Category Archives: Government

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.

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. 

 

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

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

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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?

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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 - 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.