Category Archives: Government Relations

Budget preview: One week to go

In his first budget, to be delivered to the Commons next Wednesday, the Chancellor John Healey will repeat his defining messages: money and power moved out of Westminster and a budget built on fiscal discipline and stability. The detail of the Budget itself is widely expected to focus on families and business – building on the Burnham government’s early theme of ‘breathing space’ for those struggling.

With a week to go, and in striking contrast to the last two budgets delivered by Rachel Reeves, we have so far seen little of the usual speculation or Treasury leaks on policies expected to feature in the headline Statement. The government will want to position this as a ‘no drama’ budget, not least because large spending decisions on welfare, defence, and social care appear delayed until after the budget.

The fiscal inheritance remains rather similar to past budgets, but with higher public sector pay demands, and higher than expected inflation together with in-year spending pressures, departmental spending will need to be addressed with little ‘headroom’ for manoeuvre.

The prime minister has said that he wants to run the most ‘pro-growth and pro-business country in the world’ and the FT has reported that both PM and Chancellor have reassured business leaders there will be no significant tax increases, sticking to the Starmer government’s self-imposed fiscal rules. This therefore means the government is likely to seek short-term measures to alleviate cost of living pressures. Further measures expected in the budget include:

Financial and Professional Services: It is now understood that rises to Capital Gains Tax have been ruled out; a move clearly designed to signal that this government is neither anti-business nor anti-wealth. Instead. we expect the chancellor to look to the banking sector as his primary revenue raising source. Whilst this may be consistent with the government’s overall positioning as a government for ‘working people’, protestations from the financial services sector that the government is undermining its international competitiveness will inevitably follow.
Education and skills: Reducing the number of young people not in education, employment or training (NEET) is a priority of this government. The budget is likely to feature further advance payments that pre-empt the recommendations of the Milburn Review, building on the Chancellor’s announcement of a £100 million expansion of apprenticeship brokerage services across mayoral strategic authorities. It will also offer an opportunity to put some funding behind Burnham’s commitment to expanding vocational and technical pathways in schools for students aged 14-16.
Health: The health sector will be keen to see further funding for integrated neighbourhood health services, building on plans to bring NHS, council and community services closer together. The budget could also clarify how devolution may give mayors and local leaders greater flexibility over health and social care priorities.
Energy: We expect an energy package for low-income households and a further freeze to Fuel Duty. The energy secretary has reportedly been tasked with finding more than £2bn of savings from the department’s budget, with reform of the Boiler Upgrade Scheme expected to contribute to those reductions. While the scheme is expected to remain in place, cuts to its £2.7bn five-year budget could reduce the level of support available for heat pump installations and slow the uptake of low-carbon heating technologies.

While Burnham remains personally popular in the polls, many think the budget will be the end of his honeymoon period. With the prospect of a Spring 2027 election, we should keep watch for policies that not only consolidate support from the so-called progressive left but also measures aimed at winning back Labour voters who have shifted support away from the party since 2024. With so many of the major reforms that Burnham has committed to – from the National Care Service to electoral reform – deferred until the next parliament, the public will become increasingly restless for progress and change as we hit the halfway point of this parliament. Questions are already being asked what the prime minister plans to do with the landslide majority he currently has in the House of Commons, which polls suggest would be significantly cut or even lost in a general election. The budget will be the government’s chance to set a clear course for the coming months and indeed years, and it will be important that the chancellor and prime minister seize it.

Labour Party Conference: Burnham’s plan to make Britain ‘Hope Again’

GK’s Lauren Atkins shares her reflections from attending Labour Party Conference.

As September drew to a close, party members, politicians, journalists and public affairs professionals once again descended on Liverpool for the annual Labour Party Conference. The third since Labour took office in 2024, this year’s gathering was the first with Andy Burnham as Prime Minister, setting the stage for a party looking to turn the page on recent political instability.

There was a palpable buzz around this year’s conference. The atmosphere was one of renewed optimism and a desire for clearer direction, reflected in the presence of Burnham’s new cabinet colleagues and junior ministers, who packed out fringe events and receptions to engage with party members and businesses. There was a clear effort to reconnect Labour with its sense of purpose and build excitement around the government’s next chapter.

