Author Archives: GK Strategy

GK Point of View - Will Blackman on reforms to the private rented sector

GK Point of View – Will Blackman on reforms to the private rented sector

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GK Associate Director, Will Blackman, takes a look at the reforms to the private rented sector contained in the Department for Levelling Up’s recent White Paper.  

This week the Government finally published its long-awaited White Paper on reforms to the private rented sector with its two central proposals consisting of, first, new measures to reform landlords’ grounds for repossession and, second, initiatives intended to tackle poor quality rental properties. The White Paper has been a very long time in development and comes almost three years after the Government originally consulted on its proposed reforms.

The Government’s proposed reforms would undoubtedly see the biggest shift in the balance of rights between landlord and tenant for over three decades. However the challenge for ministers and officials has been to find the optimum balance between greater security of tenure for tenants whilst, at the same time, ensuring landlords remain able to legally take back possession of their property where they have reasonable grounds to do so.

The headline proposal in the White Paper is the abolition of Section 21, or so-called ‘no fault evictions’, where landlords can evict their tenants at two months’ notice without needing to give a reason. At present landlords ordinarily seek possession of their property in one of two ways – by serving a Section 21 notice, or by serving a Section 8 notice, which enables them to evict their tenant providing certain grounds have been met, such as rent arrears or wanting to sell the property. To compensate for the abolition of Section 21, ministers are proposing to expand the grounds set out under Section 8 so that they cover a wider range of scenarios, such as anti-social behaviour. On the surface this sounds reasonable; however many landlords argue that they only use Section 21 because the court process needed to give effect to a Section 8 notice takes too long and is too convoluted. Whilst ministers are proposing reforms to the relevant court processes, in response to such concerns, only time will tell if it will be sufficient to maintain a healthy balance in the rights between landlords and their tenants.

Other measures in the White Paper have similarly been in the pipeline for some time, particularly to address the minority of so-called ‘rogue landlords’ and to enhance tenants’ rights to challenge poor landlord practice. This includes the creation of a new ombudsman to settle disputes between landlords and tenants, and the creation of a new national landlord register. The previously announced extension of the Decent Homes Standard to the private rented sector is also intended to create a minimum acceptable standard of accommodation and to remove the sometimes significant divergence in housing quality between the social and private rented sectors. The headline-grabbing announcement of a new legal right for tenants to have a pet in their home is something that many have been calling for; however it is the proposed outlawing of landlords refusing to let their properties to benefits recipients that could worry many across the sector.

Indeed, whilst the reforms overall are finely balanced, the big unknown is whether this package of changes will have an adverse effect on investment in the private rented sector going forwards..There is little doubt that these reforms will deliver on the Government’s intention to enhance the experience of those renting in the private sector. However there is a danger that some landlords, particularly with smaller portfolios, decide that letting a property is now simply too much hassle – particularly when considered alongside other tax and regulatory measures introduced in the last decade which have made letting property less financially attractive and which could see some opting to leave the sector. The knock-on effect this could have on the supply and affordability of private renting might well be significant.

The glaring omission from the White Paper is any clarity on the previously proposed new minimum energy efficiency requirements for private rented properties. In 2020 ministers proposed introducing a minimum EPC C standard for new tenancies from 2025, and all tenancies from 2028 – but the Government has said little about the matter since then. It is this requirement that is really concerning many in the sector, as they face the prospect of large bills for upgrading their properties to the new minimum standard, which could be a particular challenge for those with older houses. Ministers will need to provide clarity on this matter soon if they are to avoid significant unintended consequences for housing supply in the coming years.

GK Insight – Dr Iain Wilton on the future for financial services

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GK’s Head of Research, Dr Iain Wilton, reflects on the future of Britain’s financial services in the wake of the Queen’s Speech. 

Many aspects of the Queen’s Speech have received a lot of attention, from the absence of the Queen herself to the inclusion of so many housing-related bills – less than a week, in fact, after housing issues contributed to the Conservatives’ poor local election results, especially in London.

Surprisingly, however, relatively little attention has been paid to legislation that will fundamentally affect one of the UK’s most significant, successful but sometimes controversial sectors – its world-renowned financial services industry.

Together with associated professional service businesses, it employs more than 2.3 million people around the UK and contributes £193 billion to the economy – including £75 billion in taxes – yet some fundamental changes to its operation currently risk going ‘under the radar’.

