Conservative Party Conference 2021

Conservative Party Conference 2021: Health and Social Care Secretary Sajid Javid on ‘renewal and reform’

Delivering his first major speech as Health and Social Care Secretary, Sajid Javid set out his vision for reform and renewal. His immediate priorities are to get the country of the pandemic and to tackle the NHS waiting lists, as well as setting out an agenda for reform across health and care for the long-term.

Although Javid doesn’t shy away from prioritising the funding that the sector will need to come out of the pandemic, he argued that previous Governments have made the mistake of choosing cash or reform. Instead, he promised that 2022 ‘will be a year of renewal’. With this, he mentioned the review of leadership and management in health and social care which will be led by Sir Gordon Messenger. The comprehensive review promises to highlight the outstanding leaders who drive efficiency and innovation across services. He also wants to drive innovation in the NHS to create a fully-digitalised system across the country.

Speaking on the impacts of the pandemic, he said that the country must ‘level up’ on health as entrenched health disparities have been exposed by the pandemic. The Health Foundation has welcomed the Health Secretary’s emphasis on health as part of the leveling up agenda, but highlighted research which shows that the public health grant has been cut by 24% in real terms per capita since 2015/16, with cuts falling more heavily on those living in the most deprived areas of England.

Javid also highlighted that the pandemic has caused long waiting lists for NHS care, which are currently hovering around 5.6million but could reach up to 13million under the Government’s own projections. He suggested that surgical hubs and 40 new Community Diagnostic Centres will form part of the catch-up programme. NHS Confederation has said that although inroads are being made in waiting lists, there is still intense pressures on health services and the Government ‘must now be upfront and level with the public as to how long it will take to deal with the care backlog’.

Speaking on social care, Javid said the upcoming social care reforms will prevent people from having to pay ‘catastrophic’ costs for their care, but fundamentally people should depend on their families and their community before they turn to the state.

Labour’s long-term social care campaigner Barbara Keeley has argued that this would force more of the care burden onto unpaid carers, she said: ‘These comments by Sajid Javid are shocking and deeply worrying from the Secretary of State responsible for social care’.

The Women’s Equality Party has highlighted the gender implications of Javid’s remarks, as women are more likely to hold the burden of care, asking: ‘And what do you actually mean by this? That women’s unpaid labour should be relied upon to uphold the state thereby pushing women out of careers and into financial decline? Are women not included in your plan to ‘level up’?’

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Labour Party Conference Rachel Reeves

Labour Party Conference 2021: Shadow Chancellor Rachel Reeves on the ‘everyday economy’

Speaking at her first Labour conference as Shadow Chancellor, Rachel Reeves said she doesn’t look at the economy as just some lines on a graph but instead she concentrates on the ‘everyday economy’, the workers that got us through the Covid crisis and the businesses which give life to our high streets. The steps she outlined ‘represent an approach that is unapologetically pro-worker and unapologetically pro-business’.

Accusing the Government of not respecting the workers that keep our economy going, she highlighted that the Conservatives would take £20 a week from Universal Credit recipients and increase National Insurance tax while allowing food, fuel and energy costs to increase. She set out Labour’s economic plan for Government, including a new deal for all workers which will see zero hours contracts banned, fire and rehire outlawed, sick pay increased, flexible working from day one as well as higher living wages. This came as Shadow Work and Pensions Secretary Jonathan Reynolds told the conference that Labour would not only cancel the cut in Universal Credit but also look to replace Universal Credit with a better system.

In her speech, Rachel Reeves also pledged to make the tax system fairer. Labour will ensure that the tax burden isn’t just falling on the wages of working people, but that those at the top pay their fair share, too. This would include a review of the current tax break system so that it delivers for the taxpayer, rather than those ‘who can afford the best advice’. George Dibb, head of IPPR’s Centre for Economic Justice, welcomed the focus on a fairer tax system saying that right now the system is skewed to tax workers more than those who get their income from property or shares, and hasn’t kept up with the massive boom in property wealth over the past 20 years.

The Shadow Chancellor has pledged to scrap business rates and replace them with fairer system. Labour is also calling on the Government to freeze business rates next year and to increase the threshold for small business rates relief, giving small and medium sized businesses in all sectors a discount next year. To pay for these measures, Labour proposed that the Digital Services Tax should be increased to 12% on some online companies that thrived during the pandemic.

Responding to the Shadow Chancellor Rachel Reeves’ pledges on business rate reform, the Federation of Small Businesses highlighted research indicating that 200,000 small firms would be removed from the business rates system if its reforms were taken forward by Labour as pledged. Their research showed that that the English regions that will most benefit from this reform would be the major political and levelling up battlegrounds of the North East, North West, Yorkshire, and South West of England. Tony Danker, CBI Director-General, said that ‘with businesses just recently starting to recoup their losses a freeze in rates will provide much needed breathing room, as will the rise in rates relief for SMEs. But going it alone on digital services tax is high risk and could undermine the UK’s competitiveness at a time when need to be prioritising going for growth’.

Julian Jessop, Economics Fellow at the Institute of Economic Affairs, said that while business rates do need fundamental reform, none of the main parties has a credible alternative. He also criticised the proposed rises in digital services tax as it is a tax on sales rather than profits – and any increase will inevitably be passed on to consumers.

In her speech, Reeves promised that she would be a ‘responsible chancellor’ and announced that Labour will create a new, independent Office for Value for Money tasked with keeping a watchful eye on how public money is spent. Some have questioned whether ‘Labour’s new quango might just be a rebranding of what is already happening’ while others have argued that key to the success of a new Office for Value for Money will be bringing more smaller firms into local and national government supply chains.

Lastly, Reeves promised that she would be ‘Britain’s first green chancellor’, and confirmed that the next Labour Government would commit an additional £28bn of capital investment in the country’s green transition for each and every year of this decade. The new investment would go on projects including offshore wind, developing hydrogen industry, and insulating homes. IPPR welcomed Labour’s ambition to boost investment in the UK’s transition to net zero saying it would be a significant move towards meeting the annual investment in reducing carbon emissions and the transition to net zero that IPPR calculates is needed at least until 2030, if the UK is to meet its existing net zero target.

