Author Archives: GK Strategy

The Fallout from the Horizon Scandal

GK Point of View – The Fallout from the Horizon Scandal

GK Adviser Rebecca McMahon assesses the potential impact of the Horizon scandal on the Labour Party’s procurement plans.  

How will the Horizon Scandal influence Labour policy? 

The renewed focus on the Post Office’s procurement of Fujitsu’s Horizon software has brought to light procurement issues which are pertinent to the Labour Party. 

Labour has already committed to increasing oversight of government procurement – Shadow Chancellor, Rachel Reeves has proposed a “covid corruption commissioner” watchdog to recover taxpayer money lost due to the Government’s VIP “fast lane” for contract delivery during the pandemic. Evidently, the Party is keen on a system where both the Government and individual suppliers are held to greater account. The Horizon scandal only adds to its case. 

The Party is not just set on preventing bad outcomes from government procurement; they are also aiming to use it as an actively positive instrument, with Deputy Leader Angela Rayner placing an emphasis on “social and environmental factors”.  

She also urged the Government to ensure that “contracts do not always automatically go offshore” and instead are awarded “to businesses creating local jobs, skills and training”. Labour has also said it would “make social value mandatory in public contract design”, introducing measures to promote “decent work” and strengthen supply chains. 

Labour to lean on procurement to digitalise services? 

As well as encouraging more ethical procurement, Labour is also keen to use procurement to further digitalise public services. This is especially true of the NHS, where key figures like Wes Streeting, Shadow Health Secretary, have been vocal about the need to invest in innovative health technologies and make more effective use of health data. 

However, in the wake of the Horizon controversy, any efforts to radically digitalise the NHS will be caveated by important questions about accountability. 

Whether or not digitalisation will be a quick fix for the UK’s declining health provision, it is likely to be a key area for procurement under a Labour government. UK healthtech has expanded nine-fold since 2016, and the sector’s future could be bright under a future Starmer government. 

 

The Early Years Conundrum

GK Point of View – The Early Years Conundrum

GK Adviser Felix Griffin assesses the potential battle lines between Labour and the Conservatives in the early years sector ahead of the General Election. 

A Political Football in the Education Arena 

In the ever-evolving education landscape, early years policy has found itself thrust into the centre of a complex and highly contested arena. Incrementally, the situation has worsened over the years, with the ‘cost of living’ crisis and systemic staff recruitment and retention issues taking their toll. Early years policy is now a political football, bouncing between competing ideologies and vested interests. 

There are now clear division lines between Labour and the Conservatives. Labour appears staunchly focused on prioritising comprehensive child development, emphasising a holistic and nurturing approach to early education. On the other side, the Conservatives have pivoted towards viewing the early years as a means of getting parents back to work, shaping their policies with a lens primarily focused on economic productivity. 

With the Conservatives using free childcare as a ‘vote winner’, as previous governments have done, there is concern that the implementation failures that have plagued the sector for so long will persist. 

As the prospect of Labour taking the reins becomes increasingly likely, it stands at a crossroad. The Party is confronted with the pressing decision of whether to persist with a clearly broken framework, risking further erosion of the quality of early childhood education, or opting for the challenging path of withdrawing the current ‘free childcare’ system, potentially facing backlash from parents and stakeholders.  

However, amidst this dilemma, there is a transformative opportunity – to reform the existing system comprehensively. By engaging in strategic overhauls and policy adjustments, informed by its ‘major’ review of the early years sector, Labour has the chance to steer the course towards a more effective, equitable, and responsive early years education system, ensuring a brighter future for the nation’s youngest minds. 

 

GK Insights- Student visas reform

GK Point of View – The impact of student visa reforms

GK Associate Hugo Tuckett assesses the recent student visa reforms, and what they mean for the higher education sector.

With the Government continuing to struggle in the polls, Rishi Sunak has launched a full-frontal assault on the immigration system aimed at bringing numbers down and cutting into Labour’s seemingly unassailable lead. 

Following a record net migration figure of 745,000 in 2022, the Government has undertaken a series of measures to tighten the UK’s immigration system. As they are the largest group of non-EU migrants, international students have come into the firing line. 

In May 2023, the Government introduced new restrictions to student visa routes by preventing international students from bringing family members on all but post-graduate research routes, as well as banning people from switching into work routes until their studies have been completed. These measures officially came into force on 1 January 2024. 

The Government expects this to result in an estimated 140,000 fewer people arriving in the UK. However, with years of frozen domestic tuition fees and reductions to teaching grants stemming from Britain’s exit from the EU, it is unclear whether the UK will retain its attractiveness to international students, the very group who have been covering the sector’s budgetary shortfalls. 

