and winning a Kennedy Scholarship in Global Health at Harvard University.
During his “time in Boston” his eyes were opened to entrepreneurship. Surrounded by people who sought to use technology to build / do things better, he became fascinated with how it could be used to deliver health care - better. In a world where people expect to do their banking, arrange travel and even organise dates online, he is struck by how this contrasts with our lack of access to our medical records online.
In 2014 he co-developed the NHS’ Five Year Forward programme and a number of others, and led NHS England's contribution to the Government's Childhood Obesity Plan which originated the Sugar Tax. In a world in which diabetes costs the NHS £10 Billion, he supported the National Diabetes prevention programme through the development of an app which helps people change their lifestyle to reduce the risk of Type 2 diabetes.
Whilst at the NHS, he advised on £100 billion of health spending on innovation, technology and prevention. In 2015, he co-founded the NHS Innovation Accelerator (NIA), a programme that led to the development of the first NHS innovation tariff, a national reimbursement mechanism for medical technologies and digital health products.
After his mother fell and fractured part of her back, Ben faced difficulties in arranging and managing the home care that she required. His first-hand experience caused him to found Cera, a technology-enabled home care provider.
Cera seeks to improve healthcare using technology to optimise the process of matching appropriate care workers with patients, based on skills, language, availability etc., and to allow families to book carers for relatives and track their medical care.
But Cera goes further. As a doctor Ben recognised that carers record a lot of valuable information. For example, whether their patients' health is improving or otherwise? Which medications they have taken? Blood pressure and urine output? What they have been eating and drinking etc.? Cera uses artificial intelligence (AI) to interpret this data and flag early symptoms of (say) urine infection or other conditions before they worsen into something more serious. He suggested, too, that if Cera's systems could speak to others, the data collected could be used to collaborate, for example, with patients' GP's to design bespoke healthcare plans.
Healthcare has reached a unique phase. There is increased pressure on delivery due to increased demand, staff shortages and cost. Care homes can cost patients up to £2000 per week.
Ben believes that the solution to future funding will be through a specific tax or insurance, dedicated to an individual's social care, but increased use of digitisation and AI will also be part of the response. This, however, will need careful management. Cyber security, and control of quality and standards will be key challenges and he sees the need for somethings like a NICE accreditation for technological innovations.
Addressing the digital divide, will be important too. Those who most need the benefits of digital applications are often those who are least able to use them. Careful design will be needed for use by older people or those with dementia, for example.
Colin Ellis is Chief Credit Officer for EMEA, and a Managing Director in the Credit Strategy team at Moody's, the second largest of the ratings agencies with a market capitalisation of $40 Billion. He joined Moody’s in February 2012 and is responsible for identifying and analysing broad macro and credit trends, and leading and coordinating Moody’s ratings approach across franchises in his region. He leads the work of the Macroeconomic Board and authors the quarterly Global Macro Outlook. Subsequently he worked in the Financial Institutions Group, developing quantitative forward-looking analyses of sectors and institutions, including modelling asset trends and stress testing.
Colin said that in 2008 his role did not exist and Moody's didn't do a good job in the aftermath of the financial crisis. He described the nature of his business as "rather depressing" analysing scenarios to determine whether “if you lend your money you will get it back”. He has to try to understand the potential risks to global and national economies and assess the impact of these, should they occur, on individual ratings. To rate consistently it is important to ensure that Moody's perception of risk is applied uniformly across the group. He has to ensure that corporate ratings actions are considered ahead of potential individual events - rather like having obituaries written and on the shelf just in case -but for many more scenarios! This can be challenging. Some events are unpredictable - the US President for example may not see himself as a risk, but from a ratings perspective his propensity for the less predictable creates political risk.
As to the overall economic outlook, he is on the fence. On the face of it this year’s global growth projection looks similar to last, he said, but improvement in France and Germany masks a worrying underlying decline in China. He is nervous, too, about leverage in both the corporate and the household sectors.
The underlying situation is very different to that of 2008, he said, because of the general levels of debt. Lower interest rates over the past ten years have led to increased borrowings in the corporate sector. As a result, a significantly larger number of companies will go into the next recession with lower ratings than in 2008. So when they are stressed, the rates of default are likely to be significantly higher. In 2008, the impact was largely confined to the banking sector but today, due to high levels of corporate debt, the effects of another significant downturn will be felt more widely and the impact on individuals will be far greater.
Perhaps his greatest cause for concern is that governments have even fewer tools at their disposal than they did in 2008. Monetary policy is already ultra-loose (UK interest rates may be relatively high compared to other countries, standing at 0.75%, but they are very low compared to the 5% before 2008) and national debt levels have risen significantly, reducing the leeway for fiscal stimulus (public spending and tax cuts).
Colin also described the sort of "creative destruction" that occurs through recessions, whereby the financially weakest are wiped out while stronger balance sheets are rebuilt by others. This can only occur however (in both the corporate and household sectors) if there is income growth, without which there will be no capacity for repayment of debt. Income growth has been stubbornly low.
...... and as to the burning question, “will the reality of Brexit be the final push for the UK's Aa2 sovereign rating (already on negative outlook)?”, we will have to wait until April.... or November for the answer!