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COP26 guest post from Vince Cable

Looking ahead to COP26

This is a guest post from Sir Vince Cable, former leader of the Liberal Democrats and a former Secretary of State for Business, Innovation and Skills.

COP26 is a vast intergovernmental conference under United Nations auspices and hosted by the UK in Glasgow. The key objective is to secure agreed national commitments leading to demonstrable action to limit climate change.

These annual conferences review progress in implementing the broad commitments agreed at COP21: the Paris Agreement. This year matters more than most since the scientific evidence and the consequences of climate change are starker than ever. A series of natural phenomena – unprecedent wildfires, flooding, extremely high temperatures in Siberia – have illustrated the risks of unchecked warming. COP 26 is crucial to get governments to commit themselves to ambitious but realistic targets for curbing emissions of Greenhouse Gasses (GHGs) which are consistent with safe and tolerable levels of warming (around 1.5% over the century).

It is easy to be cynical. Heads of government will give speeches making commitments to be implemented long after they have left office. Officials will then craft a communique reflecting the interests of countries ranging from small, island states worried about being swamped by sea-level rise to hydrocarbon-based economies like Saudi Arabia and Russia; from major GHG emitters like China and the USA to microstates; from post-industrial, to industrialising to pre-industrial societies.

There are some reasons for optimism. Biden has replaced Trump. Trump was skeptical about climate change; was a strong advocate of the coal industry; and withdrew from the Paris Agreement. Biden has re-joined the Paris Agreement and will commit the USA to ambitious targets backed up by money and legislation. He also sets store by alliance-building and may be able to extract commitments from hitherto uncooperative countries like Australia. Optimists can also point to the success of earlier multilateral agreements like the Montreal Protocol governing chemicals which damage the ozone layer (an agreement in which Britain’s Margaret Thatcher played a key role)

But there are serious obstacles to radical policies in the USA. Support varies greatly from state to state – from committed California to hostile Texas – and Congressional support is not guaranteed. Even in countries with a strong environmental awareness, action lags rhetoric, as with Germany’s continued attachment to coal. And many developing countries will demand large amounts of money from industrialised countries to adapt to climate induced changes that they themselves did not create. Britain’s cut in its aid budget sends the wrong message.

The biggest problem however is China which is currently the world’s biggest emitter by some margin. President Xi has made a strong commitment to reach net zero emissions by 2060 and to reduce emissions after 2030; but there is little detail and a continuing plan to build many new coal-powered power stations, though China has now committed itself to stop supporting overseas coal burning power stations. Relations with the USA are toxic making collaboration in science research and technology exchange more difficult. Anger over Britain’s role in an alliance to confront China also increases the risk that China may choose to postpone its climate change offer until after Glasgow.

The British government has put the odds of a successful summit at 60:40. My heart is with the 60%; my head with the 40%.

The Vuelio political team will be covering the 2021 Party Conferences – sign up for the daily updates here.

Want more on climate change and the environment? Check out our Top 10 UK Green Blogs ranking and advice shared during CIPR’s Climate Change and the Role of PR half-day conference earlier this year. 

All-Party Parliamentary Groups

Are All-Party Parliamentary Groups something to worry about?

This is a guest post by Gavin Devine, founder of Park Street Partners and member of the PRCA Public Affairs Board.

At the start of August, two newspapers splashed stories about All-Party Parliamentary Groups. First the Mirror claimed that a ‘Tory MP [had] handed paid roles on Parliamentary groups’ to a lobbyist; and then the Guardian said that ‘MPs serving on informal parliamentary groups while working in second jobs are facing scrutiny’. In both cases it was All-Party Parliamentary Groups in the spotlight. And each story revealed a whole bunch of misapprehensions about these Groups and also how regulation of them is actually working rather well.

First, the misapprehensions. It is standard fare for the media to overstate the importance of All-Party Parliamentary Groups, implying that they give some sort of privileged access or play a formal role in the legislature’s activities. Sometimes they are put on a par with Select Committees; as a former Parliamentary Clerk, this used to be pretty irritating. The fact is, they have none of these powers or responsibilities.

What APPGs do is bring together MPs with an interest in a particular subject to debate and discuss the issues, and perhaps even to work out ways to make their case to Ministers. But they have no formal role and their powers are no greater than an individual MP or Peer acting on their own. They have no access to public money, so the idea of doling our paid roles is a touch misleading. What these Groups do can be important, but it is really important not to overstate their influence.

Another misapprehension surrounds the ‘revelation’ that MPs who have interests in the subject matter often serve on these Groups – or even set them up. Well, that’s the point. Surely it can be no surprise that MPs from former coalmining areas dominate the Coalfield Communities APPG, or that those who have an interest in manufacturing or have relevant firms in their constituencies are part of the Aerospace APPG? And is it really unexpected that an MP who worked in the packaging industry for 30 years now has a role as Chair of the Foodservice Packaging Association and at the same time runs the Packaging Manufacturing Industry APPG? What is the Guardian’s point: that Mark Pawsey shouldn’t use his experience and contacts to ensure that an important industry is regulated efficiently and effectively?

Which brings us to the second point: that regulation of these matters works rather well. In fact, neither of these articles could have been written without the transparency engendered by the existing rules. We know that the various MPs cited by the Guardian have paid external roles, and even how much they are paid, because they have declared it in the Register of Members’ Interests. We know they serve on various APPGs because they have completed the very frequent returns required for the Register of All-Party Parliamentary Groups. We can see who their fellow office-holders are and if anyone provides them with support in the same, available-to-the-public-on-the-internet, register. In this case, at least, Parliament’s rules and regulations really deliver.

