Monthly Archives: October 2026

View on the Spring Statement - David Laws, GK Adviser

Budget preview: One week to go

In his first budget, to be delivered to the Commons next Wednesday, the Chancellor John Healey will repeat his defining messages: money and power moved out of Westminster and a budget built on fiscal discipline and stability. The detail of the Budget itself is widely expected to focus on families and business – building on the Burnham government’s early theme of ‘breathing space’ for those struggling.

With a week to go, and in striking contrast to the last two budgets delivered by Rachel Reeves, we have so far seen little of the usual speculation or Treasury leaks on policies expected to feature in the headline Statement. The government will want to position this as a ‘no drama’ budget, not least because large spending decisions on welfare, defence, and social care appear delayed until after the budget.

The fiscal inheritance remains rather similar to past budgets, but with higher public sector pay demands, and higher than expected inflation together with in-year spending pressures, departmental spending will need to be addressed with little ‘headroom’ for manoeuvre.

The prime minister has said that he wants to run the most ‘pro-growth and pro-business country in the world’ and the FT has reported that both PM and Chancellor have reassured business leaders there will be no significant tax increases, sticking to the Starmer government’s self-imposed fiscal rules. This therefore means the government is likely to seek short-term measures to alleviate cost of living pressures. Further measures expected in the budget include:

  • Financial and Professional Services: It is now understood that rises to Capital Gains Tax have been ruled out; a move clearly designed to signal that this government is neither anti-business nor anti-wealth. Instead. we expect the chancellor to look to the banking sector as his primary revenue raising source. Whilst this may be consistent with the government’s overall positioning as a government for ‘working people’, protestations from the financial services sector that the government is undermining its international competitiveness will inevitably follow.
  • Education and skills: Reducing the number of young people not in education, employment or training (NEET) is a priority of this government. The budget is likely to feature further advance payments that pre-empt the recommendations of the Milburn Review, building on the Chancellor’s announcement of a £100 million expansion of apprenticeship brokerage services across mayoral strategic authorities. It will also offer an opportunity to put some funding behind Burnham’s commitment to expanding vocational and technical pathways in schools for students aged 14-16.
  • Health: The health sector will be keen to see further funding for integrated neighbourhood health services, building on plans to bring NHS, council and community services closer together. The budget could also clarify how devolution may give mayors and local leaders greater flexibility over health and social care priorities.
  • Energy: We expect an energy package for low-income households and a further freeze to Fuel Duty. The energy secretary has reportedly been tasked with finding more than £2bn of savings from the department’s budget, with reform of the Boiler Upgrade Scheme expected to contribute to those reductions. While the scheme is expected to remain in place, cuts to its £2.7bn five-year budget could reduce the level of support available for heat pump installations and slow the uptake of low-carbon heating technologies.

While Burnham remains personally popular in the polls, many think the budget will be the end of his honeymoon period. With the prospect of a Spring 2027 election, we should keep watch for policies that not only consolidate support from the so-called progressive left but also measures aimed at winning back Labour voters who have shifted support away from the party since 2024. With so many of the major reforms that Burnham has committed to – from the National Care Service to electoral reform – deferred until the next parliament, the public will become increasingly restless for progress and change as we hit the halfway point of this parliament. Questions are already being asked what the prime minister plans to do with the landslide majority he currently has in the House of Commons, which polls suggest would be significantly cut or even lost in a general election. The budget will be the government’s chance to set a clear course for the coming months and indeed years, and it will be important that the chancellor and prime minister seize it.

Conservative Party Conference: Can Kemi Badenoch’s ‘Right Way’ Win Back Britain?

This year’s conference season saw one of the clearest ideological divides in British politics for some time. The prime minister delivered a speech that many on the left had long wanted to hear, making the case for a more active and interventionist state. In Birmingham, Kemi Badenoch offered an equally unapologetic defence of Thatcherism.

The Conservative leader’s speech gave a sense that the party is finally off life support and up for the fight, with a renewed appeal to the shires through promises of tax cuts that will undoubtedly energise the Tory core vote. At the same time, Badenoch sought to challenge Reform UK on questions of values and integrity. Clearly adored by her party members, she remains behind in the polls and continues to fight for attention from the country.

