Monthly Archives: February 2022

David Laws, GK Adviser and Former Minister – Response to Augar

David Laws, GK Adviser and Former Minister – Response to Augar

The government has today announced its (very!) long awaited response to the Augar Review on post 18 education finance. The announcement will be eclipsed by the dramatic news of Russia’s invasion of Ukraine, but it is of importance for the long-term outlook for post 18 education.

The Augar Review was originally inspired by Theresa May’s desire as PM to offer a reduction in student tuition fees, after this became a major issue in the 2017 General Election.

It is believed that May wanted fees cut to £7,000 or £7,500 – perhaps with higher government grants to protect the more “expensive to deliver” courses. There was also a strong desire to shift financial resources away from “low value” Level 6 HE courses, towards Level 4/5 provision in subject areas of greater relevance to skills shortages and the labour market.

Today’s news indicates how far the government has moved from the initial May/Augar vision. Tuition fees will remain at £9,250 for the rest of this Parliament, and quite possibly beyond. Labour has also, under Keir Starmer, moved away from prioritising lower tuition fees. Instead, policy makers will allow inflation to gradually eat away at the real value of fees, which will over time put greater pressure on university finances.

Not only will students be stuck with £9,250 fees, but future students will be expected to start repaying their loans at a much lower level of real incomes – £25,000, instead of over £27,000 at present. The government and the Treasury have decided that students must pay back a lot more towards their loans, rather than allowing taxpayers to take the strain. As well as repayments starting earlier, payments for many will last much longer – for 40 years (before write-off), rather than the existing 30 years. However, in one piece of good news for students, the interest rate on student loans will be cut, so that it is limited to the RPI measure of inflation.

Overall, the changes to student repayments are regressive – lower earning students will pay a higher proportion of income, while higher earners gain from the lower interest rates. The strongly progressive structure put in place by the Coalition government is being watered down.

Where the conclusions of the review do still follow some of the Augar agenda are around the more generous Lifelong Loan Entitlement for both HE and other technical post 18 courses, at Levels 4/5/6. And the two consultations on minimum entry grades for post 18 study and around student numbers control are very important shifts towards potentially restricting access to university courses to those with higher attainment, and to courses with higher labour market returns. This is another major shift away from Coalition policy, which allowed for sector and student led increases in HE places.

The reviews will be controversial, and could make a major difference to the final policy proposals. Disadvantaged students could be big losers from any attempt to restrict university places to those with higher grades, while those delivering courses that lead to typically lower paying jobs will worry that they could face new restrictions on student places. By establishing reviews into both these issues, the government is accepting that change is highly controversial and needs much further thought.

If you would like to discuss the landscape for education policy in the UK, please email

Annual contracts for difference - What's the impact_

Annual contracts for difference – What’s the impact?

Annual contracts for difference – how will this impact the UK’s renewable energy generation? 

Amidst a worsening energy and cost-of-living crisis, and ongoing pressure from within the Conservative Party in the shape of the Net Zero Scrutiny Group, earlier this month the Department for Business, Energy and Industrial Strategy has made one of its biggest statements to reaffirm its commitment to the development of the renewable power industry in the UK. In line with commitments in the 2021 Net Zero Strategy, the Department has taken the decision to hold Contracts for Difference (CfD) auctions on an annual basis from March 2023, rather than every two years as previous.

The scheme is the Government’s flagship policy for the deployment of low-cost renewable energy, which incentivises investment into renewable energy generation by providing energy providers with stable and predictable returns on their supplies. This is achieved through long-term contracts of 15 years, where two parties — a renewable energy supplier and the Low Carbon Contracts Company (LCCC) — agree to pay the other party for the difference between the market price and the value which the parties agreed at the point the CfD was entered – the strike price. For example, when the price for electricity dips below the strike price agreed with the government as part of a developer’s CfD, the developer will receive a ‘top up’ to the level of the strike price, and vice versa.

This significantly reduces the investment risk for developers, and allows them to borrow money more cheaply, accelerating the development of low-carbon technologies and crucially continuing to drive down the costs of generation. This can act as the catalyst of continual development for the UK’s renewable energy market, creating optimal conditions for consistent private investment into the landscape.

These developers will be crucial pillars for the UK’s net-zero strategy, not least because of the UK’s lofty target to reach 40GW of wind power capacity by 2030. The scheme has clearly already had an effect. In 2010, total capacity was 5.4 GW. By 2020 that figure had more than quadrupled to 24 GW, after the scheme was introduced in 2013 on a bi-annual basis.

So why the need to scale the scheme up to annual rounds of bids? One of the biggest factors behind this is undoubtedly UK energy security. The Government has painfully learnt the complications and difficulties of being dependent on supplies of natural gas from the European continent for a significant portion of the UK’s energy supply, with considerable strain now being felt by the British consumer. Increasing the frequency of CfD auctions will increase the number of opportunities for developers to engage with the scheme, helping to provide a diversified power supply and support the UK’s long-term energy security. The decision will also dramatically lessen the burdens for renewable energy companies, who will be able to take advantage of the regularity of auctions rather than having to navigate the two-year periods of uncertainty between the CfD auction rounds.

Fundamentally, this move is a positive one for both supplier and consumer. The annual rounds of contracts greatly ease the strain on renewable suppliers, providing developers with the assurance that their risks will be minimised and incentivises continued investment into the UK. The subsequent scale-up of renewable energy into the grid will mean that there is much greater flexibility in the system for consumers to help shield them from future price shocks and advancing the UK’s Net Zero credentials further.

The fast-paced nature of this environment will create a strong platform for engagement with Government. GK Strategy has extensive experience of advising governmental engagement and helping businesses take advantage of existing opportunities within the energy policy landscape.

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GK Insights - Integration White Paper, by Phil Hope, GK Adviser

GK Insights – Integration White Paper, by Phil Hope, GK Adviser

GK Adviser, and former Health Minister, Phil Hope shares his thoughts on the Government’s proposals for health and care reform in our newest blog ‘Integration White Paper Joining up care for people, places and populations: A genuinely radical leap forward’

Read Phil’s thought’s here: Integration White Paper – Joining up care for people places and populations