It seems to me that what’s really bothering the media isn’t APPGs at all: it is MPs having second jobs or being too close to ‘business’. There’s a debate to be had about Members received money from outside sources; personally, I think it is entirely legitimate if it is declared for all to see. And the discussion about proximity to companies is a tired conversation about lobbying itself. I don’t know how many times it has to be pointed out that if Parliamentarians do not speak up for major employers in their constituencies or industries they used to work in or businesses they understand and support we will end up with bad laws and regulations devised by officials who can never have knowledge of every facet of the economy and society they oversee. Lobbying is all about ensuring that the legislative process is well-informed, and if APPGs play a role in that, great.

Sitting behind all this is the on-going inquiry by the Committee on Standards into the rules for and regulation of All-Party Parliamentary Groups. This will consider all of the issues raised by the two newspaper articles and much else besides. I hope that the Committee will put any prejudices about ‘big business’ aside and judge the work of APPGs representing industry in the same way as those that are ostensibly more ‘worthy’. And I hope too that it will reflect on the way that the existing rules already promote openness; and that without APPGs MPs and Lords with common interests would simply get together informally without any transparency at all.

Read more political analysis from the PRCA in this overview of the association’s investigation into unregulated lobbying from February of this year

For more on the intersection of PR with politics, check out this guest post from BDB Pitman’s Stuart Thomson Guilt by association and why we need to fight back

Inflation spikes

Can the inflation spike still be justified as temporary?

As we emerge into a post-pandemic era, the inflation debate has been heating up. The key question is: will the price increases be isolated and short lived, or are they a cause for concern? It seems like central banks are not worried over inflation now – the catchword regarding inflation seems to be ‘transitory’ – but for how long is yet to be seen.

In the UK, the Consumer Prices Index (CPI) rose by 2.5% in the 12 months to June 2021 – up from 2.1% in the 12 months to May; up from 1.5% in the 12 months to April 2021 and 0.7% in the 12 months to March 2021. CPI was at 0.7% in January 2021.

The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target and in their most recent report the Committee’s expectation is that CPI will pick up further above the target, owing primarily to developments in energy and other commodity prices, and is likely to exceed 3% for a temporary period. More generally, the Committee’s central expectation is that the economy will experience a temporary period of strong GDP growth and above-target CPI inflation, after which growth and inflation will fall back.

Explaining this further, Governor of the Bank of England Andrew Bailey said that Covid has not had the same impact on our economy as other shocks did in the past. That’s because lockdown affected both supply and demand in the economy. The fact that the UK authorities supported many people’s wages, and helped business to keep going during lockdown means the economy should bounce back quicker. So he doesn’t expect the economy to suffer long term damage. He does expect the cost of living to go up in the coming months, but that should only be short-lived. Mr Bailey said: “It is important not to over-react to temporarily strong growth and inflation, to ensure that the recovery is not undermined by a premature tightening in monetary conditions.”

While the Bank’s Monetary Policy Committee (MPC) dismissed the rise in inflation as “transitory”, on his last day as Chief Economist Andy Haldane sounded the alarm over rising inflation. He expects that by the end of this year, UK inflation to be nearer 4% than 3%. He said ‘this increases the chances of a high inflation narrative becoming the dominant one, a central expectation rather than a risk. Even if this scenario is a risk rather than a central view, it is a risk that is rising fast and which is best managed ex-ante rather than responded to ex-post.’ Andy Haldane was the only member of the MPC to vote for tighter policy to head off the threat to price stability.

Michael Saunders, an external MPC member, has sent the strongest signal that he is now inclined to vote for an early end to quantitative easing, saying last month that ‘it may become appropriate fairly soon to withdraw some of the current monetary stimulus’. Sir Dave Ramsden, BoE deputy governor for banking and markets, has also taken a more hawkish tone, saying the conditions for tightening could be met ‘somewhat sooner than I had previously expected’.

Debates around inflation come as the British Chambers of Commerce (BCC) warned that UK companies were the most concerned about inflation for almost a decade. 46% of respondents to the Quarterly Economic Survey cited inflation as an external factor of concern to their business, the highest percentage since Q4 2011, and up significantly from 30% in Q1. However, the BCC said there were signs that current pressures could prove temporary because there was little evidence of inflation from employers raising workers’ wages – regarded as pivotal for sustained price rises.

According to the most recent forecasts by the National Institute of Economic and Social Research (NIESR), CPI inflation is expected to rise to 3.5% in the last quarter of 2021, peaking at 3.9% in the first quarter of 2022 but then falling again to settle around 2% in 2023. ‘To prevent a possible dislodging of inflation expectations, the MPC should prepare the ground for normalising its monetary policy stance, and this involves clearly communicating how Bank Rate and asset purchases will be adjusted in response to higher inflation,’ NIESR Deputy Director Hande Kucuk said. The BoE’s Monetary Policy Committee should emphasise that policy tightening would be gradual, to avoid a sudden tightening of financing conditions that could derail recovery, she added.

Deforestation

Baroness Bennett: ‘We have to stop wrecking other people’s countries’

This is a guest post by Green peer Baroness Bennett of Manor Castle (Natalie Bennett), who was leader of the Green Party of England and Wales from 2012 to 2016.

What’s been called the development of the Global North – the creation of the society we have today – was built on expropriation and extraction through force from the rest of the world. It is been calculated that India alone saw $45 trillion in wealth extracted over 173 years.

But the practice isn’t just history. It is still ongoing today, as the conclusions of the UK’s independent Global Resource Initiative Taskforce (GRIT) demonstrate. It was a far from radical group – including reps from Cargill, McDonald’s and Tesco – but it could not but conclude that the UK needed a ‘new strategic approach… to overcome the challenge of commodity-driven deforestation and land conversion.’ Between 2016 and 2018, an area equivalent to 88% of the total UK land area was required to supply the UK’s demand for just seven agricultural and forest commodities.

The new Schedule 17 of the Environment Bill – addressing products from forests and deforested lands – aims to address some of that. But in the debate in the Committee stage of the Bill, members from all sides of the upper house tore into that weakness of the Schedule.

