Please find enclosed a new weekly update from GK Strategy on the latest developments from the Russia Ukraine conflict including economic, diplomatic and political impacts of the war. Read here: GK Strategy Russia Ukraine Bulletin 17.03.22
The government has today announced its (very!) long awaited response to the Augar Review on post 18 education finance. The announcement will be eclipsed by the dramatic news of Russia’s invasion of Ukraine, but it is of importance for the long-term outlook for post 18 education.
The Augar Review was originally inspired by Theresa May’s desire as PM to offer a reduction in student tuition fees, after this became a major issue in the 2017 General Election.
It is believed that May wanted fees cut to £7,000 or £7,500 – perhaps with higher government grants to protect the more “expensive to deliver” courses. There was also a strong desire to shift financial resources away from “low value” Level 6 HE courses, towards Level 4/5 provision in subject areas of greater relevance to skills shortages and the labour market.
Today’s news indicates how far the government has moved from the initial May/Augar vision. Tuition fees will remain at £9,250 for the rest of this Parliament, and quite possibly beyond. Labour has also, under Keir Starmer, moved away from prioritising lower tuition fees. Instead, policy makers will allow inflation to gradually eat away at the real value of fees, which will over time put greater pressure on university finances.
Not only will students be stuck with £9,250 fees, but future students will be expected to start repaying their loans at a much lower level of real incomes – £25,000, instead of over £27,000 at present. The government and the Treasury have decided that students must pay back a lot more towards their loans, rather than allowing taxpayers to take the strain. As well as repayments starting earlier, payments for many will last much longer – for 40 years (before write-off), rather than the existing 30 years. However, in one piece of good news for students, the interest rate on student loans will be cut, so that it is limited to the RPI measure of inflation.
Overall, the changes to student repayments are regressive – lower earning students will pay a higher proportion of income, while higher earners gain from the lower interest rates. The strongly progressive structure put in place by the Coalition government is being watered down.
Where the conclusions of the review do still follow some of the Augar agenda are around the more generous Lifelong Loan Entitlement for both HE and other technical post 18 courses, at Levels 4/5/6. And the two consultations on minimum entry grades for post 18 study and around student numbers control are very important shifts towards potentially restricting access to university courses to those with higher attainment, and to courses with higher labour market returns. This is another major shift away from Coalition policy, which allowed for sector and student led increases in HE places.
The reviews will be controversial, and could make a major difference to the final policy proposals. Disadvantaged students could be big losers from any attempt to restrict university places to those with higher grades, while those delivering courses that lead to typically lower paying jobs will worry that they could face new restrictions on student places. By establishing reviews into both these issues, the government is accepting that change is highly controversial and needs much further thought.
If you would like to discuss the landscape for education policy in the UK, please email louise@gkstrategy.com
Read GK’s newest insight paper on the Government’s Levelling Up White Paper here: Levelling Up White Paper Insights
To discuss what the White Paper means for your business or investments email jack@gkstrategy.com to fix up some time.
Annual contracts for difference – how will this impact the UK’s renewable energy generation?
Amidst a worsening energy and cost-of-living crisis, and ongoing pressure from within the Conservative Party in the shape of the Net Zero Scrutiny Group, earlier this month the Department for Business, Energy and Industrial Strategy has made one of its biggest statements to reaffirm its commitment to the development of the renewable power industry in the UK. In line with commitments in the 2021 Net Zero Strategy, the Department has taken the decision to hold Contracts for Difference (CfD) auctions on an annual basis from March 2023, rather than every two years as previous.
The scheme is the Government’s flagship policy for the deployment of low-cost renewable energy, which incentivises investment into renewable energy generation by providing energy providers with stable and predictable returns on their supplies. This is achieved through long-term contracts of 15 years, where two parties — a renewable energy supplier and the Low Carbon Contracts Company (LCCC) — agree to pay the other party for the difference between the market price and the value which the parties agreed at the point the CfD was entered – the strike price. For example, when the price for electricity dips below the strike price agreed with the government as part of a developer’s CfD, the developer will receive a ‘top up’ to the level of the strike price, and vice versa.
This significantly reduces the investment risk for developers, and allows them to borrow money more cheaply, accelerating the development of low-carbon technologies and crucially continuing to drive down the costs of generation. This can act as the catalyst of continual development for the UK’s renewable energy market, creating optimal conditions for consistent private investment into the landscape.
These developers will be crucial pillars for the UK’s net-zero strategy, not least because of the UK’s lofty target to reach 40GW of wind power capacity by 2030. The scheme has clearly already had an effect. In 2010, total capacity was 5.4 GW. By 2020 that figure had more than quadrupled to 24 GW, after the scheme was introduced in 2013 on a bi-annual basis.
So why the need to scale the scheme up to annual rounds of bids? One of the biggest factors behind this is undoubtedly UK energy security. The Government has painfully learnt the complications and difficulties of being dependent on supplies of natural gas from the European continent for a significant portion of the UK’s energy supply, with considerable strain now being felt by the British consumer. Increasing the frequency of CfD auctions will increase the number of opportunities for developers to engage with the scheme, helping to provide a diversified power supply and support the UK’s long-term energy security. The decision will also dramatically lessen the burdens for renewable energy companies, who will be able to take advantage of the regularity of auctions rather than having to navigate the two-year periods of uncertainty between the CfD auction rounds.