Under the banner of “Hope Again”, Burnham’s first conference speech as Prime Minister provided the focal point. Promising to “break with the direction of the past forty years”, he criticised deindustrialisation, deregulation, privatisation, austerity and Brexit, setting out a vision in which the state takes a more active role in public services, economic renewal and tackling the cost of living. The speech received at least eleven standing ovations from delegates in the main conference hall, underlining the enthusiasm among party members for a clear, long term political vision for the UK.

The policy announcements were wide-ranging. Burnham committed to establishing a National Care Service in the next parliament, transforming the state pension triple lock from 2030, and launching a commission on electoral reform. He also signalled a renewed focus on the UK’s long-term relationship with the EU, promised legislation to enable the public ownership of water companies, and announced plans to remove VAT from electricity bills from the beginning of October, develop a national energy plan and establish Great British Grid. On housing, he reaffirmed plans for the biggest council housebuilding programme since the post-war era, alongside measures to support first-time buyers and reform leasehold. Internationally, he pledged to put AI at the centre of the UK’s G20 presidency next year.

Taken together, these commitments offered a clearer articulation of the government’s ambitions and helped sustain the conference’s sense of momentum. Yet, while the enthusiasm in Liverpool was unmissable, the government faces a tight timetable to convince the wider electorate that its vision can deliver. With the next general election less than three years away, the challenge will be to turn the optimism of “Hope Again” into tangible improvements for households and businesses, particularly those facing persistent cost-of-living pressures.

Yesterday’s long-term commitments – with the most significant policy changes not expected until 2030 – were certainly valuable for Burnham in setting out his stall and establishing a sense of direction, but they will do little to reassure voters unless progress is also felt in the near term. The upcoming Budget will be an early test of how the government intends to balance its ambitious programme with the realities of public spending and the immediate economic pressures facing the country.

Burnham has given Labour members renewed reason to feel energised about the future. The conference had a genuine sense of optimism and purpose, but the real test lies beyond Liverpool docks. The coming months will determine whether that enthusiasm can translate into effective government, and whether “Hope Again” can become more than a conference slogan.

Crunching the NEET numbers: Is the crisis worse than we think?

Youth unemployment has rarely been higher on the political agenda. The ‘NEET’ acronym, which applies to 16-24 year olds not in education, employment or training, has become a common feature of our political vernacular: ‘one million NEETs’ a phrase now all too familiar in conversations around skills, welfare and the future of work. Since January 2026, the term ‘NEETs’ has been mentioned more times in the House of Commons than in the entire period between 2020 and 2025. The subject is likely to face more scrutiny in the autumn, as the final, ‘solutions’ report of Alan Milburn’s review into young people and work is published.

What actually lies behind the one million figure? And what do the intricacies of the data mean for the future of the crisis, and for how we assess the government’s existing, and upcoming, policy interventions in the space?

The total number of 16-24-year-olds classified as NEET has risen from 740,000 in June 2022 to one million in March this year. Since the Milburn Review was commissioned in November last year, the estimated number of NEETs has risen by 50,000, and there is little sign that the increase is slowing. The latest estimates equate to 13.5% of the total 16 to 24 cohort, or close to one in seven of Britain’s young people.

The headline number only tells part of the story. Zooming in on the statistics tells us that the NEET crisis is not, as is perhaps commonly assumed, most acute among school or university leavers. Instead, it is among the eldest cohort of young people (23 to 24-year-olds) that the scale of the problem is most apparent, and where the long-term consequences of disengagement are arguably greatest.

The older the NEET, the deeper the problem

According to ONS data, 18 to 20-year-olds account for approximately 30% of the total NEET figure. The ‘NEET rate’, the percentage of young people within a given age group, among the entire 18-20 cohort across the country is relatively low (11.4%), and the overall number has undergone a decline in the last two years. The majority (56%) of these NEETs are classified as economically inactive (not working and not looking or able to do so) with the remainder unemployed.

Among 21 to 22-year-olds, the age at which many will leave university or further education, the NEET rate rises to 17%. The balance shifts ever so slightly to 43% that are unemployed and 57% economically inactive.