It was the Conservative Lord Randall of Uxbridge who put down the most far-reaching amendment, calling for a global footprint target. In our climate emergency and nature crisis, in a world wracked by poverty and inequality, the need for that is obvious and undeniable. We need to reduce our ecological footprint by around 75% to fit within ecological limits.

In commenting on that, I looked at the ways in which it would directly, immediately, benefit the UK. It would reduce the risk of future pandemics. It would help safeguard against the economic costs of biodiversity decline and climate change; the WWF Global Futures report calculated that will cost the world at least £368 billion a year, with the UK suffering annual damage to its economy of £16 billion a year by 2050. It would also support the resilience of UK and global businesses and help businesses to manage risk proactively.

Crossbencher Baroness Meacher moved the simplest – unarguably right – amendment, noting that the Schedule only covers companies doing due diligence to ensure that they are not taking products from illegally felled forest land. But ‘legal’ deforestation is often profoundly disastrous and unsustainable: 2.1 million hectares of natural vegetation within the 133 Brazilian municipalities that currently supply the UK with soya could be legally deforested. It also introduces a perverse incentive to encourage the legalisation of deforestation.

UK businesses could also benefit from this amendment. Currently, in many parts of the world, laws relating to land use, forests and commodity production are numerous, uncertain, inconsistent and poorly implemented. It is very difficult to determine legality, and companies can be trapped in a regulatory, paperwork minefield from which the amendment could free them.

An amendment from Baroness Jones of Whitchurch brought in a further dimension, the inter-relationship of human rights and the protection of nature. It called for the recognition of customary land ownership and control. Some 80% of indigenous and community lands are held without legally recognised tenure rights. We know that in indigenous and tribal territories, deforestation rates are significantly lower. Ensuring respect for customary tenure rights is an efficient, just and cost-effective way to reduce carbon emissions.

A further amendment, tabled by Lib Dem Baroness Parminter, was essentially the reverse of what the House of Lords achieved in the Financial Services Bill. After a lot of wrestling, the House of Lords finally got a reference to climate into that. What we also need to do is to get the need to control the disastrous impacts of finance addressed in all the other Bills.

The UK is the single biggest source of international finance for six of the most harmful agribusiness companies involved in deforestation in Brazil, the Congo basin and Papua New Guinea, lending £5 billion between 2013 and 2019.

If deforestation was a country, it would be the third largest emitter of carbon, behind China and the US. Some 80% of deforestation is associated with agricultural production, yet figures published recently from five major UN agencies show that the number of people without access to healthy diets has grown by 320 million in the last year. They now number 2.37 billion in total. A fifth of all children under five are stunted because of lack of access to the most basic resource of all: food.

The need to reform Schedule 17 when we get to Report Stage in the House of Lords in September is clear. We have to stop wrecking other people’s countries. We have to ensure that our lives are lived within the limits of this fragile planet, and that everyone else has access to that basic level of resources that is their human right.

This blog post is part of a cross-party series on Vuelio’s political blog Point of Order, which publishes insight and opinion to help public affairs, policy and comms professionals stay ahead of political change and connect with those who campaign on the issues they care about. To find out more or contribute, get in touch with Vuelio Politics.

Moves at the Department of Health and Social Care

What’s on Sajid Javid’s agenda at the Department for Health and Social Care?

During an eventful weekend, Matt Hancock resigned from his position of Secretary of State for Health and Social Care after he and his aide Gina Coladangelo were caught on camera kissing in his Whitehall office, breaching Covid guidelines.

He has now been replaced by Sajid Javid, who being no stranger to Cabinet roles, is an experienced Government minister. He has previously been Home Secretary, Housing Secretary, the Business Secretary, and most recently Chancellor. In a statement, Javid said: ‘I’m incredibly honoured to take up the post of Health and Social Care Secretary, particularly during such an important moment in our recovery from COVID-19… I want our country to get out of this pandemic and that will be my most immediate priority’.  Jeremy Hunt, a former Health Secretary, has said Javid is an ‘excellent choice’ and argued that as an ex-Chancellor he will be able to ‘negotiate formidably’ with the Treasury.

However, Labour’s Shadow Health Secretary Jonathan Ashworth has raised concern over the decision. He called Javid’s appointment a step backward for the UK and highlighted that the NHS and social care suffered underfunding and cuts due to the decisions taken by Treasury ministers including Javid, ‘a key architect of Tory austerity’.

Meanwhile, the former Special Adviser Dominic Cummings has called Javid ‘bog standard’ and an ‘awful’ choice to replace Matt Hancock.

Stakeholders from across the health and social care sector have highlighted that Javid will likely find himself with a rather busy workload despite only starting his new role on Saturday. Aside from the immediate priorities of addressing the ongoing coronavirus pandemic, rising NHS waiting lists, social care reform and NHS restructuring will be other key priorities for the new Health Secretary.

On his first day on the job Javid was focused on the ongoing coronavirus pandemic, and firm in his position that coronavirus restrictions should not be extended past 19 July. In his first statement to the House of Commons as Health Secretary, he said: ‘There remains a big task ahead of us: to restore our freedoms, freedoms that, save for the greatest of circumstances, no government should ever wish to curtail.’ This comes despite mounting concern over the spread of the Delta variant, which is reportedly responsible for 95% of cases in the UK.

The new Health Secretary will be supporting the ongoing Covid-19 vaccine rollout to reach the 19 July date. It is planned that that two-thirds of all adults in the country would have had both doses by then.

NHS Providers have highlighted the wider impacts of the pandemic on the health service. They have said Javid must provide the sector with the ‘support it needs to clear the substantial backlog of care’. This comes as NHS waiting lists are recorded at a record high with more than 5 million patients awaiting treatment, while demands on mental health and emergency services are also rising.

Social care reform was a key 2019 Conservative manifesto commitment, but there still seem to be no concrete plans. In the recent Queen’s speech, the Government promised it would bring forward detailed reform proposals by the end of this year. These proposals will need drive and commitment from the new Health Secretary if they are going to relieve the economic and structural pressures on the sector.