Somewhat overshadowed by the announcement, in the Queen’s Speech, of 37 other pieces of legislation, the Financial Services and Markets Bill will cover everything from cash access to cryptocurrencies and scam prevention to the latest financial technology (fintech). Above all, the Government plans to introduce a new regulatory regime which will diverge from the EU model, encourage greater investment (especially in infrastructure) and, in the process, provide some of the ‘Brexit dividend’ that ministers are desperate to deliver before the next general election.

It will be a far-reaching piece of legislation. Moreover, it was accompanied in the Queen’s Speech by the dry-sounding but highly significant Draft Audit Reform Bill, which recognises that some high-profile company collapses (e.g. Carillion) have shaken people’s faith in the UK’s existing audit, governance and corporate reporting systems. As a result, competition will be increased, a new regulator will be created and, if the Bill is successful, trust should be rebuilt.

Both pieces of legislation will be subject to exhaustive scrutiny by MPs and peers, so each is certain to be amended and neither will be enacted any time soon.

In the meantime, however, significant changes are still afoot. In particular, the Financial Conduct Authority has recently published its new three-year strategy, which will result in the FCA becoming both a larger and a “more assertive” regulator which, in its words, wants to be “testing the limits of our own powers”. Indeed, after concluding that, at present, “firms are not consistently putting consumers first”, it will be publishing both an important “fair value” policy and an overarching “Consumer Duty” for financial services firms.

Due for introduction in late July, the ambitious new “Consumer Duty” will “set clearer and higher expectations for the standard of care firms give customers” and require them “to act in good faith, avoid foreseeable harm to their customers and support and empower them to make good financial decisions.”

At GK, we believe it represents a far-reaching tightening of the UK’s system of financial services regulation and, accordingly, it will be essential for firms to understand their new obligations and prove their compliance.

The Government’s legislative agenda, outlined in the Queen’s Speech, certainly dominated the headlines for much of the following week; its 38 bills will keep Parliament busy throughout the coming year; but some important policy changes are already imminent in the financial services sector – despite their low political profile – as the FCA prepares, even without new legislation, to flex its muscles as never before.

GK Point of View - Monica Thompson on the challenges facing the early years sector

GK Point of View – Monica Thompson on the challenges facing the early years sector

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GK Consultant and education expert, Monica Thompson, takes a look at the challenges facing the early years sector.

While the Covid-19 pandemic has affected the entire education sector, this period has been particularly challenging for nurseries, pre-schools and other early years settings. Ofsted’s recently published findings on the pandemic’s impact on children of all ages and backgrounds. It reported that children who had been hardest hit by the pandemic actually regressed in terms of their basic skills and learning. Similarly, research by the Sutton Trust from May 2021 [1] emphasised that over half of parents of pre-school children were worried about Covid-19’s impact on their children’s wellbeing and long-term development.

The Social Mobility Commission report ‘The stability of the early years workforce in England’, published in 2020, had previously found that that low pay, heavy workloads and a lack of career development for early years workers were likely to have a serious impact on nurseries, pre-schools and other settings. The pandemic proceeded to lay bare the vulnerability of the already struggling early years sector. In April 2022, the Department for Education published three new reports which were commissioned from the National Centre for Social Research (NatCen) and Frontier Economics [2]. The reports focus on Covid’s impact on the early years sector and jointly emphasise the challenges posed by funding constraints and severe staffing issues (including workforce recruitment / retention), as well as wider economic pressures and generally rising costs. The reports also raised concerns about deregulation and the mooted relaxation in staff/child ratios – stating that it might lead shortages of qualified and experienced people in the sector.

The same reports also found that 72% of private, voluntary and independent (PVI) nurseries and pre-schools have lost staff since the pandemic began. Nearly half (47%) of PVI nurseries and pre-schools said the main reason for staff leaving was to seek better pay while, worryingly, an even higher proportion (60%) reported that those exiting are leaving the sector entirely. The reports also collectively found that 54% of PVI settings and 49% of childminders report that their total costs have ‘notably’ increased on pre-Covid levels. Indeed, only 39% of private providers and 21% of voluntary providers were in financial surplus in 2021 and, for childminders, the figure fell to just 19% [3].

It is worth noting that all main political parties are now emphasising the growing problems over childcare’s affordability. The main focus of the current government, in terms of addressing these early years financial challenges, has generally been on parents’ employment and behaviour, not their circumstances. However, the paradigm has started to shift in recent months. For example, in October 2021, Nadhim Zahawi MP, during his first conference speech as Education Secretary, recognised that 40% of educational inequality is ‘baked in’ by the age of five. He also said that the Government would invest a record £180 million in ‘outstanding’ early years staff.

