Category Archives: Government

GK Insight - Perspective of Dr Iain Wilton, Director, Policy

GK Insight – Perspective of Dr Iain Wilton, Director, Policy

Whenever we have a Queen’s Speech, the focus is invariably on what it contains – rather than what’s missing.

Yesterday, however, was an exception. As well as the Queen herself being absent, for the first time in nearly 50 years, the sovereign’s throne was not merely empty but had been moved elsewhere.

In the monarch’s absence, the Prince of Wales moved off the substitute’s bench and into, in effect, the early stages of regency mode – so it was a field-day for historians in general and constitutional experts in particular.

Other conspicuous absentees, of course, included Government references to the ‘cost-of-living crisis’ which the Chancellor had sought, but failed, to adequately address in the last set-piece Parliamentary event – his Spring Statement.

Indeed, when Rishi Sunak sat down after delivering that speech, the immediate comments of Opposition backbenchers (“Is that it?”) caught the public and Parliamentary mood much better than the formal response from the Shadow Chancellor – Rachel Reeves.

It was also the moment at which the political fortunes of the Chancellor – previously famed for his “whatever it takes” approach – began their downward spiral.

It’s noticeable, however, that few people have been posing the same “Is that it?” question after yesterday’s Queen’s Speech – for two main reasons.

First, there’s a recognition (behind the rhetoric) that financial, tax and cost-of-living issues are addressed in Budgets, Spring Statements and Finance Bills, rather than a ‘Gracious Speech’.

Second, the Speech, although shorter than normal, contained much more political and legislative ‘meat’ than might have been expected – not only for a mid-term government but for a governing party that has been in power (either independently or in coalition) for the past 12 years. There is clearly much that it still wants and needs to do.

In part, it’s about playing catch-up after the statis of the Theresa May years, when the government lost its majority and became preoccupied with trying (but failing) to deliver on the result of the Brexit referendum. Since then, the challenge of handling the pandemic has been her successor’s overwhelming priority – to the exclusion, domestically, of almost everything else. More positively, though, there’s the ‘levelling up’ agenda that the Prime Minister regards as essential to retain the ‘Red Wall’ seats that he won so unexpectedly in 2019’s General Election.

Together, those delays, diversions and political imperatives explain why the Queen’s Speech outlined not only a surprisingly large number of Bills (38) but some measures of real significance.

For example: the Energy Security Bill will hasten the UK’s transition to cleaner electricity and greater energy independence; the Financial Services and Markets Bill will create a new regulatory regime, in conjunction with some upcoming and important reforms from the Financial Conduct Authority; and the Procurement Bill will have a low profile but could affect vast swathes of public expenditure – creating new commercial opportunities, in the process, for many small and medium-sized suppliers.

Above all, perhaps, housing, local government and levelling up, taken together, account for a sizeable proportion of the legislation outlined in Parliament yesterday. Perhaps that’s hardly surprising, in view of the political importance (especially to the Prime Minister) of levelling up and the extent to which many Conservatives fear that housing issues are becoming increasingly toxic for them, especially in London – as last week’s local elections seemed to confirm.

It means a bigger role for the Secretary of State for Levelling Up, Housing and Communities – Michael Gove. Inside Westminster and Whitehall, he’s renowned both for his radical ideas and his strong record on delivery. Elsewhere, however, he’s still best remembered as the person who sabotaged Boris Johnson’s original bid, in 2016, to enter 10 Downing Street. After yesterday’s Queen’s Speech, the Prime Minister has surely never been more reliant on his former foe.

 

Is the food and drinks sector being regulated at the worst possible time_

Is the food and drinks sector being regulated at the worst possible time?

Is it the right time to regulate the food and drinks sector? GK Associate Daniele Schmidt-Fischer takes a look in our latest GK insights piece. 

