Category Archives: Investment

The Office for Students: A higher education aid or hindrance?

Late last year, Secretary of State for Education Bridget Phillipson announced increases to university tuition fees starting in September 2025. However, this did little to quell concerns of financial sustainability in the higher education sector that has been the talk of university towns. The suspension of the Office for Students’ (OfS) ability to accept new registration applications and issue degree awarding powers has not helped to alleviate doubts over the stability and growth of the sector. These temporary changes to the OfS’ remit will though allow ministers to focus on a wider package of reforms to the body. These are set out in the OfS’ draft strategy for 2025 to 2030, which is currently out for consultation.

The draft strategy builds on priorities set out by Sir David Behan in his independent review, ‘Fit for the Future: Independent Review of the Office for Students’, which was published in July 2024. His main takeaways include a lack of engagement with students, overstretched powers, and its need to help develop financial sustainability in higher education.

Central to the OfS’ draft strategy is one of the government’s five main missions: ‘breaking down barriers to opportunity’. Equality of opportunity is an underlying theme of the strategy, and it claims to place the experience of students at the centre of higher education. There are three pillars which aim to achieve greater levels of student satisfaction: regulating higher education courses; expanding the OfS’ attention to areas that impact students’ engagement with higher education; and increasing the resilience and quality of higher education.

Although student experiences are important, there is an understanding from the OfS and stakeholders that students can’t experience all aspects of university life if their university is nearing financial collapse or bankruptcy. Financial resilience of the higher education sector is the lynch pin of high-quality provision and breaking down barriers. This is even more pertinent with the rising cost of living and students’ expectations that the fees they pay should provide them with quality experiences beyond the lecture theatre.

Despite previous uncertainty surrounding the OfS’ role in the future of higher education, the pause in its powers and the body’s focus on the consultation will allow for a reset moment.

For higher education providers, the consultation is a chance to make the case to government and the OfS about the quality of its courses and the importance of higher education to the UK’s growth ambitions. The development of a stable economic base and demonstrating how the sector can meet students’ expectations will be key for encouraging investment opportunities into the sector. Stakeholders should engage with the draft strategy to help create a clearer future for the higher education sector and increase dialogue between the OfS and providers.

What does the Renters’ Rights Bill mean for the future of rented housing?

GK Associate Director, Will Blackman, explores what the government’s new Renters’ Rights Bill means for the future of rented housing in England.

The government’s Renters’ Rights Bill completed its passage in the House of Commons this week and is expected to receive Royal Assent in the coming months following the completion of its Lords’ stages. What does this significant piece of legislation mean for the private rented sector and the housing market as a whole?

The origins of this bill go back several years. The Theresa May government in 2019 first consulted on reforms to rebalance the rights and responsibilities of landlords and tenants, which included the ability of landlords to issue Section 21 notices, or so-called ‘no-fault’ evictions. This change continues to sit at the heart of the bill and is intended to give greater stability and security of tenure to tenants. It also provides landlords with reformed and expanded grounds for seeking possession of their properties under Section 8 of the Housing Act 1988. This includes cases where the landlord wishes to sell or to move into the property themselves. Other measures include stricter requirements around rent increases, the creation of a new ombudsman, new requirements on landlords to remedy mould and damp problems and a new right for tenants to request a pet.

The last Conservative government introduced its own version of this legislation – the Renters’ Reform Bill – however this fell away following the dissolution of Parliament ahead of the General Election. The Labour government’s version of the bill – now the Renters’ Rights Bill – includes some significant differences to its predecessor, almost all to the benefit of tenants rather than landlords. For example, tenants must now be in three months of rent arrears before landlords can seek possession, rather than the two months proposed by the Conservatives; the grace period after which landlords can seek possession in order to sell the property has also been doubled from six to twelve months and the notice period extended from two to four months. Moreover, the current version of the bill gives tenants new rights to terminate a tenancy from day one with two months’ notice – something previously not allowed under the last bill until at least four months after a tenancy started. This would have effectively created a minimum six-month term.

These reforms are the most significant changes to the regulation of the private rented sector for over 35 years. The residential landlord sector has been careful not to be seen opposing the legislation outright given the unhelpful optics around this. However, many individual landlords are concerned that the balance has tipped too far away from them, potentially leaving many unable to take back possession of their properties in reasonable circumstances. Court backlogs have provided an additional layer of concern, with delays in processing evictions claims already persisting in many parts of England, with many landlords calling for significant improvements in order to allay their concerns.