Looking ahead, we can expect a stronger focus on early years issues over the months ahead. Ofsted’s recently published five-year strategy [4] emphasises the inspectorate’s work in the early years sector and recognises the pandemic’s impact on young children. Indeed, Her Majesty’s Chief Inspector (HMCI), Amanda Spielman, has said that Ofsted wants to bring early education to the fore and will work on developing the associated evidence base. The organisation’s new 2022-2027 strategy not only acknowledges that the sector has been hit hard by Covid-19 but quantifies the problem by recognising that, during the course of the pandemic, the number of registered childcare providers fell from over 75,000 to just below 70,000 – with childminders accounting for the bulk of the reduction. However, ultimately, Ofsted’s commitments will only work if they are backed by government policy that supports the Early Years sector. The sector also needs appropriate investment to guarantee that nurseries, pre-schools and other early years settings are able to provide quality care and education.

For more information, please contact Monica at monica@gkstrategy.com

[1] Fairness First: Social Mobility, Covid and Education Recovery – Sutton Trust

[2] The three reports can be read below:

[3] Impact of Covid on childcare settings highlighted in new DfE research – Early Years Educator

[4] Ofsted Strategy 2022 – 2027

Kings Speech

GK Insights – Perspective by Dr Iain Wilton on the Procurement Bill

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Despite its scale and economic importance, government procurement is seldom the most exciting or newsworthy subject.

 It hits the headlines only rarely and, when it does, it’s usually for the wrong reasons.

 During the Coalition Government, for example, public procurement briefly led the news when an independent review –  led by a successful retailer, renowned for his company’s tight cost controls – found that different parts of the public sector were paying vastly differing prices for the same basic goods and services.

 For example, boxes of paper were found to cost between £8 and £73 while daily car rental varied from £27 to £117 – even within the same Mondeo-sized category. The review also criticised the lack of centralised purchasing, “poor negotiation” with major suppliers and the “shocking” state of procurement data, which was “both inconsistent and hard to get at.”

 Some positive progress was made, especially in rationalising government buildings, but the review’s status was soon undermined by complaints about the tax arrangements of its author, Sir Philip Green – whose own business empire, starting with BHS, gradually began to unravel.

 More recently, government procurement during the Covid pandemic attracted widespread criticism, with many items of personal protective equipment (PPE) proving to be high cost but low quality. Indeed, official figures show that PPE storage costs have recently been running at around £500,000 per day – even though many of the items have passed their expiry dates.

Over the coming months, government procurement policies are likely to return to their usual low public profile while, at the same time, attracting considerable behind-the-scenes attention in Westminster, Whitehall and the UK’s business community.

The reason is simple. After a Green Paper in 2020 and an extensive consultation process early last year, the Government finally announced, in the recent Queen’s Speech (10 May 2022), that it will be introducing its long-awaited Procurement Bill.

Its main aims are two-fold. First, to demonstrate that the Government is “taking back control” by creating a new procurement system that is simpler, more transparent and more attuned to UK’s particular needs than the previous regime – based on European Union directives. Accordingly, it is intended to form part of the “Brexit dividend” that Ministers need to demonstrate in the run-up to the next general election.

Second, it aims to provide a boost to UK businesses by making it easier for smaller firms and new market entrants to compete for – and win – public sector contracts. Plans include the creation of a single digital platform for supplier registration, so that a business needs to submit its data only once – rather than repeating the process whenever it’s interested in a competing for a public sector contract.

The stakes are certainly high as, according to the Government’s announcement, public procurement amounts to approximately £300 billion per year – “around a third of all public expenditure every year” – so some exciting opportunities could be created by the new system.

No one should be under any illusions, though. Neither the opportunities nor the “dividend” is likely to delivered any time soon. Not only are other proposals from the Queen’s Speech more politically pressing but the Government is committed to providing stakeholders with a six-month notice period, between the legislation being concluded and the new system going ‘live’, in the interests of effective implementation.

As a result, the change-over is unlikely to happen until some time next year, at the earliest. Given the sums involved, however, even a modest improvement in UK government procurement could mean that it’s well worth everyone’s wait.

GK Strategy will be monitoring the Procurement Bill’s passage through both Houses of Parliament and can advise on its contents, progress and any amendments to this important legislation.