Aside from social care reform, plans to restructure the NHS are already underway with the Health and Care Bill expected to be brought forward to Parliament soon. This Bill would see NHS Integrated Care Systems placed on a statutory level and divulge greater powers over to the (newly appointed) Secretary of State. In the coming weeks, Javid will also help to choose a new NHS England Chief Executive as Sir Simon Stevens will step down from this role in the summer.

Court case backlog

The backlog of court cases: impact on the legal/justice system

The COVID-19 pandemic has had a huge impact on the justice system and has created an unprecedented backlog of court cases, presenting a challenge to the courts like never before. The impacts of lockdowns and social distancing has minimised court appearances, citing safety concerns for both staff and everyone involved.

The BBC reported that towards the end of 2020, that the most serious cases have piled up to 195,000 which may not be completely addressed until 2024. The issues within the legal system is not one that has stemmed from COVID and in fact the backlog of court cases predates the pandemic but has now reached record levels. The need for Government intervention to reform the courts and the judicial system is clear to see. Many issues are created because of these problems both to the victims, defendants and wider society, however the pandemic has also revealed ways to modernise and adapt our court systems and continue to make them more accessible.

Analysing why the backlog of court cases started before the pandemic reveals various factors and issues that have led to an overstretched system. A report produced by the House of Lords Select Committee on the Constitution which focused on COVID-19 and the Courts discussed some of these longer standing failures which have resulted in this situation. These issues included the decrease in Government funding over the last decade which has fallen by 21%, the decrease in legal aid budgets which have fallen by 40% and the fact that fewer staff were being employed into the workforce by HM Courts & Tribunals Service. All of this has led to a system under intense strain, exasperated by the unprecedented effects of COVID-19, where the Government had left the justice system exposed by a lack of risk assessments and preparation for an emergency situation like this.

The Crown Prosecution Service have highlighted the level of change faced for the justice system, where court workload is 44% higher now than it was prior to the pandemic and that waiting times for crown courts have increased by 25% since last year. The concerning aspect of this situation is that justice delayed is justice denied and there is a risk that victims and witnesses will lose interest and hope in their cases if they are continuously pushed back, with an outcome to their cases unclear. The backlog of court cases also has a domino effect to the rest of the criminal justice system, it has also led to an increase of remand prisons who are kept in an uncertain position, with no access to programmers and support which they would have if they were convicted, leading to a growing group of disgruntled prisoners kept in the unsettling nature of custody.

The reaction of the court systems to try to tackle these issues in the short term, has increased an avenue which can continue to be used more in the future. The Coronavirus Act 2020 extended the use of remote hearings which have acted as a good substitute and should be considered as a widely used alternative form of serving justice in the future . This has led to many adapted procedures, such as prerecorded interviews and statements from both vulnerable witnesses and victims, which has provided them with a more comfortable and confident environment to communicate their evidence. Remote hearings also allow live streaming so that the public can see and hear them. In the longer term, this method can help to clear this backlog as it speeds up and makes court processes easier to carry out. The success of remote hearings has been presented by the Institute for Government who have stated in their performance tracker 2020, that:

‘On 23 March, 550 court or tribunal hearings used video or audio technology. Two weeks later, the figure stood at more than 3,000, accounting for around 90% of the total cases processed.’

This shows that although the backlog of cases has grown substantially, the situation would have been much worse without remote hearings. There is a need for the Government to assess both the success and failures in introduced technologies during the pandemic to improve the ability to digitise our court services and improve access to justice.

Government reaction to this, both in the short term and long term, is crucial to tackling this issue of court case backlogs and the underfunding of the judiciary system. In terms of an immediate response, the Government has focused on investing more money into the courts, opening temporary courtrooms to increase the accessibility/availability of environments for trials to take place. However, this is a not a long-term solution nor is it at the rate needed to sufficiently tackle this backlog.

The recent Queen’s Speech revealed details around the Government’s plan in reforming areas of the legal system, with many measures welcomed, albeit overdue. Within the Queen’s Speech, the Government spoke about modernising court processes through documentation being transferred to more electronic means and more procedures being completed online, such as stating pleas. The Government’s focus is ensuring legislation as ensures the timely administration of justice. The Government has focused funding towards the roll out of new technology – though virtual and remote hearings, hiring more staff and adding up to 60 nightingale courtrooms, totaling investment of over £250mn. In reference to victims losing trust in the courts system as they have continuously seen their cases pushed back, the Government also committed to increased funding for victim support services this year, totaling to £151mn and an additional £5mn for Witness Care Units, to support witnesses/victims through these court processes.

Overall, the Government is investing over £1 billion to transform the courts and tribunals system and a further £142 million in COVID-19 funding to support court recovery and upgrades necessary to tackle these growing issues. Although an assessment on the successes of Government intervention can only be made after an extensive period, we have already seen some stabilisation of the court backlog, where the rise of the backlog has stalled, acting as a good indication that the Governments interventions are having an immediate effect.

G7 overview

Overview of the G7

The G7 communique, published at the end of the summit last Sunday, sets out six areas of global action: 1) End the pandemic and prepare for the future, 2) Reinvigorate our economies, 3) Secure our future prosperity, 4) Protect our planet, 5) Strengthen our partnerships and 6) Embrace our values.

Among these goals, there are ambitions to help developing countries recover from the pandemic and ‘build back better’ for the future. Despite the ambitious pledges, there are still concerns from the international development sector on the level of commitment shown by the G7 leaders, particularly the UK which is the only G7 country to have reduced its foreign aid budget in light of the economic cost of the pandemic.

Covid-19 vaccine distribution
Ahead of the summit, G7 leaders committed to providing 1bn Covid-19 vaccines over the next year, including 100m surplus coronavirus vaccinations from the UK. The UK has committed to delivering 5m doses by the end of September, beginning in the coming weeks, primarily for use in the world’s poorest countries. Of the 100m doses, the UK will donate 5m doses by the end of September, beginning in the coming weeks, primarily for use in the world’s poorest countries. 25m more will be donated by the end of 2021. 80% of the 100m doses will go to COVAX and the remainder will be shared bilaterally with countries in need. At the end of the summit, the communique totaled the final commitments at 870m, just short of the 1bn planned.