Some industry leaders such as Propertymark and the National Residential Landlords Association have warned that the proposed provisions could lead to landlords withdrawing from the sector, in turn limiting supply and driving up rents. The Ministry of Housing, Communities, and Local Government’s own impact assessment does not predict an exodus of landlords from the sector. Indeed, landlords have been subject to a raft of regulatory and tax changes since 2015, but these have not resulted in significant divestment from the private rental market, which many had predicted at the time.

However these changes play out in the long term, individual and institutional investors in the private rented sector will need to grasp this new regulatory landscape quickly, especially given its wide-ranging impacts for the sector and the prospect of significant disruption to their portfolio. It is the case that home ownership remains unaffordable for many and this is unlikely to change in the near term. However, as the government looks to tip the balance in favour of tenants, it is vital that investors engage with the new regulatory landscape to ensure they are well prepared and can take steps to insulate themselves from any emerging risks.

To discuss the government’s housing policy reforms in more detail, please contact Will Blackman at will@gkstrategy.com

New Government, Same Challenges: Why the early years sector needs to engage with Labour

GK Adviser Noureen Ahmed considers Labour’s approach to the early years sector and why it is so important for providers to engage with the government.

Earlier this month, the Prime Minister Keir Starmer outlined his ‘Plan for Change’ in which he set out the six metrics he would like to hit by the next election. This was an important moment for Starmer to demonstrate to voters that his government means business after a turbulent five months in office. Starmer’s education metric, to ensure 75 per cent of five-year-olds are school-ready, falls under the government’s mission to break down the barriers to opportunity. This is one of five missions Starmer set out prior to the election in which he promised to bolster opportunity for all through improvements to the education system.

Early years education has long been a priority for Labour, with Starmer’s education team having been incredibly vocal about the sector in opposition. Even though much of the initial focus has been on delivering the previous government’s early years reforms, notably the rollout of the extended childcare entitlement, the new government is clearly preparing the sector ahead of launching its own early years agenda, as laid out in Labour’s general election manifesto.

Whilst the spotlight on the sector has been welcomed, some immediate concerns have been expressed by sector leaders, including: whether the government’s schedule to roll out the final stage of its extended childcare entitlement to up to 30 hours go ahead as planned in September 2025, and if the government can deliver its additional pledges for the early years sector successfully over the course of this parliament.

The recruitment and retention crisis facing the early years sector is the biggest barrier impacting the delivery of the extended childcare entitlement. Difficulties attracting people to work in the early years sector, coupled with an exodus of staff, means it is unsurprising early years professionals are sceptical about whether the final rollout will go ahead as planned. The Department for Education’s (DfE’s) recent announcement that it will provide £75 million in grant funding to help childcare providers deliver the staff and places needed next year is positive and suggests that the government is determined to launch the final stage on time, despite these challenges.

There was also some welcome news at the October budget with the government announcing £15 million in investment to begin the delivery of 3,000 school-based nurseries by the end of this parliament. Schools currently have the opportunity to bid for up to £150,000 to either expand existing nurseries or open a new one, with the government hoping to open around 300 new or expanded nurseries by September 2025.

Education secretary Bridget Phillipson has reiterated government’s appetite to deliver more school-based nursery provision. Making use of unused classrooms in primary schools looks like a sensible policy approach. However, the government could find it difficult to meet the commitment’s short- and long-term targets. Getting enough schools on board with the scheme could prove difficult. Even though there may be capacity to utilise the free classroom spaces available, the infrastructure (both physical and logistical) needed to create and maintain nursery provision is very different to those needed for primary school pupils.

The Labour government is also realistic about the need for a model which includes both state-delivered provision via in-school nurseries and maintained nurseries and provision by the private voluntary and independent (PVI) sector in order to meet capacity demands. In regard to the latter, the government understands the importance of the PVI sector in delivering high-quality early years education and so will be keen to work with the sector to deliver much of its proposed in-school nursery provision.

Moreover, Ofsted has said it will work to support the government’s plans by making it easier for high-quality providers to set up and expand nurseries. The watchdog’s plan to streamline the registration process for providers as well review how it inspects and regulates multiple providers is laudable because it allows the sector the chance to continue meeting the demand for early years settings.