Fundamentally, this move is a positive one for both supplier and consumer. The annual rounds of contracts greatly ease the strain on renewable suppliers, providing developers with the assurance that their risks will be minimised and incentivises continued investment into the UK. The subsequent scale-up of renewable energy into the grid will mean that there is much greater flexibility in the system for consumers to help shield them from future price shocks and advancing the UK’s Net Zero credentials further.
The fast-paced nature of this environment will create a strong platform for engagement with Government. GK Strategy has extensive experience of advising governmental engagement and helping businesses take advantage of existing opportunities within the energy policy landscape.
For more information, get in touch with milo@gkstrategy.com.
GK Adviser, and former Health Minister, Phil Hope shares his thoughts on the Government’s proposals for health and care reform in our newest blog ‘Integration White Paper Joining up care for people, places and populations: A genuinely radical leap forward’
Read Phil’s thought’s here: Integration White Paper – Joining up care for people places and populations
The Omicron variant, parliamentary scrutiny and a distracted Government are all hindering the development of Integrated Care Systems (ICSs) and there are concerns about the framework that sits around them.
Amidst the capacity and workforce pressures faced by the health service this winter, longer-term ambitions for the transformation of our health and care system are also feeling the strain.
The timelines for formalisation and statutory responsibility of the 42 Integrated Care Systems (ICSs) in England have been pushed back. The intention is now for them to be given their full statutory responsibilities by 1st July this year rather than 1st April as originally planned. The primary reason given for this delay is to allow parliament an acceptable amount of time to review and approve the proposed changes.
Even with this extension, there is growing frustration that this wholescale reconfiguration of the health system is not being accompanied by the required due diligence and planning.
The Health and Care Bill – the legislation that will enable these reforms – has reached the House of Lords and the early signs are the Government are in for a bumpy ride.
It’s times like this where the second chamber can demonstrate both its value and its limitations. More sector specialists, less constrained by time pressures and careerism often makes for a better assessment of the changes proposed. Any substantive improvements to the legislation are likely to come from the Lords, the challenge or opportunity depending on your perspective is that any amendments must be approved by the Commons, where the Government has a strong majority and can whip MPs effectively. Therefore, sensible Lords amendments may well be reversed prior to the Bill receiving Royal Assent.
The concern for the Government is that the Lords are starting to highlight that the legislation is poorly planned and drafted. In the Autumn of 2021, Health Secretary Sajid Javid admitted that “significant areas of contention” had yet to be resolved with the reconfiguration of the health system the Bill and he’s being proved right.
The initial assessment from the Lords has been both scathing and embarrassing for the Government. the Delegated Powers and Regulatory Reform Committee has stated that the Bill “falls so short of the standards which the Committee — and Parliament — are entitled to expect” and the legislation is a perfect example of a wider issue of “how much disguised legislation a Bill can contain and offends against the democratic principles of parliamentary scrutiny”.
Furthermore, just as the Bill was due to begin its Committee Stage the Lords Shadow Health Spokesperson, Baroness Thornton, also identified that proceedings couldn’t legally begin without an impact assessment related to parts of the legislation. The Government has apologised for the oversight and the very short notice that they were shared.
Taken together, these issues all add to the impression that the reforms are being rushed through, at a time of extreme pressure on the health system with not enough evaluation of the impact and practical implementation of new powers and accountabilities. The biggest concern among those who favour greater health devolution is that the Bill will reinforce the instinctive tendencies of the government and NHSE towards greater centralisation and prescription, and continued NHS dominance of the health and care agenda.
During January and early February 2022, the Lords will undertake a line-by-line examination and vote on each clause of the legislation – including the long list of amendments tabled by Peers.
Trying to predict which amendments will garner enough support is difficult – let alone which the Government may concede on – but topics that have high profile backers and cross-party support include:
Of course, it’s not just the Parliamentarians that are frustrated, many ICS leaders – preparing to go live with their accountable duties – only found out about the delay via third party sources with the Department of Health & Social Care and NHS England’s communications leaving much to be desired. Louise Patten, Chief Executive of NHS Clinical Commissioners recently outlined that that the delay causes confusion about local leadership responsibilities and partnership working with local government and threatens accountability.
Moreover, the delay in publication of the Integration White Paper, further guidance on developing place-based Integrated Care Partnerships and the Levelling Up White Paper also means that many areas are continuing to develop new local partnership governance arrangements in the absence of a national policy framework.
And of course, all of this hugely matters to patients, the healthcare workforce and organisations trying to supply the health system with the services and technology it needs.
Organisations with a stake in health care delivery need to ensure that they monitor the passage of this legislation and importantly seek the practical understanding of where accountability and commissioning responsibility lies within ICS ‘footprint’ regions.
For further information about the implementation and impact of ICS’, please email joecormack@gkstrategy.com