Category Archives: Government

GK Point of View – The Contested Future of the Apprenticeship Levy

GK Senior Adviser Robert Blackmore assesses the criticisms of the Apprenticeship Levy, from unspent funds to the over-provision of apprenticeships for affluent employees, and highlights the many contested proposals to reform the Levy.

While it may not dominate the front pages, the Apprenticeship Levy is fast becoming one of the more controversial areas of UK public policy. The Levy, which is charged at 0.5% of an employer’s total payroll, applying to those with a payroll of more than £3 million, is contested at several levels.

One major criticism of the Levy is that the Treasury has benefited to the tune of £3.3 billion between 2019 and 2022 from unspent funds. However, despite an unexpected uplift in the amount raised by the Treasury via the Levy, the budget allocated to the Department for Education (DfE) to facilitate the scheme has remained consistent, raising the prospect of overspend. Employers have raised concerns about transparency, with Anna Ambrose, Director of the London Progression Collaboration, stating that the “Treasury black hole” risked “undermining confidence that money for apprentices is being used in the most effective and fair way.”

Government officials, however, would argue that they are attempting to find a delicate balance between keeping to a pre-determined budget, whilst simultaneously ensuring that provision for priority skills areas is enhanced. Ahead of November’s Autumn Statement, it was reported that Number 10 and the Treasury were considering plans to limit the number of degree-level apprenticeships. Chancellor Jeremy Hunt was said to be concerned that too great an amount was being spent on level 6 and 7 apprenticeships that tend to be filled by older and more affluent employees.

This proposal faced opposition from the DfE, while course conveners argued that high-level apprenticeships were “critical for the productivity agenda and fiscal sustainability”. Employers also pointed out that the allocation of funds should be their preserve, noting that the Levy was established to be “employer led”. Ultimately, no such proposals were included in the Autumn Statement. Instead, documents published alongside the fiscal event highlighted how apprenticeships had become a ‘prestigious and high-quality alternative route to higher education’. Despite its omission, it remains a topic of contention within Government.

Outside Whitehall, the calls for reform grow louder. Earlier this month, EDSK, a think tank focused on education and skills, proposed an even more radical overhaul of the Levy. Its report, ‘Broken Ladders’, recommended that individuals who have already achieved an undergraduate degree should no longer be eligible to start a levy-funded apprenticeship. It was also suggested that employers should be prevented from accessing further levy funding if they have trained more apprentices aged 25+ than those aged 16-24. EDSK believe that such reforms would ensure that the focus of the Levy remains on those young people who have elected to pursue a non-academic pathway. Unsurprisingly, EDSK has faced criticism from training bodies, most notably from Mandy Crawford-Lee, Chief Executive of the University Vocational Awards Council, who argued that “we should dismiss the false notion that apprenticeships are the only suitable for school/college leavers unable to reach the ‘academic’ standards needed to take them to university.”

Furthermore, last week, the British Retail Consortium (BRC), the National Farmers Union (NFU) and UK Hospitality (UKH), alongside others, issued a joint statement calling for the Government to develop a wider skills levy, for businesses to train up a greater number of domestic workers to plug the UK’s skills gaps. Helen Dickinson, Chief Executive of the BRC, went as far as to state “The government should stop dragging its feet so businesses can upskill our workforce.”

This position aligns with the Labour Party’s stated aim to “increase the quality as well as quantity of training opportunities” through a “growth and skills levy“. Such an expansion of the Levy, however, has faced criticism from officials inside the DfE, who estimate that plans to expand the Levy would limit the number of apprenticeship starts per year to 140,000 (down from 349,000 in 2021/22) and cost an additional £1.5 billion. It should be noted, however, that this analysis has been labelled ‘quite simplistic’ by Stephen Evans, Chief Executive of the Learning and Work Institute.

A Labour victory at the next election, expected in 2024, would provide a mandate for a ‘growth and skills levy’, yet the party have yet to fully expand on their policy, and it is unlikely that the future manifesto will delve too deeply. Many will hope reform to the Levy is not lost in the maze that is nascent government policy making.