The government has made a big play that in total will see investment increase by over 30% compared to last year, all whilst happening amidst a bleak fiscal outlook. This political priority as the education secretary has acknowledged must be accompanied by reform to deliver a sustainable early education system. This will mean high quality providers demonstrating value for money and their ability to scale up provision. Those providers with a proven track record and an ambition for growth will find a receptive ear within DfE and No 10. With the next phase of rollout in 2025 and the comprehensive spending review in the spring setting out the funding for the remainder of this parliament, providers have no time to waste. They should prioritise engaging with government to position themselves as a partner in the next phase of reform, and to demonstrate the role they play in ensuring a successful delivery.

A fork in the road for food security

GK Senior Adviser James Allan considers the publication of the Food Security Report and why the opportunity is ripe to engage with ministers and officials holding the pen on the food strategy due for publication in 2025.

The government has published its three-yearly Food Security Report and it is hefty. Five themes covering 16 sub themes and 37 indicators ranging from food crime and pathogen surveillance to physical access to food shops and consumption patterns. Ministers had chosen to delay the publication of the report in hope of avoiding the farmers in protest against the £1m cap to Agriculture Property Relief introduced at the autumn budget. But this issue has not abated. Tractors returning to Westminster on the day of publication detracts from the business of government and its work to address food security.

The report’s headline finding is that those disadvantaged across society, including low-income households and people with a disability, are less likely to meet government dietary recommendations, and this trend has increased. All the while, the UK’s self-sufficiency has remained broadly unchanged in the past two decades, but the risks have heightened. The UK continues to source food from domestic production and trade at around a 60:40 ratio. But digging a little deeper, the UK is highly dependent on imports for fruits, vegetables and seafood – all sources of micronutrients essential to balanced and healthy diets in the fight against rising levels of obesity.

The risks to food security and self-sufficiency are numerous: climate change, nature loss, water insecurity, labour shortages and geopolitical events, the list goes on. More than this, these risks are interconnected with both acute and chronic impacts which trigger and compound each other. One can easily imagine a shortage of rice on British supermarket shelves if an extreme weather event, compounded by increased geo-political tensions, threatens the 46% of rice that is imported from India and Pakistan. At home, declining levels of natural capital are somewhat slowing, but boosting domestic production will mean prioritising and funding sustainable farming practices that restore and preserve our ecosystems to fully reverse this trend. Such schemes are not cheap for a government navigating tight public finances, as the second phase of a comprehensive spending review has kicked off with the Chancellor asking government departments to find 5% efficiency savings.

What’s new?

The government is set to adopt a “systems approach” which will focus minds on the outcomes of the whole system from production to consumption. Defra secretary Steve Reed is also promising a new way of engagement with not just sector and industry leaders, but also academics and charities to corral collective ambition, influence and effort. For food producers and retailers, this is a seismic opportunity to leverage your consumer and business story for a political audience that is in listening mode.

Pulling this off will be the test of ministers and officials drafting the government’s new food strategy due for publication in 2025. Why? Because if this Labour government is truly socially minded, addressing food insecurity will be a political priority. Doing so will aid better health and educational outcomes thereby reducing the burden on schools and the NHS, both of which are areas the Labour party self-identifies as being custodians of.

For investors, having a clear understanding government workstreams toward food security will be important. Investment decisions will need to be considered in the context of UK self-reliance in the food and energy sectors, but especially where technological innovation better position investors to capitalise on emerging trends, ensure long-term sustainable returns, and help shape a more secure and resilient national food system.

While spectators might eagerly await the publication of the government’s food strategy next year, the opportunity to engage is now.

Navigating changes to food and drink packaging: A guide for investors

Mark Field, director and founder of Prof Consulting Group, outlines what investors need to know about packaging in the food and drink sector

Setting the scene

Food and drink packaging is undergoing major transformation with innovations at each stage of the value chain. By responding to regulatory, consumer, and supply chain challenges, companies are finding new ways to reach customers and help them shop more sustainably. The role of packaging is to keep food and drink intact, safe and fresh along its journey from producer to consumer. It provides a space to communicate information to customers and to represent a brand. Carefully managed, it is a window to showcase a company’s values, but poor execution risks significant brand damage.

Shifts in the regulatory and commercial landscape

Regulation – responding to concerns about environmental pollution and climate breakdown, the regulatory landscape is shifting to place responsibility on producers for the packaging they put into the market.