UNICEF has welcomed the commitment from the G7 to rollout vaccines, emphasising that without a global vaccination programme, the world will be more at risk of variants that could threaten the vaccinated and unvaccinated. They also call for an accelerated timetable in light of several forecasts which suggest that G7 countries will have enough vaccine supplies to donate 1 billion doses by as early as the end of 2021, rather than the 2022 goal proposed.

Moreover, despite the large numbers of vaccines promised, it is not clear that they will go far enough. In a critique, former Prime Minister Gordon Brown argued that 11bn vaccine doses are needed to guarantee all countries the same levels of anti-Covid protection as the west. He said: ‘The gift of 1bn doses from the richest countries to the poorest is headline-grabbing and welcome. But it falls billions of doses short of a solution and does not answer what Johnson called “the greatest challenge of the postwar era”.’

Alongside the communique, the G7 set out frameworks to strengthen its collective defences against threats to global health. This includes the ‘Carbis Bay Declaration’ which promises to reduce the time taken to develop and licence vaccines, reinforce global surveillance networks, and reform and strengthen the World Health Organisation.

Education
Girls’ education has been a primary objective for UK foreign policy in recent years so it was no surprise that this was a focal point for the UK, particularly with the Global Partnership for Education (GPE) coming up next month. The UK pledged £430 million to the GPE to get the world’s most vulnerable children, particularly girls, into school. This funding pledge is on top of the £400m of UK aid which will be spent this year on bilateral efforts to increase girls’ access to education.

At the session, G7 leaders discussed also how to build back better from the coronavirus pandemic in a way that creates opportunities for everyone. Leaders reaffirmed their commitment to targets set at the G7 Foreign Ministers’ meeting in May to get 40 million more girls into school and 20 million more girls reading by the age of 10 in the next five years.

Plan International has welcomed the funding commitments from the G7 and the action plan to address the ‘devastating impact’ of the pandemic on girl’s education. However, it argues that the G7 funding commitments to GPE, totaling $2.75 bn will not be enough. GPE hopes to raise $5bn from donors, including $3.5bn from the G7.

Meanwhile, ActionAid has highlighted that the new funding pledge for girl’s education comes at the same time as the Government is cutting its aid budget on girls’ education by 40%. They argue that advancing girl’s education should form part of a wider Government response to gender equality, including by tackling violence against women and girls.

Climate change
Under the Prime Minister’s plans to Build Back Better for the World he laid forward a new approach intended to give developing countries access to more, better and faster finance while accelerating the global shift to renewable energy and sustainable technology. It includes a £500m Blue Planet Fund to protect the ocean and marine biodiversity and a Nature Compact to reverse biodiversity loss by 2030. WWF has welcomed these announcements but has called for pledges to be converted into concrete policy goals and implemented at pace to reach the targets of the Sustainable Development Goals by 2030. This will be vital ‘to abate the induced catastrophes the world is increasingly experiencing and will continue to unless we urgently transform our broken relationship with the natural environment.’

Alongside this UK, Germany and USA announced new action to scale up protection for the world’s most vulnerable communities against the impacts of climate change. The £120m new funding from the UK and £125m new funding from Germany will enable quicker responses for vulnerable people when extreme weather and climate-linked disasters hit. This will protect those most at risk in Africa, South East Asia, the Caribbean, and the Pacific and help reduce losses and damage to communities, infrastructure and livelihoods caused by climate change.

Finally, the G7 Development Finance Institutions (DFIs) and multilateral partners also pledged to invest over $80 billion in the private sector in Africa over the next 5 years. The investments will support the long-term development objectives of African economies, including those which have been negatively hit by the COVID-19 pandemic. With investments focused on renewable power, infrastructure, manufacturing, agriculture, and technology sectors it is aimed that they will provide clean, reliable power to millions of people, help create jobs and reduce poverty.

Investment in education

Reactions to the resignation of the Education Recovery Commissioner

The Education Recovery Commissioner Sir Kevan Collins’ letter of resignation followed the Government’s announcement that it was offering a further £1.5bn in education catch up support for young people, around 10% of what he had suggested was needed.

Sir Collin was direct about the impact of this gap between the two figures, stating: ‘I do not believe it is credible that a successful recovery can be achieved with a programme of support of this size’. He also said he believed ‘the settlement provided will define the international standing of England’s education system for years to come’.

This link to international standards in education was picked up by Labour leader Keir Starmer at last week’s Prime Minister’s Questions. Starmer pointed out the funding, equivalent to £310 per child over the next four years, paled in comparison to the US’s catch up plan worth over £1,600 per child and £2,500 in the Netherlands. He quoted Sir Kevan Collins describing the catch up as ‘too small, too narrow and too slow’.

Labour responded to the announcements with an opposition day debate on investing in children and young people, which Shadow Education Secretary Kate Green commented that the amount of catch up funding offered is inexplicable given the Prime Minister’s claim that children’s education is his priority. The Secretary of State for Education Gavin Williamson did not attend the debate and it was instead taken by the Secretary of State for School Standards Nick Gibb. The entire House voted to issue a motion of regret of the resignation of the education recovery commissioner and:

‘…agrees with Sir Kevan’s assessment that the current half-hearted approach risks failing hundreds of thousands of young people; and therefore calls on the Government to bring forward a more ambitious plan before the onset of the school summer holiday which includes an uplift to the pupil premium and increased investment in targeted support, makes additional funding available to schools for extracurricular clubs and activities to boost children’s wellbeing, and provides free school meals to all eligible children throughout the summer holiday.’