GK Point of View – Reflections on the Autumn Statement

On Wednesday 22^nd November, Jeremy Hunt MP unveiled his Autumn Statement, setting out the Government’s tax and spending commitments for the next year. The backdrop to this year’s Autumn Statement presents a number of challenges for a government with likely less than a year until the next General Election. The UK’s inflation rate stands at 4.6%, more than double the Bank of England’s target of 2%. Growth rates have stalled, and the Bank of England is predicting that the UK will see zero growth until 2025.

To better understand the true impact of the decisions in the Autumn Statement and how they will impact both the wider economy, and specific sectors, GK Strategy have developed a briefing containing sector specific insight and analysis from our Senior and Strategic Advisers.

Find GK’s briefing here: Autumn Statement 2023

Is Sunak trying to bring the Tories back to the centre? Reflections on Rishi’s latest reshuffle.

After the polarising figures of Truss, Johnson and most recently Braverman, Sunak is using his latest reshuffle to resist the Conservative Party’s attempt to shift to the right. By bringing more centrist political figures into the fold, he looks to prepare his government to fight Labour over the centre ground at the next election. And it’s all encapsulated in the appointment of one man…

The eventual sacking of Home Secretary Suella Braverman today has finally given Sunak the political space to undertake the long-awaited Cabinet reshuffle which sees him shed some of the legacy Cabinet members inherited from the Liz Truss cabinet like Therese Coffey and bring in more centrist political figures and Sunak allies into senior government jobs. Even if it has come perhaps a month sooner than Sunak might have wanted.

One of the clearest articulations of this, is the appointment of David Cameron. The former Prime Minister from 2010 to 2016 replaces James Cleverly (who moves to Home Secretary) as Foreign Secretary, despite being out of (frontline) politics for seven years. The move makes a lot of sense from a policy perspective. Bringing back an electorally popular PM, and experienced on the world stage, Sunak will hope Cameron plays a key and senior role in managing the tense situation in Israel-Gaza. However, domestically his appointment – together with the promotion of several special advisers and former ministers who worked during the Cameron and May governments, like Laura Trott and Richard Holden – is signalling to the country that the Party is, if not just presentationally, moving back to the centre ground.

If the Conservatives are staring down the barrel of huge electoral defeat at the next election, it makes sense to shift to a strategy of shoring up the base and minimise damage, from a pragmatic perspective. This means focusing on the Blue Wall seats and those who voted Conservative before Brexit will be amongst those most skittish at the next election, and most at risk of offering their vote to the Lib Dems or Labour. They may have voted for Johnson because there was no alternative, saw the chaos of Liz Truss, and are now perhaps uncomfortable with the direction and tone of the Party led from the likes of Braverman. That is of course not to say that there won’t still be a strong policy approach on home affairs like immigration, but presentationally, the approach from Cleverly will be far more palatable to No.10 than what we have seen from Braverman.

Therefore, seeing the likes of Cameron return will give them a feeling that the Party is back to the one they know. This is not without risk, given his close association with Brexit amongst many middle of the road and remainer voters, but it must be said that Brexit has crashed out of the top issues for voters.

This puts Sunak back in the position to appeal to the electoral centre ground that has been increasingly under attack by Labour in recent months, and will make the Autumn Statement all the more important, as he will want to demonstrate that this is a team ready for the long-term. Even if it is a rather damning indictment on the quality in the parliamentary party, not on least many 2019-ers, who will largely feel overlooked if they don’t sit in this wing of the party.

However, with Cameron and Hunt in Great Offices of State, and ministerial ranks filled with coalition era ministers and former SpAds, it will certainly make Rishi’s approach as the ‘change candidate’ against Keir Starmer all the more difficult. Instead, it feels like Sunak is perhaps going to lean more into the ‘better the devil you know’ message, despite continuing to talk about fresh ideas for the long term.

Perhaps this latest Rishi Reset is the one to shift the dial? Or perhaps, more likely, it is the sign of a government that has run out of road and ideas.