In Europe, the upcoming PPWR is part of the region’s circular economy plan to value waste and minimise its environmental impact. The new regulation updates existing rules and aims to harmonise how packaging is managed throughout EU countries, making trade smoother. PPWR will require all countries to increase the share of reusable packaging which includes deposit return schemes, targets, economic incentives and minimum percentages of reusable packaging. In addition, 70% of all packaging by weight must be recycled by 2030. For some companies this might mean investing in new packaging equipment to handle new materials, for example, in the transition from plastic to paper. For others it can mean an entirely new way of selling, such as using returnable glass jars instead of plastic pots.

Nations in the UK are considering (England) or have implemented (Wales) deposit return schemes where consumers return packaging to a retail outlet and receive money back. This requires investment into infrastructure such as reverse vending machines. Others are working with digital technology to trace their products through the recycling system starting with the home curb side collection and rewarding customers who participate.

The UK’s plastic packaging tax charges a flat rate per tonne of plastic packaging with less than 30% recycled plastic. Companies must ensure they have accurate information on the packaging they buy to submit data to a government register.

Communication on packaging sustainability must be accurate and not mislead consumers according to the upcoming EU Green Claims Directive and the UK’s existing CMA’s Green Claims Code. One of the goals is to ensure that consumers are empowered to participate in the circular economy and can make informed choices. Consumers and NGOs are alert to greenwashing and don’t hesitate to call out companies who overstep the line.

A new UN treaty to regulate the production and disposal of plastic is expected at the end of 2024. Brands are calling for a limit to the amount of virgin plastic produced and for support on recycling and reuse systems.

Consumers – people expect companies to ensure their packaging is sustainable and research shows they want to participate in the transformation. According to global surveys, recycling packaging is the most popular sustainable behaviour, practiced by 62% of people. Companies can respond to these needs with clear and accurate disposal communication and with innovation in packaging formats.

Supply chains – extracting raw materials places undue pressure on natural resources and creates pollution that worsens climate and nature breakdown. Reducing the extraction of virgin raw materials, such as oil and timber, is urgent. Food and drink companies can limit their contribution to these challenges and take the opportunity to strengthen their resilience in the face of shortages and rising costs. UK and EU packaging leaders are moving from efficiency and lightweighting towards new materials, recyclable and recycled, and reusable packaging formats. For example, alcoholic drinks companies are experimenting with infinitely recyclable aluminium instead of glass, and being lighter, the product has fewer transport emissions.

Risks and opportunities

Companies who are unable to understand or keep pace with regulatory changes face increased costs resulting from levies on non-recyclable packaging, fines for misleading green claims and increased costs of excess packaging. Evidence shows that if customers are disappointed, companies will lose sales.

However, leading companies in the sector are embracing the transformation and innovating across the value chain. For example, with smart packaging technology using freshness tags; using alternative materials to plastic such as seaweed coatings and mushroom fibre cushioning; and using more reusable and refillable packaging. Infrastructure to support circularity is also growing, with refill stations, mobile and fixed reverse vending machines, and scanning and tracking technology increasingly prevalent. Cameras and cloud-based systems can be used to enable traceability and visibility over each process involved in collecting, recycling and cleaning packaging.

Companies that can promote and support convenient sustainable living will succeed in today’s crowded market. Many value-driven brands are entering the market and winning customers on this basis.

What should investors be asking?

Investors who want to understand the sustainability of packaging used by food and drink businesses should be asking management teams the following questions:

How does the business actively prepare for upcoming regulatory change and comply with existing regulations?

Does the business follow industry codes and benchmarks?

How does the business track the competitive landscape and identify gaps and innovations that resonate with consumers?

Does the business understand how customers use and dispose of their packaging?

Does existing packaging have clear recycle/reuse instructions?

Can the business substantiate claims on packaging sustainability?

Does the business know and manage the full life cycle along the value chain from raw material production through to disposal?

Does the business communicate their sustainability status openly e.g. on website linked to a QR code on packaging?

How does the business collaborate with stakeholders in all markets to ensure their packaging is reused/recycled correctly?

Prof Consulting Group helps to lead business to success in the UK and Australian food industry with its team of industry-leading experts and extensive range of services. For more information or to discuss how Prof. Consulting Group can support your business, please visit https://www.profcg.com/contact/

The £0.5bn revenue raiser, incurring the wrath of farmers

GK Senior Adviser James Allan visited the farmers protest in Westminster and assesses the likelihood of a government u-turn and its agriculture policy plans.

