Tag Archives: Conservatives

Reflections on the Future of Council Tax

GK Associate Hugo Tuckett assesses the likelihood of council tax reform amid rising concern about local authority financial resilience.

Is council tax reform on the horizon?

Amid rising bankruptcies in recent years, and growing concern about the sustainability of council finances, funding mechanisms for local authorities – and particularly council tax – are attracting growing political scrutiny.

In December 2023, the Local Government Association reported that almost one in five council leaders and chief executives it surveyed think it is very or fairly likely that they will need to issue a Section 114 notice this year or next due to a lack of funding. A Section 114 notice is issued by a council’s finance officer if they believe the council’s expenditure will exceed the resources it has available. Eleven Section 114 notices have been issued since 2018, with only five issued in the 30 years prior.

Given that council tax receipts now make up over half of local authority spending power (56.9% in 2023-24 compared to 49.1% in 2015-16), ensuring the council tax regime is operating effectively is critical to the long-term sustainability of local authority finances.

The Levelling Up Committee recently made a series of recommendations to the Government on council tax reform. In its report, the Committee reiterated its previous conclusions about the “unfairness and outdatedness of the council tax regime”.

The Government has since said it has no plans to conduct a revaluation of council tax bands (the Committee’s key recommendation) as, amongst other factors, “it would particularly risk those on a lower income, including pensioners, who have seen their homes appreciate in value”.

Here is the focal point of political discourse. A Conservative Government, aware that (according to recent YouGov polling) the Party is now the most popular only among the over-70s, will be aggrieved to conduct a revaluation of property bands which would hit the pockets of its core voter base. A Labour government on the other hand, with traditionally greater allegiances to younger, non-home owning voters and those on lower incomes could take a fresh look at this issue. One option likely to be under consideration is the introduction of new, higher bands of council tax.

Given the Shadow Chancellor, Rachel Reeves, has ruled out numerous tax rises ahead of the upcoming General Election, council tax reform represents one revenue-raising lever still available to her. While the details of any potential reform are still unknown, it is a near certainty that the council tax regime will only grow in political salience in the years ahead.

GK Point of View – The Fallout from the Horizon Scandal

GK Adviser Rebecca McMahon assesses the potential impact of the Horizon scandal on the Labour Party’s procurement plans. 

How will the Horizon Scandal influence Labour policy?

The renewed focus on the Post Office’s procurement of Fujitsu’s Horizon software has brought to light procurement issues which are pertinent to the Labour Party.

Labour has already committed to increasing oversight of government procurement – Shadow Chancellor, Rachel Reeves has proposed a “covid corruption commissioner” watchdog to recover taxpayer money lost due to the Government’s VIP “fast lane” for contract delivery during the pandemic. Evidently, the Party is keen on a system where both the Government and individual suppliers are held to greater account. The Horizon scandal only adds to its case.

The Party is not just set on preventing bad outcomes from government procurement; they are also aiming to use it as an actively positive instrument, with Deputy Leader Angela Rayner placing an emphasis on “social and environmental factors”.

She also urged the Government to ensure that “contracts do not always automatically go offshore” and instead are awarded “to businesses creating local jobs, skills and training”. Labour has also said it would “make social value mandatory in public contract design”, introducing measures to promote “decent work” and strengthen supply chains.

Labour to lean on procurement to digitalise services?

As well as encouraging more ethical procurement, Labour is also keen to use procurement to further digitalise public services. This is especially true of the NHS, where key figures like Wes Streeting, Shadow Health Secretary, have been vocal about the need to invest in innovative health technologies and make more effective use of health data.

However, in the wake of the Horizon controversy, any efforts to radically digitalise the NHS will be caveated by important questions about accountability.

Whether or not digitalisation will be a quick fix for the UK’s declining health provision, it is likely to be a key area for procurement under a Labour government. UK healthtech has expanded nine-fold since 2016, and the sector’s future could be bright under a future Starmer government.

GK Point of View – Tory and Labour priorities in 2024

GK Senior Adviser Robert Blackmore and Adviser Noureen Ahmed assess the priorities for the Conservatives and Labour in 2024 as we make our way closer to a general election.

