Author Archives: GK Strategy

Council Tax Reform

Reflections on the Future of Council Tax

GK Associate Hugo Tuckett assesses the likelihood of council tax reform amid rising concern about local authority financial resilience.

Is council tax reform on the horizon?

Amid rising bankruptcies in recent years, and growing concern about the sustainability of council finances, funding mechanisms for local authorities – and particularly council tax – are attracting growing political scrutiny.

In December 2023, the Local Government Association reported that almost one in five council leaders and chief executives it surveyed think it is very or fairly likely that they will need to issue a Section 114 notice this year or next due to a lack of funding. A Section 114 notice is issued by a council’s finance officer if they believe the council’s expenditure will exceed the resources it has available. Eleven Section 114 notices have been issued since 2018, with only five issued in the 30 years prior.

Given that council tax receipts now make up over half of local authority spending power (56.9% in 2023-24 compared to 49.1% in 2015-16), ensuring the council tax regime is operating effectively is critical to the long-term sustainability of local authority finances.

The Levelling Up Committee recently made a series of recommendations to the Government on council tax reform. In its report, the Committee reiterated its previous conclusions about the “unfairness and outdatedness of the council tax regime”.

The Government has since said it has no plans to conduct a revaluation of council tax bands (the Committee’s key recommendation) as, amongst other factors, “it would particularly risk those on a lower income, including pensioners, who have seen their homes appreciate in value”.

Here is the focal point of political discourse. A Conservative Government, aware that (according to recent YouGov polling) the Party is now the most popular only among the over-70s, will be aggrieved to conduct a revaluation of property bands which would hit the pockets of its core voter base. A Labour government on the other hand, with traditionally greater allegiances to younger, non-home owning voters and those on lower incomes could take a fresh look at this issue. One option likely to be under consideration is the introduction of new, higher bands of council tax.

Given the Shadow Chancellor, Rachel Reeves, has ruled out numerous tax rises ahead of the upcoming General Election, council tax reform represents one revenue-raising lever still available to her. While the details of any potential reform are still unknown, it is a near certainty that the council tax regime will only grow in political salience in the years ahead.

SEND and AP Improvement Plan

The SEND and AP Improvement Plan – A Year Without Progress

GK Advisers Noureen Ahmed and Felix Griffin evaluate the implementation of the SEND and AP Improvement Plan.

The Government and the Opposition face questions on their SEND policy plans

Nearly a year has elapsed since the Government unveiled its SEND and AP Improvement Plan, which reiterated its commitment to ensuring every child and young person with SEND receives the high-quality support they need. What exactly has changed since publication? The answer – not much…yet.

The plan outlined several key policies, including the long-overdue standardisation and digitalisation of Education, Health, and Care Plans (EHCPs), the implementation of new national SEND standards, and the introduction of a revised funding approach for alternative provision.

Although these policies were warmly welcomed by the sector, they’re not expected to come into effect on a national scale until 2025 at the earliest. This delay has raised concerns about the precariousness of the SEND landscape, prompting calls for a quicker implementation timeline.

A recent report from the Guardian, citing Freedom of Information (FOI) requests, revealed instances where children and young people in certain local authorities waited over two years to receive an EHCP. Moreover, insufficient funding for SEND services has put local authorities in a difficult position, exacerbating the existing strain on resources.

Questions have also been raised about what a Labour government might look like for the sector. At present, the Party has said very little on SEND but noted that interlinking services and improving data use” would help identify a child’s needs much earlier.

The Government has stressed its ambition to reform the SEND landscape. However, given the escalating crisis, doubts continue to grow as to whether the plan will suffice in addressing and alleviating the issues facing the sector.

Digital skills

Adult Education: A Model for Devolution?

GK Adviser Rebecca McMahon explores the localisation of adult education and whether it could provide a template for devolution plans in other policy areas.

A rare win for the Levelling Up agenda?

Over the last 13 years, a series of Conservative governments have made various stabs at improving regional inequalities, and by the time of the Levelling Up White Paper 2022, there was a consensus that at least some form of devolution is necessary to heal regional divides and accelerate British growth.

However, plenty of obstacles remain in the way of a strong devolved power system in the UK, stemming both from central government (particularly due to reservations held by the Treasury) and local government (whose various financial difficulties over the last year have undermined their case for greater responsibility over policy and fiscal decision-making.) Plus, recent high-profile blows to the Levelling Up agenda – notably the collapse of the multi-billion HS2 project at the end of last year – have created further setbacks.

However, one of the more successful devolution efforts has materialised in the seemingly unexpected domain of adult skills. The Government kickstarted the devolution of the Adult Education Budget in the 2019-20 academic year, transferring decision-making powers over the pot of money to six Mayoral Combined Authorities (MCAs) plus the Greater London Authority (GLA).

Since then, a further three MCAs have been handed these powers, and the trend of devolution suggests that more deals are to take place in the near future. The success of ‘trailblazer’ deals in Greater Manchester and West Midlands makes this more likely. The Chancellor, Jeremy Hunt, confirmed that the North East MCA would also receive a deal as part of the continued ‘Skills for Growth’ agenda.

Labour’s thinking on Adult Education

Central to Labour’s skills agenda is the replacement of the Apprenticeship Levy with the Growth and Skills Levy. Notionally, this points to a more flexible skills and training landscape, with accommodation for all types of learners.