On 19 November, farmers were out in force and took to the streets of Westminster for a heartfelt protest for a sector that feeds the nation. At the autumn budget, the Chancellor Rachel Reeves introduced a cap of £1m for assets eligible for Agriculture Property Relief and Business Property Relief. Estimated to raise £0.5bn a year by 2029/30 for spending on public services, the measure has been dubbed a ‘family farm tax’ for farmers that “don’t do it for the money because there is none”.

The extent to which the Chancellor’s action equates to a “death knell” for the family run farm is somewhat contested. While the Country Land and Business Association estimates 70,000 farms will be impacted by the change, various policy wonks and tax specialists argue that this does not consider other reliefs and is based on the quantity of farms, rather than ownership structures. Disputed figures aside, it risks fueling a shift public opinion against the government and one of the shortest-lived honeymoon periods for a new Prime Minster. A survey carried out by JL Partners found that 53% of respondents felt the autumn budget was unsuccessful, so the farming community are not alone.

Is this Reeves’ Cornish pasty tax moment?

When then-Conservative Chancellor George Osborne introduced a 20% tax on hot foods to end VAT anomalies in 2012, few anticipated the political drama of “pastygate” which ensued. The Conservative government was criticised for being out of touch, with some commentators even alleging class war. Then Prime Minister David Cameron was caught out for saying he’d eaten a pasty in Leeds Railway Station when the West Cornwall Pasty Company duly noted that the pasty outlet had closed two years previous. The controversy detracted from Osborne’s budget and ultimately led to a government u-turn and a negative with 49% of people describing the government’s handling of pastygate as a “shambles”. In a similar vein, the political fallout from this protest will be difficult for the Labour government to manage. Whatever Reeves’ next move, pastygate demonstrates that u-turns are not unprecedented when public opinion moves against a pinch point policy issue.

Beyond the political drama

Politics aside, the protests cut to the core of several interrelating policy issues, chief among them food security. Should farmers up the stakes and choose to strike, the government has already confirmed contingency plans to mitigate against likely food shortages. Any disruption to already fragile “just in time” food supply chains, which are a hallmark of the British supermarket industry, would have an immediate knock-on effect for the consumer, and in turn, the voter. This year of global elections has demonstrated that voters do not reward incumbents when food prices rise.

Yet given the 60/40 split of domestic and imported food produce respectively, the issue of food security is both desperately domestic and international. Russia’s invasion of Ukraine not only led to record levels of food inflation, hitting low-income households the hardest, but also a decline in business investment in the UK food and drink sector. Then there’s the issue of climate change. While India and Pakistan account for roughly 46% of UK rice imports, the government acknowledges that India is increasingly a climate vulnerable country. In short, a greater dependence on food imports arising from a possible collapse of domestic farming exposes the UK to yet more unpredictable geo-political and climate risks.

The British farming sector does not operate in isolation; it is critical to the UK’s broader rural economy, supporting industries such as agricultural machinery, agri-tech and innovation, and food processing. More than this, farmers are custodians of the UK countryside, contributing to environmental goals of biodiversity, carbon sequestration and sustainable land management and forestry. Though contentious, the Chancellor’s action prompts a broader conversation about agricultural reforms which align with national priorities and ensures the voice of the farming community is heard. The government has yet to set out substantive details but spoke of a new deal for farmers during the election campaign. Now in government, Defra Secretary Steve Reed has signalled a focus on trade deals undercutting low welfare and low standards; maximising public sector purchasing power to back British produce; and a land-use framework to balance nature recovery and long-term food security.

Whether Reeves doubles down or pivots on the Agriculture Property Relief depends on the government’s willingness to expend political capital to defend its decision. Labour’s instinct will be to fight on but the party finds itself on new ground. Its broad but narrow majority is part contingent on non-traditional Labour voters, many of them in rural areas. The MPs in these constituencies will have their eyes on a 2029 general election. Maintaining the rural vote and positioning Labour as the party of both rural and urban communities will be a challenge for the government. How Starmer and Reeves handle the ‘family farm tax’ could well define this iteration of the Labour Party. For investors and businesses alike, keeping abreast of these political battlegrounds, and preparing for the associated commercial risks and opportunities, will be important in making the case to a government that might well bend to a shift in public opinion.