The King’s Speech

Conservative Party shapes political battlegrounds in bid to turn around polling deficit

The first King’s Speech by Charles III and the last before a General Election was noteworthy not for the 21 Bills announced, which will shape the upcoming legislative agenda, but what it revealed politically. Whilst in the short-term today’s ceremony is unlikely to move the dial, it did reveal the foundations upon which the Prime Minister and the Conservative Party will seek to fight the election upon.

The overarching theme was the Government’s commitment to reducing inflation and bringing down the cost of living. The language that accompanied this was ‘making decisions in the long-term interest.’ This is fundamental to the Conservative Party strategy. By next Autumn (the most likely timing for the General Election) household costs will have stabilised and the Party will say to the electorate that they are on the right track and now is not the time to change course. Expect the phrase ‘long term interest’ to feature even more prominently as we look ahead to the Autumn Statement later this month. In the most recent YouGov poll of the most important issues facing the country unsurprisingly the economy is far out in front of the public’s most pressing concerns.

Within the King’s Speech were numerous Bills related to law and order. This is an area of traditional strength for the Conservative Party, however, in recent times the Party has fallen behind Labour on the issue. The recent demonstrations in London and the potential for further action ahead of Armistice Day, the Conservative political machine may see this as an opportunity to push for a hard line approach that they believe will sit well with the majority of voters. The Economic Activities of Public Bodies Bill, which is designed to give ministers the powers to ban public bodies from imposing their own boycotts, divestment or sanctions campaigns against foreign countries is likely to be a focal point in this debate designed to further expose divisions within the Labour Party on conflicts such as Israel-Palestine.

The other major focus area, which wasn’t included as a Bill but was referenced by The King as a priority area for the Government is on the topic of immigration. The King said the Government would continue to crackdown on criminal gangs and control the boats crossing the Channel with the powers conferred to ministers in the previous Parliament. With almost 4 in 10 voters citing immigration as a top three issue the Government is determined that its efforts remain front of mind of voters.

So, with the pitfalls for Labour clear, how can the Party respond? Under the Shadow Chancellor Rachel Reeves we will continue to ensure fiscal discipline is the priority. By demonstrating a firm grip on public spending and fully costed policies, Reeves will hope to build up enough credibility that when she asks voters ‘do you feel better off after a Conservative government’ the reply will not only be ‘no’, but an electorate confident in voting for a reformed Labour Party. The Party will also feel they are on the right side of the argument when it comes to the transition to Net Zero with regards to the forthcoming Offshore Petroleum Licensing Bill, claiming the Government is failing to show leadership and is presiding over a period of ‘dither and delay’.

Labour are also likely to capitalise on the lack of health announcements in the speech despite the policy area trailing only behind the economy in voters concerns. Despite a bill promising to ban the sale of smoking to anyone born on or after 1st January 2009, there were no mentions of NHS reforms or bringing down waiting lists. Perhaps an acknowledgement that the Conservative Party have for now conceded on the issue.

The battle lines have been drawn. Today is the firing gun on the debates in Parliament and the media that are likely to play out between now and the election as the parties vie for your vote.

What can organisations looking to engage in the political process take from this? It is far less about the potential impact of these measures, which may or may not pass, but a guide to how you can align your organisation with the political agenda to ensure your voice is heard and to begin to positively influence the shape of the next Parliamentary session.

For more details on the State Opening of Parliament and the new session, speak to GK Associate Director, David Mitchell david.mitchell@gkstrategy.com

Party conference 2023

As the annual conference season draws to a close, possibly the last before a general election next year, the main political parties will be reflecting on the success or otherwise of the Manchester and Liverpool gatherings. Both conferences were attended by our political advisers, who reflect on Conservative and Labour conference below.

As with past conferences, the measure of success differs, this was Rishi Sunak’s first as Tory leader, a more stable but still divided party. Just a year ago Liz Truss led a chaotic prelude to her short time in No10 and this year’s collection of Nigel Farage (as journalist) and long awaited HS2 announcement wasn’t the best backdrop as the Prime Minister attempted to cast his leadership as a force for change. Contrast Liverpool and the balance of a Labour party consistently ahead in the polls, with a more united and coherent party than for the past decade – a gathering of Labour activists who were at pains not to be carried too high on the prospect of government.