The Government has expressed that what has been announced is only part of the full catch up plan, of which more is to be revealed at the Spending Review. This is despite previous commitments to have Sir Collins’ recommendations delivered outside of that process, and a catch-up programme in place by September 2021. As Green rightly pointed out, Johnson has repeatedly said that education and the future of young people is a priority and key element of the coronavirus response. This makes the comparably low funding which caused the Commissioner to seems strange and out of touch with the Government’s skills drive, particularly given the lack of support for 16-19 education within the support programme. Pundits have wagered the Treasury ‘took a carving knife’ to more substantial plans set out by Secretary of State Gavin Williamson, leading calls for his resignation. Researchers at the IFS, however, commented that the decision may have been taken out of fears of the benefits of extra tuition and education support leading to a permanent increase in spending.

During a media round following the resignation news, vaccines minister Nadhim Zahawi recentred teachers’ unions as detrimental to education catch up, mentioning their opposition to extending the school day. Angela Rayner hit back, stating Tory Minister’s ‘always try to attack unions to distract from their own failures’.

Although the investment in education recovery so far totals over £3bn, as Sir Collins said, reducing spend in education at this point is a false economy. Further, the Institute for Fiscal Studies noted that if the losses to learning over the last year are not addressed ‘costs could easily run into hundreds of billions as a result of lost skills and productivity’. The sector will eagerly await the next announcements at the Spending Review, although it seems unlikely that it will meet the former Recovery Commissioner’s recommendations amongst a package of spending. The question left after that is whether Sir Collins was right in his estimations of what failing to make up for the learning loss of the pandemic will mean.

Sector responses:
• Labour Shadow Education Secretary said:
‘Kevan Collins’ resignation is a damning indictment of the Conservatives’ education catch-up plan.
He was brought in by Boris Johnson because of his experience and expertise in education, but the Government have thrown out his ideas as soon as it came to stumping up the money needed to deliver them.’

• Liberal Democrat Spokesperson for Education Daisy Cooper said:
‘Sir Kevan was a good appointment and many of us were cheering him on. The Government’s pitiful offer of a £1.4bn to support a generation of young people who have lost months of learning was an insult to him and to our young people.

Our children deserve better than this useless Education Secretary. Time and time again he keeps getting it wrong. It really is the last straw – the Education Secretary has to go.’

• Director of Education & Skills at Nacro Lisa Capper commented:
‘We must see more focus on closing the clear and significant attainment gap among 16-19-year-olds, an often-overlooked group. It is also vital that no matter where you learn, all 16-19 year olds see the benefit of this funding, including those who learn with charitable and independent providers. These students are often those most in need of support to catch up, and who benefit from the wrap around support these centres provide.’

• Sutton Trust Executive Chair and Education Endowment Foundation Chairman Sir Peter Lampl said:
‘Creating an ambitious, sustainable recovery plan to support every pupil is a considerable challenge. The extension of tutoring for the most disadvantaged young people is crucial as it’s a highly cost-effective method of making up for lost learning. The focus on quality teaching, investing in the teaching profession and early years practitioners is also much needed.

‘However, the proposed funding is only a fraction of what is required. Low-income students who have already been most heavily impacted by Covid-19 will be disadvantaged even more and overall standards, which have fallen dramatically, will be very slow to recover.

‘Sir Kevan Collins is right that much more will be needed if we are to mitigate the long-term impact of the pandemic.’

• National Association of Head Teachers General Secretary Paul Whiteman said:
‘Today’s statement confirms the disappointing scope and scale of the government’s ambition for children and young people. The government has missed an opportunity to make a real difference to the lives of young people in the short term, and ignored the necessity of putting down some firm recovery foundations for the long term. By every measure, this is a low-cost option when what pupils deserved was something first class.’

• Education Policy Institute
The EPI found that the new education recovery package of £1.4bn amounts to around £50 extra per pupil per year – a fraction of the level of funding required to reverse learning loss seen by pupils since March 2020. They commented the Government ‘decided not to take the opportunity’ to offer evidence-based interventions to protect against long-run negative impacts to education and wellbeing.

• Association of Colleges Chief Executive David Hughes said:
‘The plans for the next steps of the recovery plan will disappoint colleges and students with the least amount of time left in education. The extension of the tuition funding is good news but the failure to fund additional teaching hours or to extend the pupil premium to age 18 means that many disadvantaged students may fall through the gaps.’

Global Tax Reform

Global tax reform

The G7 has agreed to back a historic two pillar international agreement on global tax reform that will mean the largest multinational tech giants will pay their fair share of tax in the countries in which they operate – and not just where they have their headquarters. As part of this landmark deal, Finance Ministers also agree to the principle of a global minimum rate that ensures multinationals pay tax of at least 15% in each country they operate.

The plan is based on two ‘pillars’ that have long been under discussion by the OECD, Group of 20 (G20) countries and their so-called Inclusive Framework. Under pillar one, countries would get a new right of taxation over a share of profits generated in their jurisdiction by an overseas-headquartered multinational. This would mean taxing the source of a company’s revenue regardless of the firm’s physical location. This would crack down on profit-shifting to low-tax jurisdictions. The rules would apply to global firms with at least a 10% profit margin – and would see 20% of any profit above the 10% margin reallocated and then subjected to tax in the countries they operate.

Under Pillar Two, the G7 also agreed to the principle of at least 15% global minimum corporation tax operated on a country by country basis. This is lower than a 21% proposal put forward by the US president, Joe Biden, earlier this year and lower than what the Labour party has been calling for. However, it is still regarded as a turning point, and the inclusion of “at least” in the G7 deal means it could be negotiated higher.

Which companies would it apply to?
The burden is likely to fall primarily on technology and pharmaceutical firms that have been able to place their business locations and intangible intellectual property in low- or no-tax locations and book their revenues in those jurisdictions. The details about which firms would be affected have yet to be worked out. The Biden administration has proposed that about 100-150 multinationals would be within the scope of pillar one. At any rate, the digital profits tax would apply only to firms making profit margins of over 10%–meaning many firms with low margins, including possibly Amazon – would remain exempt (its profit margin in 2020 was only 6.3%).

Moreover, the Chancellor Rishi Sunak is reportedly pushing for the City of London to be carved out of the G7’s plans for a global tax agreement. The Financial Times quotes an official close to the discussions as saying that the UK was one of several countries pushing for ‘an exemption on financial services’.