Notably, the Government’s own impact assessment refuses to consider the effects of preventing international students from bringing dependants on all but post-graduate research routes, given the lack of available evidence to determine how many students (who bring dependants) will be dissuaded. On a more positive note, the impact assessment finds that only 2% of total students with an expired student visa would be affected by the ban on switching work routes until their studies had been completed. 

Given the distinct possibility that numbers of international students arriving in the UK drop because of the changes, financial pressure will grow on higher education providers who have made over-optimistic assumptions about future growth in international student numbers as a means of balancing the books. 

As we enter an election year in which the Conservatives will be reluctant to loosen immigration controls, the likelihood that some providers collapse under the financial strain cannot be overlooked. 

 

GK Point of View - Tory and Labour Priorities in 2024

GK Point of View – Tory and Labour priorities in 2024

GK Senior Adviser Robert Blackmore and Adviser Noureen Ahmed assess the priorities for the Conservatives and Labour in 2024 as we make our way closer to a general election. 

The Tory plan to build back core support 

The Conservative Party begins 2024 in dire straits, over 20 points behind Sir Keir Starmer’s Labour in the polls, they are running out of time to avoid a chastening defeat. Party leaders are therefore concentrating their efforts on ensuring they have strong support with the Party itself, while strategists desperately try to home in on the clearest path to victory, reducing illegal immigration via the Rwanda scheme, and providing tax cuts. 

Much of the Government’s political capital is being spent on making its plan to send some asylum seekers to Rwanda for processing a reality. The updated Rwanda Bill has now reached the House of Lords, where intense opposition is expected. For party strategists, it provides the Conservatives with an opportunity to weaponise the debate and highlight the immigration and Brexit-related tropes that dominated the political debates in the late 2010s. 

However, the political salience of the small boats issue to the wider country, as opposed to the party’s rank-and-file, is not yet clear. That is why the Party is so keen to ensure voters feel economically empowered, as the next election approaches. With the Spring Budget scheduled for 6th March, there are a number of tax cuts that Chancellor Jeremy Hunt has been considering in recent weeks, including further cuts to national insurance, cuts to income tax, and an increase in the child benefit threshold. The Chancellor, however, has been managing expectations about how feasible these may be, with the likelihood that the degree of fiscal headroom in March will be lower than expected. A fourth category, cuts to inheritance tax, is also now deemed less likely, as the Prime Minister fears it could be portrayed as a tax concession to the wealthy.

Yet, such a strategy is dependent on the electorate’s support for the Government after 13 years in power. Will they show gratitude to the Government for providing extra pounds in their pocket and vote accordingly? The tax burden is the highest it has been since the Second World War, and, according to the Resolution Foundation, wage stagnation represents a real-term decline in take home pay for many households since 2008. Given these challenges, it is not guaranteed that the Conservatives’ strategy will cut through. 

It’s in the bag for Labour surely? 

As the next general election looks increasingly likely for late Autumn, the Labour Party is planning to finalise any manifesto commitments by mid-February (in the unlikely scenario that the PM announces a May election). Although the Labour Party requires a significant electoral swing to claim a majority, it has been buoyed by recent polling indicating that Labour are firm favourites to lead the next government. As a result, many in Labour HQ are optimistically planning the Party’s campaign strategy. 

In 2023, Labour Leader Sir Keir Starmer unveiled his 5 national missions that the party will build its manifesto around. Core missions include Labour’s ambition to support the NHS to get back on its feet and break down barriers to opportunities. 

Unsurprisingly, education has remained at the forefront of Labour’s core priorities, with the Party recently unveiling its plans for schools, further education, and the early years space. The Party is determined to introduce reforms to support the development of young people and better prepare them for adulthood. 

The NHS is regarded as an area of strength for the Party, with the public almost always preferring Labour’s handling of the NHS. Given the widespread awareness of ongoing crises, such as doctors’ strikes, long waiting lists and inaccessible GPs, the Party is letting the national story do the campaigning for them, with scant few serious pledges on health and social care policy. Shadow Health Secretary, Wes Streeting, has promised to work to address the fundamental issues, with promises made by the Party to boost funding investment, cut down waiting lists and improve staff recruitment. 