The final age group, 23 to 24-year-olds, is where the NEET picture becomes much starker. NEETs in this age group account for over a third of the one million total, and the figure is equivalent to a staggering 18.2% of the age cohort, almost one in five. More striking still is the composition of that group. Just 36% are unemployed, while 64% are economically inactive.

That inactivity figure will be a source of much consternation for policymakers. We know from Alan Milburn himself that once young people stop looking for work that ‘the route back is much harder.’ We also know that 45% of today’s 24-year-old NEETs have never had a job, and that those who have never worked by 24 are far more likely to struggle to find sustained employment for the rest of their lives – a long-term ‘scarring effect’ that follows young people into adulthood. The fact that the number of 25 to 49-year-olds unemployed for 12 months or more has risen from 151,000 in April-June 2025 to 198,000 in April-June 2026 may be an early sign of this reality showing up in the data, especially as today’s 25-year-old NEETs slip out of the 16-24 limelight.

Under the Labour government, there have been some attempts to intervene. Keir Starmer oversaw the launch of various initiatives under the Youth Guarantee banner. This include the Jobs Guarantee, offering government-funded six-month work placements for 18 to 24-year-olds on Universal Credit who have been looking for work for 18 months; and the Youth Jobs Grant, worth £3,000 to employers that hire a young person on UC who has been looking for work for six months or more. Together, these policies are expected to support 150,000 young people into jobs over the next three years.

Likewise, in recent weeks Andy Burnham has proposed introducing technical education qualifications for 14 to 16-year-olds in schools; a move billed as a way to boost skills development for young people and enhance their readiness for ‘the jobs of the future’, matched to local employer need, with positive knock-on effects for career options. This proposal, alongside commitments to devolve 16-19 funding powers to regional mayors, has been billed by the government as the ‘first step’ in the prime minister’s plan to tackle the youth unemployment crisis.

There are merits to both interventions but also limits. The Youth Guarantee schemes, for example, targets young people already visible through the benefits system, leaving the ‘hidden NEET’ population with little equivalent support (those who do not receive any welfare support from the government, estimated at around half of the total). Earlier exposure to technical education may help prevent young people becoming detached from work in the first place, and devolved powers mean more tailored local skills provision in some regions. However, the reforms will do little for the large cohort of older NEETs already sitting outside the labour market, with the implementation of these reforms not expected until at least two years down the line.

The findings and recommendations of the Milburn Review will need to be wholesale and ambitious if they are to make a meaningful dent in the NEET numbers. But they must also take account of where the biggest NEET challenge actually lies, among the eldest cohort. While policymakers often point out that ‘NEET does not begin at 16’, their future interventions must be equally guided by the truth at the opposite end of the spectrum that NEET does not end at 24. The current trajectory appears unsustainable. ONS figures this week, showing a further fall in job vacancies, suggest the crisis may well get worse before it gets any better.

GK Strategy are a sector-leading team of consultants with expertise and experience across the education and skills landscape. If you have questions about government policy in the space, or would like to discuss GK’s public affairs offering, please contact:

Scott Dodsworth – Managing Director at scott@gkstrategy.com.

Natty Croucher – Associate at natty@gkstrategy.com

View from the US: The Rise of American Progressives

Erin Caddell of GK Strategy’s American partner Anchor Advisors examines the ideological battle reshaping the Democratic Party and what it could mean for investors, corporates and the future direction of US policy

Sir Isaac Newton’s Third Law of Motion, published in 1687, states that for every action there is an equal and opposite reaction. This centuries-old theorem may go some way toward explaining the ideological split currently occurring in the U.S. Democratic party – one that could carry significant importance for the congressional midterm elections in November 2026 and for U.S. policy for many years to come.

Republican President Donald Trump faces a difficult political backdrop approaching the midterms, often thought of as a referendum on the incumbent U.S. president’s first two years in office. Trump faces sagging approval ratings in his second term, with notable weakness on his handling of the economy due to rising inflation, as well as a Middle East war with no easy way out. As this column has noted before, Republicans are already defending one of the narrowest House majorities in American history (218-212, with four vacancies and one independent).