The Tory plan to build back core support

The Conservative Party begins 2024 in dire straits, over 20 points behind Sir Keir Starmer’s Labour in the polls, they are running out of time to avoid a chastening defeat. Party leaders are therefore concentrating their efforts on ensuring they have strong support with the Party itself, while strategists desperately try to home in on the clearest path to victory, reducing illegal immigration via the Rwanda scheme, and providing tax cuts.

Much of the Government’s political capital is being spent on making its plan to send some asylum seekers to Rwanda for processing a reality. The updated Rwanda Bill has now reached the House of Lords, where intense opposition is expected. For party strategists, it provides the Conservatives with an opportunity to weaponise the debate and highlight the immigration and Brexit-related tropes that dominated the political debates in the late 2010s.

However, the political salience of the small boats issue to the wider country, as opposed to the party’s rank-and-file, is not yet clear. That is why the Party is so keen to ensure voters feel economically empowered, as the next election approaches. With the Spring Budget scheduled for 6th March, there are a number of tax cuts that Chancellor Jeremy Hunt has been considering in recent weeks, including further cuts to national insurance, cuts to income tax, and an increase in the child benefit threshold. The Chancellor, however, has been managing expectations about how feasible these may be, with the likelihood that the degree of fiscal headroom in March will be lower than expected. A fourth category, cuts to inheritance tax, is also now deemed less likely, as the Prime Minister fears it could be portrayed as a tax concession to the wealthy.

Yet, such a strategy is dependent on the electorate’s support for the Government after 13 years in power. Will they show gratitude to the Government for providing extra pounds in their pocket and vote accordingly? The tax burden is the highest it has been since the Second World War, and, according to the Resolution Foundation, wage stagnation represents a real-term decline in take home pay for many households since 2008. Given these challenges, it is not guaranteed that the Conservatives’ strategy will cut through.

It’s in the bag for Labour surely?

As the next general election looks increasingly likely for late Autumn, the Labour Party is planning to finalise any manifesto commitments by mid-February (in the unlikely scenario that the PM announces a May election). Although the Labour Party requires a significant electoral swing to claim a majority, it has been buoyed by recent polling indicating that Labour are firm favourites to lead the next government. As a result, many in Labour HQ are optimistically planning the Party’s campaign strategy.

In 2023, Labour Leader Sir Keir Starmer unveiled his 5 national missions that the party will build its manifesto around. Core missions include Labour’s ambition to support the NHS to get back on its feet and break down barriers to opportunities.

Unsurprisingly, education has remained at the forefront of Labour’s core priorities, with the Party recently unveiling its plans for schools, further education, and the early years space. The Party is determined to introduce reforms to support the development of young people and better prepare them for adulthood.

The NHS is regarded as an area of strength for the Party, with the public almost always preferring Labour’s handling of the NHS. Given the widespread awareness of ongoing crises, such as doctors’ strikes, long waiting lists and inaccessible GPs, the Party is letting the national story do the campaigning for them, with scant few serious pledges on health and social care policy. Shadow Health Secretary, Wes Streeting, has promised to work to address the fundamental issues, with promises made by the Party to boost funding investment, cut down waiting lists and improve staff recruitment.

However, further information on reforms have not been made public – many at Labour Party HQ worry that a detailed proposal may just offer the Conservative Party a “free win”, by giving it something to critique. The manifesto will shed light on where their focus may lie on health, but it’s unlikely that Labour will reveal its plans in full before taking power. Nevertheless, Labour has now started talks with the civil service and is finalising policy. We expect Labour to accelerate its campaign plans and attempt to present itself as a calming presence in contrast to the continuing Tory storms.

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.

What’s in store for the levelling up agenda now Liz Truss is Prime Minister?

GK Researcher, Tristan Robinson, investigates what’s in store for the levelling up agenda under the premiership of Liz Truss and whether tangible progress can be delivered before the next general election.

What we know so far

During the Conservative Leadership Contest, Liz Truss never truly went into detail as to how she’d take on levelling up under her premiership.