In a change to the usual order, the Conservative’s met first. The ongoing saga of will they, won’t they with HS2 didn’t help Rishi Sunak’s first conference as party leader. While the Prime Minister’s team struggled to get a hold of the narrative over the three days in Manchester, the former leader and likely leadership hopeful, Liz Truss and Suella Braverman, were quick to try and seize the agenda. Where the party truly seemed united was on the importance of support for climate action, and this was reflected in the sheer number of well-attended fringe events giving serious attention to how the UK can credibly retain its status as a climate leader. The Conservatives, despite recent announcements seemingly backing away from climate policy, understand that this remains a key vote-winner. Cobbling together a sell-able vision for the climate to the electorate could be make-or-break for the party in any upcoming election.

Sunak’s conference speech, his most important as leader saw the Prime Minister attempt to create some separation between his premiership and what he referred to as the previous “30 years of a political system which incentivises the easy decision, not the right one”. This will be a tough balancing act in the months ahead of the upcoming election. The 30-years Sunak references encompasses not only former Labour leaders Tony Blair and Gordon Brown, but no fewer than five Conservative Prime Ministers. The key question going into an election year will be whether Sunak can create that separation and be given the opportunity to push forward with his ambitious reforms to education, or whether he will be rejected by the electorate as more of the same.

Keir Starmer’s speech embodied Labour conference in Liverpool this week. A leader and a party more at home with its values and a confident, clear, coherent, even hopeful message about Britain’s future – a decade of national renewal. The party wanted a clean conference, a solid platform speaking to business leaders and the wider public, the opportunity now to project Keir Starmer’s message for the country which faced down the shame of the Corbyn-era and proudly bound past Labour success with a party of service, building a new country over the next decade and beyond. The test now is for the party to successfully project the same confidence beyond Liverpool, and Westminster, to the country at large.

Labour reshuffle: Keir puts Labour on election footing with ‘battle-ready’ team

GK Associate Director David Mitchell looks at the Labour Party’s reshuffle of its Shadow Cabinet, and what we can understand from Sir Keir Starmer’s new look team.

The Leader of the Opposition’s Office has invested enormous energy to underpin the value of message discipline into the Labour ranks in the first half of this year. This has centred around the importance of fiscal responsibility, which must trump all else. As Parliament returns today, Keir and his team has convened a team that has experience and consists of media performers to communicate that message to the voters.

The influence of Labour’s most electorally successful leader Tony Blair was evident in today’s reshuffle. From a commitment over the weekend not to raise income tax in the next Parliament (similar to the run up to the 1997 election), to today’s announcement that saw the promotion of Blairites such as Pat McFadden and Liz Kendall. The former was Blair’s Political Secretary and will now take up the role of Shadow Chancellor of the Duchy of Lancaster and National Campaign Co-ordinator. In this role Pat will be responsible for ensuring the party is externally aligned across all shadow departments, as well as ensuring a co-ordinated message is presented to the electorate.

This reshuffle was not just about the removal of the remaining remnants of the Corbyn years but was notable for the pivot away from those seen as from the ‘soft left’ of the Labour Party. Lisa Nandy, seen as the face of this wing of the Party, has found herself demoted from the strategically important levelling up brief to Shadow Cabinet Minister for International Development. In this context, today’s reshuffle reflects not just a gradual move in the political direction of the Labour Party, but a substantial positioning of the Party in the centre ground.

The decisiveness of Keir’s reshuffle today is a culmination of changes through the party’s structures including the National Executive Committee, but also a reflection of a healthy and sustained polling lead that the Party has held since the start of 2022. Of course, Keir does not have everything his own way. His relationship with Deputy Leader Angela Rayner, which has been described as ‘tense’ and ‘challenging’ saw Angela emerge as a big winner, adopting the Shadow Deputy Prime Minister and Shadow Secretary of State for Levelling up brief.

This is a team that Keir is now confident that he can go to party conference in Liverpool in a few weeks’ time, and present as a government in waiting. LOTO will be aware there will be a buoyant atmosphere and excitement with delegates and activists in attendance, he will now hope his new team will importantly rub off with the voters watching at home.