Tag Archives: investment

The GK Post-Election Breakfast Event

GK Strategy Adviser Rebecca McMahon reviews the GK Post-Election Breakfast Event.

The coming weeks and months will see the new Labour government pressing ahead with its agenda for government, and getting to grips with a number of difficult challenges facing the UK, from sluggish growth, to growing NHS waiting lists, to precarious local authority finances.

GK Strategy was delighted to host a panel discussion this week looking at how the government will tackle some of these issues, and how it will prioritise its time and resources to deliver on its ambitious policy pledges. GK was joined by former Minister and Health Select Committee Chair, Steve Brine, and Head of Research at Labour Together, Christabel Cooper, who shared their insights into the government’s approach, and some of the inevitable obstacles it will face in the coming months.

Both panelists agreed that while the list of public policy challenges inherited by Starmer and his team is by no means a short one, Labour ministers will now be deciding on areas where urgent action is most needed.

Reforming the UK’s planning system was identified as one of the priority areas for Starmer’s new administration. Our two panelists noted that the new Government’s ambition in this area has already been illustrated by repealing the de facto ban on onshore wind, re-introducing mandatory housing targets, and pledging to update the National Planning Policy Framework via consultation by the end of the Party’s first month in power.

As a policy area with implications for multiple sectors – including housebuilding, the green economy and major infrastructure– planning reform to unlock private investment will be at the core of the new Labour Government’s agenda. As Chancellor of the Exchequer Rachel Reeves set out in her first speech following her appointment, its ultimate success will rely on “unlocking private investment that we so desperately need”.

Healthcare and the future of the NHS was another policy area which featured prominently. Steve Brine pointed out that under current spending plans, funding for the health service is projected to rise at a lower rate than during the austerity years. Meanwhile, the NHS Workforce Plan continues to be underfunded and the outcome of the Health Secretary’s talks with the junior doctors uncertain. He noted that while the Government will soon have to make difficult spending decisions, there would be an emphasis on creating an investor-friendly NHS to support Labour’s ambitions to “crowd in” private investment to improve efficiency and health outcomes.

There was a consensus that Labour’s perspective on the use of the private sector in supporting the delivery of public services is a pragmatic one. Labour’s ‘wide but shallow’ majority – achieving 64% of parliamentary seats on roughly 34% of the vote – means that the Party will need to reassure voters that it is making headway on its policy programme. Our panelists agreed that working with the private sector will be key to successfully demonstrating this.

Please do get in touch via rebecca.mcmahon@gkstrategy.com if you are interested in attending future events or would like to set up a call to discuss the year ahead in politics.

GK Point of View – The GK Budget Breakfast Review

GK Associate Hugo Tuckett reviews GK Strategy’s Private Equity Breakfast, where the Spring Budget and the general election were key discussion topics.

Will Jeremy Hunt use the Budget to put Labour on the back foot?

On Tuesday 27 February, GK Strategy was delighted to host professionals across private equity, corporate finance and wider deal advisory at a panel event to discuss what we can expect in politics over the next 12 months. The panel included The Rt Hon. David Laws, former Chief Secretary to the Treasury, and Chris Giles, Economics Commentator at The Financial Times. The discussion was chaired by GK’s CEO, Louise Allen.

A key theme of the discussion was the Government’s priorities for the upcoming Budget. The panellists agreed that challenges within the UK’s public finances would limit the Chancellor’s flexibility to implement wide-ranging tax cuts in the months leading up to the General Election.

Instead, they argued that the Government would prioritise smaller, targeted tax cuts that would create a dividing line with Labour. A reduction or phasing out of inheritance tax was touted as the one area where the main opposition party would struggle to match the Conservatives.

Labour’s immediate fiscal priorities, should it win the upcoming General Election, were also addressed by the panel. David Laws suggested that the Shadow Chancellor, Rachel Reeves, would have to decide whether to follow Gordon Brown’s approach post-1997 and commit to a Conservative government’s tight spending plans, or as was the case post-2010, label the previous administration financially irresponsible and introduce a series of tax rises and spending cuts to balance the books.

He later suggested that the Chancellor, Jeremy Hunt, might try to use the next few months to lay a series of traps for Labour, such as a commitment to reduce income tax in April 2025, in an attempt to create some separation between the two parties ahead of polling day.

Please get in touch via (hugo@gkstrategy.com) if you are interested in attending future events or would like to set up a call to discuss the year ahead in politics.

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

GK Point of View: The Circular Economy and its investment potential

With an increasing number of deals being conducted in this space, GK consultant Milo Boyd takes a look at the potential of the circular economy for investors.

The circular economy – a system of trade which aims to increase the efficiency of resource use and reduce environmental impact, while developing the wellbeing of individuals – is increasingly being looked upon as an area that warrants attention from investors, and it seems that the concept is here to stay. A 2021 report published by BDO showed that the concept has been attracting a growing amount of investments – more than £1.5bn of capital has been directed into the circular economy since 2018. Of this funding, 33% of the deals have been conducted in manufacturing and industrial sectors and a further 33% has been directed to the food and drink sector, giving an indication of the breadth of opportunities available for investors. The upward trend in investment would indicate that these opportunities are only going to become more numerous as the UK continues to march towards a more sustainable future, and increasing numbers of organisations place ESG at the front and centre of their business operations.

Fundamental to this shift is the growing understanding of the economic returns that the concept of a circular economy can achieve across a variety of industries, notwithstanding the more obvious environmental benefits. For example, 2021 research from the Ellen MacArthur Foundation and Material Economics found that an adoption of circular economy principles into a system that addresses material use, shifting the focus to retaining and reusing resources and reforming our food system, can help to tackle 45% of Co2 equivalent emissions around the world, and found that profitability of investments can be significantly increased compared with non-circular investments.

Finance has rightly begun to seize on these findings, and this is reflected in the overall trajectory of investment into the concept, as investors strike away from the ‘take-make-dispose’ and instead increasingly seek ‘circularity’ in investment decisions. The optimisation of the UK’s resources can be both economically stimulating and encourage the scale up of markets that support the UK’s net zero ambitions, whilst simultaneously producing high – and crucially less risky – returns for investors.

It is important that the Government provides the right environment to encourage these investments to continue. The installation of a new government brings the prospect of a political and regulatory reset, and with it a new direction of travel for policy. A particular point of focus is what approach new the Prime Minister will take. Liz Truss, a self-confessed fiscal Conservative who is keen to hit the ground running, has vowed to bring about the biggest change to the UK’s economic policy for decades. It remains to be seen how Liz Truss will approach environmental policy, aside from conflicting statements to boost the green economy whilst simultaneously supporting fracking.

The circular economy is an important feature of the Government’s environmental strategy, as has been made clear in the 25 Year Environment Plan published in 2018, and the more recently published Net Zero Strategy. But there has been scant indication of how the new Prime Minister intends to build on these strategies and how she hopes to maximise resource productivity, reduce waste of resources, and to encourage an acceleration in the circular economy’s development. This is where the financial sector needs to proactively respond and not shirk its responsibility – finance can and should be a key lever in maximising the circular economy’s potential. It should be in the sector’s immediate priorities to establish a working relationship with the Government to achieve the environmental and financial benefits that can set the UK on a path towards economic growth and environmental sustainability. This will be of vital importance if the Government and the UK’s finance sector are committed to maintaining the UK’s status as a global leader for finance and climate action.

GK Strategy are experts in helping organisations understand the changing political landscape, and strongly recommend that business leaders quickly meet with government to discuss their priorities. GK is well placed to support finance leaders looking to connect with relevant stakeholders, get in touch with milo@gkstrategy.com for more information.