With Covid fading from the Government’s agenda, ministers are again turning their attention to pre-pandemic legislative proposals. A sector that will be in the limelight will be the food and drinks industry, which will be incentivised to reformulate its products, reduce single-use plastic, and guide the consumer to make healthier choices. Given the regulatory uncertainty of the past few years, the industry should be well-prepared to weather the forthcoming provisions. However, the Government does not make it easy for a sector which is hit by a triple-whopper of pandemic recovery, Brexit-related labour and supply disruptions, and an avalanche of regulatory changes which assimilate the tobacco playbook.

On 1 April, the Government published guidance on the introduction of a tax on plastic packaging from April 2022. This will apply to plastic packaging manufactured in, or imported into the UK, that does not contain at least 30% recycled material. The charge for the tax, which only applies to “finished” plastic and mixed-plastic packaging components (containing mostly plastic by weight), at a rate of £200 per tonne, arises when the component is imported into or produced in the UK.

A few days later, on 6 April, new rules requiring calorie information to be displayed on menus and food labels came into force. The changes – which were approved by Parliament in 2021 – mean it is now a legal requirement for large businesses with more than 250 employees, including cafes, restaurants and takeaways, to display calorific information about non-prepacked food and soft drinks.

On the same day, the UK Department of Health and Social Care published guidance which includes the long awaited details on the forthcoming High in Fat, Salt and Sugar (HFSS) food regulations, including restrictions on volume offers and new rules on placement and promotion. The regulations – Food (Promotion and Placement) (England) Regulations 2021 (SI 2021/1368) – confirmed that from 1 October 2022 provisions regarding the placement and promotion of HFSS products will affect manufacturers selling products direct to consumers and retailers in England with 50 or more employees. Additionally, HFSS products will be banned from tills and aisle bays to reduce impulse buys. The clampdown on store promotions was originally scheduled for April 2022 but a six-month delay was agreed last June to allow businesses more time to adapt. The new guidance has clarified that products which have volume promotions printed on the packet will be subject to a sell-through period of 12 months to October 2023.

There is more information about what constitutes a ‘relevant special offer’ such as a ‘meal deal’ or ‘dine in for two’ promotion, although the guidance states that each individual case will be assessed by enforcement officers. Businesses should carefully assess which products are caught by the restrictions and what changes will be required, for example, changes to store layout and/or website design, and changes to planned marketing and placement etc., in order to comply.

Adding to the above, the Government is due to publish a white paper on its National Food Strategy next month which is part of its recent efforts to build a food system fit for the 21st century. The white paper, which lays out plans for future legislation, is expected to draw heavily from a National Food Strategy review released in July 2021. The report, authored by Leon founder Henry Dimbleby, made a series of recommendations for transforming the food system, including new taxes on sugary and salty foods.

The regulations are part of the Ministerial wider strategy to tackle obesity, published in 2020, and follow last year’s Government’s consultation on the rules. The aim is to reduce excessive consumption of HFSS products that can lead to children becoming overweight and even obese. Further, the Government wants businesses to help people make healthier choices and join the efforts to reduce obesity,

The regulations are meant to curb the rising obesity rates, which the Government highlighted to be “one of the greatest long-term health challenges this country faces”. Prime Minister Boris Johnson, a sceptic of so called ‘nanny-state’ interventions, was said to have become passionate about the issue after his severe bout of Covid. The latest available data found that 36.2% of adults in England are overweight, with the impact of the pandemic on obesity levels still unknown. Accordingly, action remains essential, but critics are likely to argue whether now is the right time to introduce measures that will increase the industry’s costs and, hence, the prices paid by consumers – who are already facing a major cost-of-living crisis.” The Government itself found that the abovementioned regulations could hit businesses across the country by costs of over £1bn a year, while food associations also argue that these proposals are not expected to impact rates of obesity, thus nulling their sole purpose.

Overall, the regulatory ambitions are in good faith. However, during a time of worker shortages and supply disruptions, their timing is far from ideal. They put further pressure on businesses, which are likely to pass it on to the consumer in form of higher prices, all during a time when the public has become a lot more conscious about the cost of living, especially food.

GK Point of View - David Laws on the Prime Minister's survival

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

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?

 

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?

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.