However, further information on reforms have not been made public – many at Labour Party HQ worry that a detailed proposal may just offer the Conservative Party a “free win”, by giving it something to critique. The manifesto will shed light on where their focus may lie on health, but it’s unlikely that Labour will reveal its plans in full before taking power. Nevertheless, Labour has now started talks with the civil service and is finalising policy. We expect Labour to accelerate its campaign plans and attempt to present itself as a calming presence in contrast to the continuing Tory storms. 

 

GK Point of View – The Contested Future of the Apprenticeship Levy

GK Senior Adviser Robert Blackmore assesses the criticisms of the Apprenticeship Levy, from unspent funds to the over-provision of apprenticeships for affluent employees, and highlights the many contested proposals to reform the Levy.

While it may not dominate the front pages, the Apprenticeship Levy is fast becoming one of the more controversial areas of UK public policy. The Levy, which is charged at 0.5% of an employer’s total payroll, applying to those with a payroll of more than £3 million, is contested at several levels.

Government officials, however, would argue that they are attempting to find a delicate balance between keeping to a pre-determined budget, whilst simultaneously ensuring that provision for priority skills areas is enhanced. Ahead of November’s Autumn Statement, it was reported that Number 10 and the Treasury were considering plans to limit the number of degree-level apprenticeships. Chancellor Jeremy Hunt was said to be concerned that too great an amount was being spent on level 6 and 7 apprenticeships that tend to be filled by older and more affluent employees.

This proposal faced opposition from the DfE, while course conveners argued that high-level apprenticeships were “critical for the productivity agenda and fiscal sustainability”. Employers also pointed out that the allocation of funds should be their preserve, noting that the Levy was established to be “employer led”. Ultimately, no such proposals were included in the Autumn Statement. Instead, documents published alongside the fiscal event highlighted how apprenticeships had become a ‘prestigious and high-quality alternative route to higher education’. Despite its omission, it remains a topic of contention within Government.

Outside Whitehall, the calls for reform grow louder. Earlier this month, EDSK, a think tank focused on education and skills, proposed an even more radical overhaul of the Levy. Its report, ‘Broken Ladders’, recommended that individuals who have already achieved an undergraduate degree should no longer be eligible to start a levy-funded apprenticeship. It was also suggested that employers should be prevented from accessing further levy funding if they have trained more apprentices aged 25+ than those aged 16-24. EDSK believe that such reforms would ensure that the focus of the Levy remains on those young people who have elected to pursue a non-academic pathway. Unsurprisingly, EDSK has faced criticism from training bodies, most notably from Mandy Crawford-Lee, Chief Executive of the University Vocational Awards Council, who argued that “we should dismiss the false notion that apprenticeships are the only suitable for school/college leavers unable to reach the ‘academic’ standards needed to take them to university.”

Furthermore, last week, the British Retail Consortium (BRC), the National Farmers Union (NFU) and UK Hospitality (UKH), alongside others, issued a joint statement calling for the Government to develop a wider skills levy, for businesses to train up a greater number of domestic workers to plug the UK’s skills gaps. Helen Dickinson, Chief Executive of the BRC, went as far as to state “The government should stop dragging its feet so businesses can upskill our workforce.”

This position aligns with the Labour Party’s stated aim to “increase the quality as well as quantity of training opportunities” through a “growth and skills levy“. Such an expansion of the Levy, however, has faced criticism from officials inside the DfE, who estimate that plans to expand the Levy would limit the number of apprenticeship starts per year to 140,000 (down from 349,000 in 2021/22) and cost an additional £1.5 billion. It should be noted, however, that this analysis has been labelled ‘quite simplistic’ by Stephen Evans, Chief Executive of the Learning and Work Institute.

A Labour victory at the next election, expected in 2024, would provide a mandate for a ‘growth and skills levy’, yet the party have yet to fully expand on their policy, and it is unlikely that the future manifesto will delve too deeply. Many will hope reform to the Levy is not lost in the maze that is nascent government policy making.

GK Point of View – Reflections on the Autumn Statement

On Wednesday 22nd November, Jeremy Hunt MP unveiled his Autumn Statement, setting out the Government’s tax and spending commitments for the next year.  The backdrop to this year’s Autumn Statement presents a number of challenges for a government with likely less than a year until the next General Election. The UK’s inflation rate stands at 4.6%, more than double the Bank of England’s target of 2%. Growth rates have stalled, and the Bank of England is predicting that the UK will see zero growth until 2025.

To better understand the true impact of the decisions in the Autumn Statement and how they will impact both the wider economy, and specific sectors, GK Strategy have developed a briefing containing sector specific insight and analysis from our Senior and Strategic Advisers.

Find GK’s briefing here: Autumn Statement 2023