Given these dynamics, many Democratic leaders and pundits have suggested the party employ a midterm campaign version of Napoleon’s military adage to never interrupt your enemy when he is making a mistake: focus voters’ attention on Trump policies that many voters view unfavorably rather than on promoting a robust alternative agenda. To these strategists, the poster child for the ideal Democratic candidate in 2026 is Roy Cooper, a two-time former governor of North Carolina running for U.S. Senate in that state with the simple slogan “Make Stuff Cost Less”. Cooper focuses fairly narrowly on criticizing Trump actions that he argues have resulted in “farmers… getting crushed by tariffs” and “families… seeing prices rise at grocery stores and restaurants.” In response, Cooper proposes a modest set of reforms such as tougher anti-trust enforcement and making data centers pay more for the power they draw from public utilities.

Cooper may well reach the Senate – he has run ahead of his Republican opponent in every poll published since the race began. But the middle-of-the-road approach of Cooper and other moderates is not capturing the hearts of Democratic voters writ large. The hard-edged governing style of Trump and his Republican congressional allies, in areas ranging from immigration enforcement to foreign policy to social spending, has, to use a scientific term, made Democrats mad as hell. And – returning to Newton’s Third Law – Democrats want their leaders to push back hard at Trump with policies equal and opposite to those promulgated by the GOP-led Administration and Congress.

Evidence of Democrat voters’ more confrontational impulse is ample in recent party primaries to select candidates to run in the November congressional elections. In June, two progressive U.S. House candidates running to represent district in New York City – Brad Lander and Darializa Avila Chevalier – ousted incumbents, while a third (Claire Valdez, a member of the state Assembly) defeated the Brooklyn borough president in a race for another U.S. House seat. All three candidates support increased government support for public housing, universal federal health insurance, abolishing the U.S. Immigration and Customs Enforcement (ICE) agency, cutting defense spending, shifting energy production from fossil fuels to renewables to address climate change, and reducing American military involvement abroad, among other progressive policies. All are vocal in their criticism of Trump. It is not just in deep-blue New York where the left is gaining momentum: earlier this month, Melat Kiros, a 29-year-old Democratic U.S. House candidate in Colorado, backing an agenda similar to her New York counterparts, unseated U.S. Rep. Diana DeGette, who had represented the district in D.C. for nearly 30 years. Progressive candidates have tallied recent election wins in states from Maryland to Oregon.

A number of the candidates cited above, and others squaring off against more-moderate Democrats, are members of the Democratic Socialists of America (DSA), a left-leaning political organization founded in 1982. DSA’s importance in the U.S. political ecosystem can be easily exaggerated by both critics and supporters – the organization reports about 120,000 members, compared to 45 million Democrats and 39 million Republicans. Yet the DSA has clearly touched a nerve within a Democratic party still trying to figure out how best to oppose Trump and his MAGA movement – and position itself for a post-Trump future. The party’s goal to create “a system where ordinary people have a real voice in our workplaces, neighborhoods, and society” (see below) echoes in the campaign speeches and placards of progressive candidates on the stump today. The most famous DSA member is New York City Mayor Zohran Mamdani, the 34-year-old political wunderkind who rode his own anti-Establishment, anti-incumbent wave to power in January, defeating Andrew Cuomo, former New York governor and scion of a well-known political family.

What is Democratic Socialism? “Capitalism is a system designed by the owning class to exploit the rest of us for their own profit. We must replace it with democratic socialism, a system where ordinary people have a real voice in our workplaces, neighborhoods, and society… We want a democracy that creates space for us all to flourish not just survive and answers the fundamental questions of our lives with the input of all. We want to collectively own the key economic drivers that dominate our lives, such as energy production and transportation. We want the multiracial working class united in solidarity instead of divided by fear. We want to win “radical” reforms like single-payer Medicare for All, defunding the police/refunding communities, the Green New Deal, and more as a transition to a freer, more just life.” (Source: Democratic Socialist of America)

The recent success of DSA members and similarly inclined progressives has led to an equal and opposite (Newton again!) reaction from moderates who argue that moving too far to the left will cost Democrats in the midterm elections in November as well as the presidential election in 2028. In a July 20th note, Third Way, a center-left think tank, warned: “If [Democrats] follow the siren song of the left, they will steer their ships into the rocks. If they remain in the mainstream, they will have a fighting chance of winning not only the primary, but also most crucially, the general election.” Third Way and other naysayers of the progressive wave cite the example of Kamala Harris, who ran on a progressive agenda as the Democratic party’s presidential nominee in 2024 after then-President Joe Biden opted not to run for re-election. In the 2024 campaign, Harris proposed ambitious spending to combat climate change, an increase in the corporate tax rate and anti-price gouging laws for groceries, among other policies popular with many progressives. Trump, of course, comfortably defeated Harris in the presidential election (though the hurried mid-campaign handoff from Biden to Harris certainly didn’t help).