However, some people have expressed concern about the sustainability of this proposal, suggesting that an altered levy would be a step in the wrong direction for apprenticeship uptake, at a time when other viable further education alternatives seem more important than ever. In terms of devolution, Labour have made a lot of noise about their commitment to the cause, threading it through various ‘missions’ upon which they have built their policy agenda, and publishing high-profile reviews by legacy figures like Gordon Brown which showcase their support. But in practice, the landscape is less certain, owing to Rachel Reeves’ fiscal ‘iron fist.’ Given the pressure that the Shadow Chancellor placed on Keir Starmer to backtrack on their flagship £28bn pledge to the green economy, she will be hesitant to hand over budgetary responsibilities to local authorities given their recent track record on finances.

The increasing localisation of adult education budgets in the UK somewhat offers a model for the Government and potential future governments to further the devolution agenda. However, any party will inevitably face a gamble on whether to trust local authorities with increasingly large pots of money and whether this will ultimately reap long-term rewards.

GK Point of View- Spring Budget 2024

Spring Budget 2024_GK Strategy

The GK team react to the Chancellor’s Spring Budget, with GK Strategic Advisers offering their insight into what this means for the Conservative Party in the run up to the General Election, what the budget means for individuals, as well as the announcement’s wider impact on key British industries.

To read our briefing please use the link above or click here.

Budget breakfast

GK Point of View – The GK Budget Breakfast Review

GK Associate Hugo Tuckett reviews GK Strategy’s Private Equity Breakfast, where the Spring Budget and the general election were key discussion topics. 

Will Jeremy Hunt use the Budget to put Labour on the back foot? 

On Tuesday 27 February, GK Strategy was delighted to host professionals across private equity, corporate finance and wider deal advisory at a panel event to discuss what we can expect in politics over the next 12 months. The panel included The Rt Hon. David Laws, former Chief Secretary to the Treasury, and Chris Giles, Economics Commentator at The Financial Times. The discussion was chaired by GK’s CEO, Louise Allen. 

A key theme of the discussion was the Government’s priorities for the upcoming Budget. The panellists agreed that challenges within the UK’s public finances would limit the Chancellor’s flexibility to implement wide-ranging tax cuts in the months leading up to the General Election.  

Instead, they argued that the Government would prioritise smaller, targeted tax cuts that would create a dividing line with Labour. A reduction or phasing out of inheritance tax was touted as the one area where the main opposition party would struggle to match the Conservatives. 

Labour’s immediate fiscal priorities, should it win the upcoming General Election, were also addressed by the panel. David Laws suggested that the Shadow Chancellor, Rachel Reeves, would have to decide whether to follow Gordon Brown’s approach post-1997 and commit to a Conservative government’s tight spending plans, or as was the case post-2010, label the previous administration financially irresponsible and introduce a series of tax rises and spending cuts to balance the books. 

He later suggested that the Chancellor, Jeremy Hunt, might try to use the next few months to lay a series of traps for Labour, such as a commitment to reduce income tax in April 2025, in an attempt to create some separation between the two parties ahead of polling day. 

Please get in touch via (hugo@gkstrategy.com) if you are interested in attending future events or would like to set up a call to discuss the year ahead in politics.  

 

Internal strife muddying the waters for both the Conservatives and Labour

GK Point of View – View from Westminster

GK Associate, Joshua Owolabi, assesses Rishi Sunak and Keir Stramer’s recent struggles with rogue MPs. 

Internal strife muddying the waters for both the Conservatives and Labour 

Former Prime Minister, Harold Wilson, joked frequently about the frenetic pace at which politics could move. Over his long career, he became well-acquainted with the turbulence that intra-party politicking could bring. Keir Starmer and Rishi Sunak may be able to relate. Clearly, the last few weeks have been taxing for them both as they struggle to deal with internal conflicts. 

There has been scant opportunity for Starmer to enjoy the emphatic byelection result in Wellingborough, where the Labour Party overturned a Conservative majority of over 18,000 votes. It doesn’t matter that only a fortnight ago Starmer led his party to its largest swing in a byelection since 1994. Since then, the Labour Party has needed to clamp down on grassroots dissent over the decision to withdraw support for its Rochdale byelection candidate, Azhar Ali. Days later, Starmer was scrambling to avoid a rebellion and the potential resignation of Shadow Ministers, after the SNP brought forward an opposition day motion on the war in Gaza. 

The Prime Minister has been blindsided yet again by some of the more outspoken Tory MPs. Lee Anderson, who had been Deputy Chairman of the Conservative Party as recently as January, had the whip suspended following his incendiary remarks about the Mayor of London. Various Tory MPs have either defended or criticised Anderson since his outburst. Sunak has attempted to placate both sides, calling Anderson’s comments ‘wrong’ while also refusing to label them as ‘Islamophobic’.  

However, Anderson doubling down on the comments has left Sunak with a problem to solve. Can he deal with the Anderson situation in a way that keeps the right-wing of his party happy, but also heeds the calls from ‘One Nation’ MPs for Anderson to be disciplined? Unfortunately for the Prime Minister, the answer to that question seems obvious.  

Meanwhile. a speech from Sunak’s predecessor elicited the response “err… who is Liz Truss?” from a perplexed American audience at a conservative political conference in Maryland. Despite the criticism that Truss’ speech has received, Sunak will be concerned by her decision to lean into conspiracy theories about the ‘deep state’ and her call for Nigel Farage to rejoin the Party. Along with the Lee Anderson headlines, it highlights the way in which Sunak is struggling to control the narrative.  

As Tory factions battle each other for control after the election and the Labour leadership works to limit self-inflicted wounds before it, the approaching Spring Budget hasn’t received much attention. Sunak, Starmer, Hunt and Reeves will need their MPs to get back on message as they set out their economic visions. They’ll be hoping that the infighting of February gives way to a renewed focus on policy in March.