More significant than any individual announcement was the moral case set out in The Right Way, Badenoch’s conference policy document, and echoed throughout her speech. Almost every policy proposal was rooted in a belief in personal responsibility and the value of individual endeavour. Badenoch argued that individual effort is not only the source of economic prosperity but also of human fulfilment and opportunity. In that sense, her speech was about more than policy. It was a battle of ideas, with Badenoch presenting conservatism as a competing vision ‘for the soul of the country’.

The headline-grabbing policy announcement was Badenoch’s pledge to abolish inheritance tax on family homes and raise the amount an individual can pass on tax-free to £500,000. Under the proposals, a couple would be able to leave their main residence to direct descendants free from inheritance tax, alongside a further £1 million of assets to other beneficiaries. Long criticised by many on the right as Britain’s least fair tax, inheritance tax is often portrayed as a form of double taxation, applying to assets accumulated from income that has already been taxed.

Badenoch also identified the eventual abolition of inheritance tax as a long-term ambition. Critics argue, however, that the benefits would be concentrated among the wealthiest and not ‘ordinary’ families. The Institute for Fiscal studies estimated that the wealthiest 1% of estates, worth £2.1 million or more, would receive around half of the gains from full abolition. Some also worry that the proposal could encourage older homeowners to remain in larger properties, limiting the availability of family-sized homes.

The Leader of the Opposition also argued that too many people are being written off by a welfare system that discourages work. Her reforms would remove access to out-of-work benefits immediately after school or university, introduce ‘back to work’ cards for long-term claimants, and require those able to work to engage with employment programmes. Badenoch aims to couple these welfare reforms with plans to halve the jobs tax for under-25s and repeal Labour’s Employment Rights Act.

Badenoch said that cutting the welfare bill would help fund higher defence spending, something that was notably absent from Burnham’s conference speech. Central to this was a £10 billion commitment to build ‘Britannia Shield’, an integrated UK air and missile defence network. The proposal would initially focus on protecting critical national infrastructure and military bases before being expanded to cover the UK mainland and British territories overseas. However, with the programme expected to be delivered over ten years, it represents a long-term ambition rather than a rapid build-out.

The proposal is more ambitious than the government’s current plans, having previously identified missile defence as a priority while allocating less than £800 million to the capability over four years. This comes despite a recent commons Defence Committee report warning that the UK has ‘next to nothing’ in place when it comes to missile defence, particularly against the growing threat posed by drones.

Despite the non-nonsense tone of Badenoch’s speech and the long list of policy commitments unveiled at conference, all of it ultimately depends on the Conservatives returning to power. With Badenoch ruling out an electoral pact with Reform UK and the party still polling below its performance at the 2024 general election, the central question remains whether voters are willing to give the Conservatives another hearing after fourteen years in government.

Steve Brine, GK’s Strategic Adviser and former health minister said: ‘What struck me was the attempt to give the Conservatives a clearer organising argument: that Britain’s problems stem from weak growth and an overextended state, and that the answer is greater economic freedom, lower taxes and firmer choices about public spending. The speech also sought to present Kemi as someone prepared to make the case for a distinct Conservative identity and one that her party feels wholly comfortable with. In that, the two main parties are in lock-step. The test will be whether that argument can be turned into a credible and coherent programme for government.’

Robert Halfon, GK’s Strategic Adviser and former education minister said: ‘Kemi Badenoch leaves conference with her leadership secure and her party more united than it has been for years. The direction is clear: firmly Conservative, and clearly distinct from Reform. Skills are part of that offer. Badenoch put apprenticeships in her leader’s speech, and the plan to move money from poor-value degrees into apprenticeships gives the Education team a concrete policy to drive forward. Employers will now want to see it costed and funded.’

Labour Party Conference: Burnham’s plan to make Britain ‘Hope Again’

GK’s Lauren Atkins shares her reflections from attending Labour Party Conference.

As September drew to a close, party members, politicians, journalists and public affairs professionals once again descended on Liverpool for the annual Labour Party Conference. The third since Labour took office in 2024, this year’s gathering was the first with Andy Burnham as Prime Minister, setting the stage for a party looking to turn the page on recent political instability.

There was a palpable buzz around this year’s conference. The atmosphere was one of renewed optimism and a desire for clearer direction, reflected in the presence of Burnham’s new cabinet colleagues and junior ministers, who packed out fringe events and receptions to engage with party members and businesses. There was a clear effort to reconnect Labour with its sense of purpose and build excitement around the government’s next chapter.