What does this mean for US-focused investors and corporates?

The moderate, middle-of-the-road approach of some Democratic candidates doesn’t seem to meet the political moment. Thus, we do think the progressive movement will move the Democratic Party to the ideological left in the years to come, even if “socialist” candidates remain a small portion of the electorate and the Congress. This could benefit sectors that have been out of favor thus far in Trump’s second term. For instance, health insurance companies that provide insurance under Medicaid and other healthcare programs for disadvantaged Americans could benefit from reversal of recent cuts to such programs under a Democrat-controlled Congress and/or White House. Similarly, apartment-focused real estate investment trusts (REITs) would benefit from expanded public spending on housing in a more progressive political climate. Child-care providers could see the same from federal programs to provide more support for working families. In sum, Democrats’ intense anger at Trump’s policies and persona are likely to be quelled only by a similarly forceful agenda on the other side of the spectrum – the equal and opposite reaction crystallized by Newton so long ago.

Capital isn’t glamorous, but it’s where health reform succeeds or fails

Drawing on his experience as a Health Minister and Chair of the Health and Social Care Select Committee, GK’s strategic advisor Steve Brine argues the real challenge is delivering, not announcing, NHS infrastructure investment.

There is an old saying in politics that ministers like cutting ribbons more than fixing roofs. Reading the Government’s new 10-Year Capital Plan for Health and Social Care, I was reminded just how true that is.

Having served as a Health Minister and later as chair of the cross-party Health and Social Care Select Committee, I’ve learned that while politicians understandably focus on services, patients and waiting lists, none of those can be credibly improved without investing in the infrastructure that underpins them.

Estates, equipment and digital capability are not simply operational issues; capital isn’t glamorous – but it’s where health reform succeeds or fails

That is why I think this document matters, even if it contains fewer headline announcements than some may have wanted. It’s more of a capital investment framework than a capital spending announcement and while it is important because it starts to join together a series of previously announced commitments into one strategy, if you’re looking for lots of new money or major projects, you’ll likely be disappointed.

For investors, suppliers and those looking to support the transformation of health and care, this is best understood therefore as a statement of strategic direction. The Government is attempting to provide something the NHS has too often lacked: a long-term framework that links capital investment directly to service reform.

The themes will be familiar and re-enforce the view many of us held that the capital plan would essentially be the infrastructure companion to the 10-Year Health Plan which is now just over one year old.

Investment in neighbourhood health centres, modern diagnostic equipment (see my last piece), digital infrastructure, community facilities and the maintenance of the existing estate have all featured in previous announcements.

What is new is the attempt to bring those priorities together and explicitly align them with the Government’s ambition to shift care from hospitals into communities, from analogue to digital, and from sickness towards prevention.

As a minister, I learned very quickly that capital policy is health policy. You can’t expect clinicians to embrace new models of care if they are working in buildings designed before England last won the World Cup, nor can you promise a digital NHS without investing in the infrastructure that powers it. Too often, capital has been treated as something separate from healthcare delivery whereas in reality, it is one of its principal enablers.

That lesson stayed with me when I chaired the Health and Social Care Select Committee. Alongside colleagues on the Public Accounts Committee, we scrutinised the New Hospital Programme, asking not simply whether Boris Johnson’s ambitions were right, but whether they were deliverable.

That experience reinforced a rather obvious point: announcing infrastructure programmes is relatively straightforward; delivering them consistently over a decade, through changing political and economic circumstances, is considerably more challenging!

That is why I think investors should read this document with cautious optimism. The opportunities are clear. If the Government is serious about expanding community-based care, modernising diagnostics, digitising the NHS and addressing the maintenance backlog, there will inevitably be demand for expertise, technology, construction, data, equipment and innovative delivery models.