She had often used the term levelling up in a “Conservative way” by focusing on tax cuts, deregulation, and devolution to boost growth. The recent not-so-’mini’ fiscal statement set out by the Chancellor of the Exchequer Kwasi Kwarteng, has given a clear indication that Liz Truss has kept with her mantra of governing in a ‘Conservative way’ – Trussonomics. The Chancellor gave no mention of levelling up in his speech but did announce the creation of new ‘investment zones’ in over 4o locations across the UK. It’s hoped that this would encourage businesses to invest by incentivising lower tax regulations and planning rules. If some of these new ‘investment zones’ were selected in areas such as Liverpool, Teesside, Newcastle and Grimsby, the financial benefits for the local areas could be significant.

Andy Street, Mayor of the West Midlands recently outlined his support for targeted Investment Zones whilst Mayor for Tees Valley Ben Houchen called it a ‘gamechanger‘ for areas such as Teesside, helping to rejuvenate town centres such as Hartlepool and creating new high-wage jobs. Yet, it remains unknown as to how long it will take for these zones to be implemented. In addition, there is a possibility of opposition from the Government’s own backbenchers who are concerned about losing their leafy rural seats that have long been opposed to development.

Liz Truss has also pledged to reverse the decision to downgrade the Northern Powerhouse Rail project which links Liverpool with Hull, stretching across England. During the contest she did not commit to completing the HS2 Line between the East Midlands and Leeds. It is yet unknown whether she will go through with this decision and reverse the downgrade and commit to the Eastern Leg. She also committed to Northern Research Group pledge card that aims for further devolution, a Minister for the North with direct responsibility for local growth and levelling up, the equalising of the Levelling Up Formula and introduction of two new vocational institutions in the North of England.

Levelling up is not just about infrastructure & transport, and Liz Truss has yet to go into detail on how she will help level up the UK by fixing the social disparities on matters such as quality of education, access to health care as well the quality of living between the North & South of England.

Time is ticking…

Liz Truss has not made levelling up her flagship policy for her administration, but rather tax cuts & deregulation. Whilst she has given an inkling as to what her approach would look like – such as introducing new investment zones & supporting the Northern Research Group pledge card – she has yet to give a detailed plan on what their levelling up agenda would look like or how long their proposals would take to implement.

The immense cost to level up makes it near impossible to do anything substantial in a short time frame and with many Southern MPs concerned of losing their seats on the topic of development, illustrated with the impact of the 2021 Chesham & Amersham by-election which ultimately caused planning reforms to be ditched during Johnson’s premiership. Centre for Cities believes that to truly level up and close the North-South divide would cost £2 trillion and would take decades to implement long-term efficient policy. In truth, Liz Truss will have very little time to fulfil any substantial changes to the geographical disparities in the UK in under two years. The incoming winter crisis & the rising tensions with Russia will inevitability shift the focus away from levelling up just as Covid-19 had done for Johnson’s government.

Labour’s Alternative

Shadow Minster for Levelling Up, Lisa Nandy, introduced an alternative with a 5-point plan to level up the UK. Focusing on jobs, Labour wants to spread job opportunities across the UK by investing £28bn each year in green projects in industrial and coastal towns. The plan also wants to set off 100k new businesses to help local high streets, and includes fostering greater connectivity with towns and villages by investing in better transport and digital infrastructure, more devolution, and reintroducing neighbourhood policing to ensure town centres are safe.

As Labour Conference rumbled on and Labour revealed more of its outlook in the run up to the next election, Labour’s Shadow’s Transport Secretary Louise Haigh offered a telling insight into Labour might tackle the problem of connectivity. Haigh promised not just to nationalise the railway system once more, but to build a Elizabeth Line for the North and deliver the Northern Powerhouse Rail and HS2 in full. Lisa Nandy also spoke at Labour Conference at an event with the Conservative-led thinktank Onward pledging to boost building of social housing and “finish the job” on rebuilding northern cities that was originally planned during the last Labour government.

GK Strategy are experts in helping organisations to understand the changing political landscape, and strongly recommend that business leaders quickly meet with government to discuss their priorities. For more information, get in touch with scott@gkstrategy.com.