Under the banner of “Hope Again”, Burnham’s first conference speech as Prime Minister provided the focal point. Promising to “break with the direction of the past forty years”, he criticised deindustrialisation, deregulation, privatisation, austerity and Brexit, setting out a vision in which the state takes a more active role in public services, economic renewal and tackling the cost of living. The speech received at least eleven standing ovations from delegates in the main conference hall, underlining the enthusiasm among party members for a clear, long term political vision for the UK.

The policy announcements were wide-ranging. Burnham committed to establishing a National Care Service in the next parliament, transforming the state pension triple lock from 2030, and launching a commission on electoral reform. He also signalled a renewed focus on the UK’s long-term relationship with the EU, promised legislation to enable the public ownership of water companies, and announced plans to remove VAT from electricity bills from the beginning of October, develop a national energy plan and establish Great British Grid. On housing, he reaffirmed plans for the biggest council housebuilding programme since the post-war era, alongside measures to support first-time buyers and reform leasehold. Internationally, he pledged to put AI at the centre of the UK’s G20 presidency next year.

Taken together, these commitments offered a clearer articulation of the government’s ambitions and helped sustain the conference’s sense of momentum. Yet, while the enthusiasm in Liverpool was unmissable, the government faces a tight timetable to convince the wider electorate that its vision can deliver. With the next general election less than three years away, the challenge will be to turn the optimism of “Hope Again” into tangible improvements for households and businesses, particularly those facing persistent cost-of-living pressures.

Yesterday’s long-term commitments – with the most significant policy changes not expected until 2030 – were certainly valuable for Burnham in setting out his stall and establishing a sense of direction, but they will do little to reassure voters unless progress is also felt in the near term. The upcoming Budget will be an early test of how the government intends to balance its ambitious programme with the realities of public spending and the immediate economic pressures facing the country.

Burnham has given Labour members renewed reason to feel energised about the future. The conference had a genuine sense of optimism and purpose, but the real test lies beyond Liverpool docks. The coming months will determine whether that enthusiasm can translate into effective government, and whether “Hope Again” can become more than a conference slogan.

What Great British Grid means for Britain’s electricity network

In his first address to Labour Party Conference as prime minister, Andy Burnham set out plans for a new government-backed body, Great British Grid (GBG), as part of a wider effort to address high energy costs, accelerate infrastructure delivery and support economic growth.

For investors and businesses, the government’s plans for GBG are unlikely to represent a fundamental change to the ownership or operation of Britain’s electricity network. The Department for Energy Security and Net Zero has said that GBG will ‘complement, rather than replace’ the companies already responsible for operating the electricity system, with the role of existing network operators remaining unchanged. Instead, the focus is on changing how future transmission infrastructure projects are developed and delivered.

GBG will operate as a branch of Great British Energy (GBE) and will participate in bids for future transmission projects. Rather than incumbent network operators automatically developing new infrastructure, projects could be awarded through a competitive process involving bids from GBG, existing network companies and private investors. The government argues that increasing competition in this way will help speed up grid expansion, support economic growth and reduce the costs of network investment that are ultimately passed on to consumers through energy bills.

The scale of GBG’s involvement will depend on the funding available to it. GBE was allocated £8.3 billion of capital funding for this parliament, although a proportion of that funding has already been committed to other priorities, including support for small modular nuclear reactors. While the final allocation to GBG has yet to be confirmed, it is likely to be small compared with the scale of investment required across the electricity network. Planned transmission investment during the 2026-31 regulatory period alone is expected to total around £70 billion, with substantial further investment required throughout the 2030s.

The use of competition to deliver transmission infrastructure is not entirely new. The Competitively Appointed Transmission Owner (CATO) regime, introduced under the Conservative government in 2023, was designed to open parts of the transmission network to competitive procurement. GBG therefore builds on an existing framework for competition, while giving the state a more direct role in bidding for future transmission projects.

The government has also announced reforms that would allow businesses to construct their own grid connections rather than waiting for network operators to undertake the work. Ministers hope this approach will accelerate the delivery of energy projects, industrial developments and AI data centres in the UK.

While these reforms may help reduce some delays, many industry groups continue to argue that the planning and consenting system remains one of the biggest barriers to faster infrastructure delivery. The success of the government’s approach is therefore likely to depend not only on changes to grid connections, but also on whether wider planning reforms can shorten approval times for major energy projects.

Please contact Brett Morton via brett.morton@gkstrategy.com if you would like to discuss the government’s energy reforms in more detail.