The direction of travel is now clearer than it has been for some time. The question not answered is pace. The plan sets out the destination far more clearly than the route to get there. There is relatively little detail about sequencing, procurement, prioritisation or delivery milestones.

History also provides a note of caution. During my time in government, I saw how easily capital budgets could come under pressure when day-to-day NHS spending became squeezed. Every government says it will protect long-term investment; not every government manages to do so.

And I note how one of the strongest themes is ‘repair first’ as large sums are earmarked for tackling the maintenance backlog, replacing obsolete equipment and of course removing RAAC. £6.75bn for hospital repairs over nine years and £2bn to remove reinforced autoclaved aerated concrete.

Overall, I see this as a welcome piece of strategic thinking. It provides a clearer signal than we have had for many years that infrastructure is no longer being viewed as an afterthought but as a prerequisite for NHS reform. For those looking to invest, that matters.

The real test, however, will not be whether the strategy is well written, but whether successive governments (including the new one about to start work) have the discipline to stick to it.

Politics of Defence

The UK Government has today published its long-awaited Defence Investment Plan (DIP).

Due back in Autumn 2025, the plan aims to fund Britain’s Armed Forces into the next decade. In one of his final acts as Prime Minister, Sir Keir Starmer today announced an additional £15bn in funding for defence over four-years with money taken from other departments to pay for it. Nonetheless, the government has faced criticism from across Westminster on the funding allocation and the extent to which the DIP meets the challenges the country faces today and into the near future.

For the Prime Minister, this has come at a huge personal political cost. Lord Robertson, the highly respected lead author of the UK’s first independent Strategic Defence Review (SDR), published in June 2025, gave a carefully constructed speech in April directly criticising Sir Keir and Chancellor Rachel Reeves in what he described as a ‘corrosive complacency [today] in Britain’s political leadership’. More recently, two defence ministers, including the Secretary of State John Healey, resigned over the Prime Minister’s political weakness when faced with commitments to fund defence.

While the government has accepted the SDR’s 62 recommendations, the DIP today makes clear and sensible allocations in areas set out below and supportive of last year’s SDR. Yet at its heart, the monies still fail to add up to fund UK defence with many across defence industry and the military having already spoken to this fundamental point.

The plan itself focuses on cheaper, uncrewed autonomy, space, land lethality, cyber and electromagnetics in addition to £11bn to replenish the weapons and munitions sent to Ukraine and £63bn for the nuclear deterrent – it alone is some 20 per cent of the overall budget.

The 81-page plan delivered to Parliament by the new Defence Secretary Dan Jarvis, sets the course for defence spend of only 2.7% of GDP by 2030. Tan Dhesi MP, Chair of the Commons Defence Select Committee, said the government has not provided a ‘clear pathway’ to spending the committed three per cent of GDP on defence.

There remain unanswered questions over the allocation of funds for capital spend in an environment of large personnel expense and general fiscal realism. While the SDR set an ambition within tight spending envelopes, the DIP was meant to be a serious credibility test of government.

In a wider update to the Commons, Dan Jarvis did not rule out the UK joining a defence investment bank, an idea championed by former Bank of England Governor, Mark Carney, the now Prime Minister of Canada. This is something the Treasury has resisted. Of interest, former Health Secretary Wes Streeting asked Jarvis if the government would reconsider joining in the Commons earlier today.

Beyond equipment, the government has committed to invest £70m to support veterans through the Office for Veterans Affairs, including £12m investment in a new fund for reducing veteran homelessness.

Ultimately, all government policy, including defence, is Treasury-driven and what the PM thinks matters most; this most recent review and debate over funding secured the fate of Prime Minister Starmer. In a matter of weeks, the UK government will be under new leadership, faced with the very real and pressing challenges of national security. With visibility of government priorities and funding allocated, now the defence industry small and large can answer the government’s call and GK Strategy is ready to help with engagement, both in procurement and senior relationships in DE&S, Main Building and across Whitehall.

Please email Senior Partner and defence and security lead Scott Dodsworth to learn more. scott@gkstrategy.com

SD. Tuesday 30 June 2026