Tag Archives: investment

The Warm Homes Plan and the government’s green agenda

GK’s Hugo Tuckett examines the government’s publication of its Warm Homes Plan and what it means for the government’s green agenda

January 2026 saw the publication of the government’s long-awaited Warm Homes Plan. The plan, which is backed by £15 billion of funding and was originally due for publication in 2025, represents the sum of the measures that the government believes will deliver on its commitment to lower household energy bills by £300 over the course of this parliament (2024-29). It is also one of the government’s most entrenched policies, dating back to Labour’s time in opposition when Shadow Chancellor of the Exchequer Rachel Reeves announced in 2021 that a future Labour government would deliver billions of pounds worth of new funding to support upgrades to the UK’s green infrastructure.

The Warm Homes Plan seeks to deliver a significant expansion of solar panels and heat pumps, marking a departure from previous efforts to improve the insulation of homes. Despite its original billing to improve households’ energy efficiency, the final publication of the plan sets out the energy secretary Ed Miliband’s ambition to deliver a ‘rooftop revolution’ and includes a range of measures designed to support a much greater uptake of solar panels. This has led to some concern amongst charity and industry groups who have warned that shifting to clean heat and electricity generation (including heat pumps and solar panels) before dealing with the scale of draughty homes is only going to lead to an increase in bills in the short term. It does though demonstrate the government’s shift in approach from seeking to reduce household energy consumption to increasing energy generation from renewable sources.

Ministers are eager for households to adopt a range of green measures to substantially lower bills and, in some cases, deliver ‘zero-bill’ households. The government’s thesis is that investing in the roll out of new technologies now, including heat pumps, will drive down costs further in the medium-to-long term. It also becomes much cheaper and more efficient to use a heat pump when combined with battery storage systems and solar panels. Critics will say that the government should be thinking much more radically about how it plans to rebalance the levies on energy, so that it can bring down the cost of electricity for all if it really wants to see people make the shift from gas to electricity. Aside from the government reiterating its decision to remove £150 worth of levies from energy bills through the abolition of the Energy Company Obligation (ECO), this plan does not tackle that more intractable problem.

The funding included in the plan is predominantly aimed at low-income households, but there is some financial support available to all homes. The plan will administer £4.4 billion in grants to low income households and social landlords. This will include fully funded upgrade schemes, including solar and heat pumps, depending on the assessment of the building. It will also establish a £5.3 billion Warm Homes Fund which will be available to all households. This includes £2 billion in low-and-no-interest consumer loans and £2.7 billion for innovative finance products in the home upgrade system. The government aims to upgrade five million homes by 2030 and lift one million homes out of fuel poverty through the plan, which will be overseen by a new government body, the Warm Homes Agency.

The publication of the plan is a significant moment for the government and for energy secretary Ed Miliband. Despite previous climbdowns on the amount of funding that would be made available to support the government’s green agenda, Miliband has deftly navigated both HM Treasury and the Cabinet to retain a sizeable portion of funding to deliver on his ambitions in the sector when other departments are experiencing real-terms cuts. As the 2029 general election approaches, there will be real pressure on the Department for Energy Security and Net Zero to deliver on the ambitions of the plan, which sits in an area of public policy where the government will be hoping to draw a clear dividing line with Reform UK. The government has spent a lot of its first 18 months in power talking up its efforts to boost the UK’s green credentials and lower household energy bills – now it’s all about delivery.

Push to raise foreign taxes on US assets a risk for foreign investors

By Lizzie Wills, Senior Partner & Head of Private Equity

A bill making its way through the US Congress could present meaningful new taxes on US holdings of investors domiciled in the UK, as well as several EU member countries – another in a series of new risks to emerge from the newly fraught relationship between America and its historic allies. While passage of the bill is not guaranteed, potentially impacted parties should begin to think now about how to react to potential changes.

The effort in the US Congress to impose new taxes on many foreign investments in the US is part of a broader tax and spending package that recently passed the US House of Representatives and is currently being debated in the Senate. The bill would be passed under a legislative vehicle known as reconciliation, which allows a bill to pass under restricted circumstances with simple majorities of both the House and Senate, circumventing the usual requirement to secure 60 Senate votes.

The foreign investment tax package is known as Section 899 for the new section of the US tax code required to implement it. Section 899 would impose incremental taxes above current rates on the value of income or sale proceeds of many US holdings (US Treasury securities would be exempt) held by institutional investors, individuals and governments domiciled in countries that have imposed what the bill characterises as “discriminatory” taxes on the US. The discriminatory threshold would automatically include countries that have levied Digital Service Taxes (DSTs) on US-based technology firms – which includes the UK, France and Spain – as well as taxes imposed under the Undertaxed Profits Rule, a standard developed by the Organisation for Economic Co-operation and Development (OECD) to attempt to impose minimum tax rates on multinationals.

Since the House version of the reconciliation bill passed on 22 May 22, critics have dubbed Section 899 the “revenge tax”, predicting that if passed the provisions would hurt US asset prices, cause interest rates to rise and the US dollar to tank considering the US$30 trillion in US assets held by foreigners. The Tax Foundation, a US think tank, estimates the new taxes would impact some 80% of the foreign direct investments into the US. Yet US policymakers appear to be largely unmoved thus far by the opposition. The Senate Finance Committee has released draft language pegging the incremental taxes at 15% (5% per year for each of three years) starting in 2027, watering down the House version but keeping it largely intact. The notion of raising taxes on foreign investors is completely consistent with the “America First” mindset of the Trump administration and Republican congressional leaders. The Congressional Budget Office (CBO), a non-partisan body that estimates the fiscal impact of proposed legislation, has forecast that the House version of Section 899 would raise US$116 billion over the 10-year budget forecast window, important considering the CBO’s forecast that the bill would add trillions to the already yawning US budget deficit. The Senate’s version of the bill would raise less, given the 15% maximum (versus 20% in the House bill) but would still be expected to generate meaningful revenue.

The broader reconciliation bill has drawn opposition from multiple factions of the Republican party. However, the bulk of the criticism has focused more on the bill’s proposed cuts to the Medicaid health-insurance programme (for moderates) and the projected further widening of the federal budget deficit (for conservatives). By comparison, criticism of Section 899 has been muted. And even if the current version of the bill is scaled back, the temptation for a party that controls the White House, Senate and House to pass a bill through reconciliation is huge – the vehicle was used to pass the tax-reform bill in Trump’s first term, in 2017, as well as the Inflation Reduction Act (IRA) under President Joe Biden in 2021.

Sample countries that have imposed Digital Service Taxes (DSTs) on US Firms

Austria Denmark Belgium
Canada Hungary Turkey
France Italy Peru
India Poland Colombia
UK Spain Kenya

Source: Tax Foundation

What can non-US investors with US holdings do in response? Both the Senate and House versions of the bill specify that the new taxes will only be imposed on entities with greater than 50% equity ownership outside the US. Jointly held funds with divided US/non US ownership could shift majority control back to the US partner. Other strategies will surely emerge to adapt to the new rules should they come to pass. But investors would do well to start thinking about them sooner rather than later.

If you’re interested in discussing this in more detail please be in touch with Lizzie Wills on lizzie.wills@gkstrategy.com.

Westminster in 2025: Policy Shifts and Political Risks

GK is delighted to present its ‘Westminster in 2025’ report which sets out the key policy shifts and political risks we are expecting to see over the coming 12 months.

The report can be accessed here: Westminster in 2025 – Policy Shifts and Political Risks

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.