Author Archives: GK Strategy

GK Point of View - Tory and Labour Priorities in 2024

GK Point of View – David Laws on the Prime Minister’s survival

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Perspective by David Laws, GK Adviser

The issue of whether Boris Johnson can remain as PM is firmly back on the agenda. The Prime Minister faces multiple risks over the six months ahead, which include: the local election results; possible additional “partygate” fines; the release of the Sue Gray report; and now an investigation by the Privileges Committee. Any one of these could trigger events that would end the PM’s time in Downing Street.

But the ever-resilient Mr. Johnson will still feel that he is in with a chance of recovering, and in a much better position than he was, just a few months ago. His predicament previously looked terminal, and Rishi Sunak was heavily tipped to take over. What changed? Well, three things. The police intervention scuppered the Gray report, and led to a “drip,drip” of problems rather than a cascade. Then, the invasion of Ukraine intervened – dominating the news agenda and causing Conservative MPs to think twice about the timing of any attempt to topple their leader. And, finally, Rishi Sunak’s star has faded dramatically: his wife’s non dom status, his failure to address the cost of living crisis, and his own partygate fine appear to have hugely diminished his appeal and his prospects. His odds of becoming PM have collapsed

So, Boris is still in place, and after each piece of bad news he will be able to argue that his MPs should defer judgement until some later occasion – the Gray report or perhaps now the Privileges Committee investigation, whose results could now be months away.

Johnson still faces considerable risks, but the odds of him surviving as PM into 2023 are perhaps now 60:40 in his favour. Not long ago, he looked overwhelmingly likely to lose office, so his circumstances are still much improved.

The PM’s predicament – still in power but widely discredited – and the collapse of support for the Chancellor, is all extremely good news for the Labour opposition. They have not, of course, secured the Johnson “scalp”, but they have avoided the situation in which the Conservative Party simply switched Boris for another election winner. A discredited PM and damaged Chancellor is a gift to an opposition which now looks capable of winning an election against an imploding government, but not strong enough perhaps to win on the basis of its own programme alone.

The odds in the bookies, where Rachel Reeves is tipped as the next Chancellor and Keir Starmer is well rated to be the next PM, indicates that Labour’s programme for government needs to be taken more seriously by the business and investor community than for perhaps a decade.

Although Starmer’s Labour Party is far more moderate than that of Corbyn’s, it would still likely make major changes to taxation, business and labour market regulation, public spending, and relations with the EU.

We will want to look in detail at this programme over the months ahead. An election does not need to be held until mid 2024, but investors will increasingly factor this into their calculations.

Is tech political_

Is tech political?

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It is not unreasonable to take the position that technology firms – at the cutting edge of innovation through new product and service development – should steer well away from the complex world of politics. However this overlooks the reality that the policy and regulatory decisions underpinning the sector’s operating environment are by their nature, political, and therefore engaging proactively with policymakers to help shape that future environment makes good business sense.

The range of current Government workstreams on technology and digital issues is vast. From the future of the UK’s data and privacy regime, to innovation and digital regulation, online safety, competition in digital markets, cyber security, AI technologies, digital tax and online advertising – there is a significant amount of thinking going on across Government about how policy and regulation should be shaped in response and to promote growth in this and other sectors where ministers see opportunities for the UK to develop a competitive edge in the post-Brexit environment.

Indeed for SMEs or newer entrants to the market, the risks of sitting back are even greater, as established players and those with the loudest voices look to either maintain the status quo or shape the regulatory environment in their favour, with heavy handed regulators also getting involved and creating a stifling environment for growth.

The tech sector is the fastest growing in the UK economy, but there is no monopoly of wisdom within Government about how best to tackle the challenges it faces. The risks of unintended consequences are significant. It is essential therefore that technology firms communicate effectively about the value of tech and work with the Government to shape the policy and regulatory environment in a way that creates a positive environment for long-term growth. Tech is political – and so it ought to be. But it is essential that companies take advantage of opportunities to be part of the conversation within Government and beyond.

Our team has significant experience of advising technology companies, helping them to engage with policymakers on a range of digital policy issues. If you would be interested in a conversation, please contact Will Blackman at will@gkstrategy.com

 

What does a _review_ of government policy on employer training mean_

What does a “review” of government policy on employer training mean?

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Perspective by David Laws, GK Adviser

Last week the Chancellor, Rishi Sunak, made a few waves in the education sector by announcing in his Spring Statement a “review” of government policy on employer training, including the Apprenticeship Levy. The announcement caught many by surprise, including apparently some of the Chancellor’s colleagues in the Education Department.

By the end of the week, some were suggesting that the “review” was not a formal “Review”, and might not result in much change in the Levy. So, what exactly is going on? Well, the Apprenticeship Levy seems to have strong backing in the government, and indeed across the political parties. Inevitably, there are often calls for tweaks, for more “flexibility” and for a variety of different reforms – not all of which are mutually compatible.

The Chancellor’s “review” could result in looking again at some of these practical issues, which also include the extent to which the existing Levy is being used to support new entrants into the labour market, as opposed to existing staff (some of whom may already have higher level, tax-payer supported, qualifications). But the Chancellor might have something new or “additional” in mind, to work alongside the Levy. In his recent “Mais Lecture” the Chancellor started to set out his vision of a post-pandemic economic strategy, including “investment in people”. Some have speculated that he may want to introduce some sort of discrete tax credit to incentivise training. This would presumably involve reformulating the existing tax relief for training which is available through the corporation tax system. The aim, in any case, seems to be to raise the amount of expenditure by employers on training, and improve its quality and focus. The review will look at whether current incentives are delivering the “right kinds of training”.

What should those interested in the Apprenticeship Levy make of all this? It seems if there is still a strong commitment to the principle of the Levy, and a desire in some parts of government not to rock the boat too much. This could suggest that the review will make small changes to the Levy, while perhaps restructuring other training reliefs.

But it would be unwise to take any review into this area for granted – not least one where the powerful Treasury appears to be in the driving seat. To the extent that the review does look at if “the current tax system is incentivising the right kinds of training”, the review could ask some fundamental questions, which could have both direct and indirect effects on the Levy. This could include looking at issues raised by the Augar Review, around the support for higher level apprenticeships.

Whether this “review” is one with a small “r” or capital “R”, all those interested in the Levy and the future of government policy on training support incentives should be using this as an opportunity to feed into government their views on how the system should evolve. The review is going to need to address some fundamental issues, and what impact this will have on future government policy on training cannot be taken for granted.