How much would it raise?
The OECD estimated last October that as much as $81bn (£57bn) in additional tax revenues each year would be raised under the reforms. Pillar one would bring in between $5bn and $12bn, while pillar two, the global minimum rate, would collect between $42bn and $70bn. However, this assumed that a global minimum rate of 12.5% would be applied under pillar two. It also captures a larger number of multinationals under pillar one. The Tax Justice Network advocacy group estimates that a 21% minimum rate would bring in $640bn in underpaid tax each year.

There are various estimates for how much individual countries would recover. According to the Institute for Public Policy Research thinktank’s Centre for Economic Justice, the UK would reap an extra £14.7bn annually from a 21% global minimum rate. IPPR reported that a global minimum corporation tax rate of at least 15% could raise £7.9bn for the UK, but warned this rate would not be enough to end the race to the bottom on tax. The Labour party said that the lower rate of 15% would let big multinational firms off £131m per week which could be used to fund the NHS and other public services instead.

What next?
The topic will be discussed at OECD group meetings in Paris on 30 June – 1 July 1st, and then again when G20 Finance Ministers and Central Governors meet in Venice on 9 – 10 July.

However, global corporate tax reform will prove difficult to implement. In the EU the plans will require a directive, subject to veto by the low-tax economies such as Ireland or Hungary, and passage of associated changes by national parliaments. Ireland’s finance minister Paschal Donohoe tweeted: ‘I look forward now to engaging in the discussions at @OECD. There are 139 countries at the table, and any agreement will have to meet the needs of small and large countries, developed and developing’. The battle for low-tax countries is likely to be about building support for a lower minimum rate (closer to Ireland ‘s current rate of 12.5%) or seeking certain exemptions.

Political prospects are difficult in the US too. Biden team could probably push through the global reform in the evenly divided Senate under so-called ‘reconciliation’, which requires a simple majority, if they can do so before the November 2022 mid-term elections or do not lose seats in that electoral contest.

Cabinet office

Cabinet reshuffle speculation

This is a post from Daniel Loman and Jennifer Prescott. 

Despite Number 10 saying there is no reshuffle planned speculation continues to mount as to what changes the Prime Minister may decide to make to his Cabinet. And if as Number 10 said in late May there are no plans for a reshuffle it does not mean one cannot happen in the weeks or months to come or events cannot transpire that forces the hand of the Prime Minister. Here are our thoughts based on reports and the Government’s direction and policy priorities of where each member of the current Cabinet stands.

Chancellor of the Exchequer, Rishi Sunak: Despite Sunak’s stock not being as high as it was this time last year it would be very shocking to seem him depart the Treasury. For the moment he seems to have been unharmed from the Greensill lobbying row. Sunak was also probably received the most praise during Dominic Cumming’s mammoth committee appearance, but in the eyes of the Prime Minister that could be a negative.

Secretary of State for Foreign, Commonwealth and Development Affairs; First Secretary of State, Dominic Raab: Dominic Raab has managed to stay out of any Covid related scandals and when Johnson was in hospital he acted as deputy PM. Dominic Cummings said the Foreign Secretary did not get ‘enough credit as he should have done’. Similar to Sunak, praise from Cummings could do more to harm Raab than help him.

Home Secretary, Priti Patel: Towards the end of last year it seemed inevitable that Patel would be moved from the Home Office. However despite the finding that she had broken the ministerial code of conduct Patel now seems to be on more steady ground. Patel also seems quite central to the Government’s priorities and the Prime Minister would probably have some people scratching their head if he moved on from Patel now considering he has backed her throughout everything that has already been.

Minister for the Cabinet Office, Chancellor of the Duchy of Lancaster, Michael Gove: There has been speculation that Gove could take over as Health Secretary, with sources claiming he is a consensual figure within the Cabinet, as well as one of the most experienced. Dominic Cummings spoke favourably of him, insisting that he was not responsible for the failings of the Cabinet Office. However, recent reports that he acted unlawfully by awarding a Government contract without tender process may jeopardise his promotion.

Lord Chancellor and Secretary of State for Justice, Robert Buckland QC: Publicly there has been little to suggest the Prime Minister would have a reason to move on from Buckland. The impact of Covid on prisons hasn’t really been a headline issue and neither has the court backlog. Buckland has spent more time in his job than the four people who held it before and he is probably good value to continue, he is also the first QC to have the job since Ken Clark (2010-2012).

Secretary of State for Defence, Ben Wallace: Another Minister who is probably safe, the Prime Minister will likely want someone with some experience after the announcements made in the Integrated Review earlier this year.

Secretary of State for Health and Social Care, Matt Hancock: Dominic Cummings has claimed that Hancock should have been fired for ‘15, 20 things’ so surely, he will be moving on from the Department of Health and Social Care. It seems most commentators (including us) think Hancock will be moved on. However it is worth considering that Number 10 will probably be eager to avoid validating Cumming’s concerns. The Prime Minister may also take the view that he wants Covid as far back in the rear-view mirror as possible before changing Health Secretary and that may be a little further down the line.

COP26 President, Alok Sharma: Sharma is thought to be safe in his role, especially as it could be disruptive to switch ministers just months ahead of COP26 in Glasgow.

Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwarteng: Having only being in role since the beginning of the year, it seems unlikely that Johnson would choose to move Kwarteng, who is seen as a passionate champion of the PM’s plans for a green industrial revolution.

Secretary of State for International Trade and President of the Board of Trade, Minister for Women and Equalities, Elizabeth Truss: There are rumours that Liz Truss could be in line for a promotion to the role of Foreign Secretary. She has consistently been ranked as one of the most popular figures of the Cabinet amongst Conservative members and her performance as Trade Secretary has impressed many.

Secretary of State for Work and Pensions, Dr Thérèse Coffey: The Work and Pensions Secretary sent a tweet to footballer Marcus Rashford questioning his comments about low income families just hours before the PM performed a U-turn over the provision of free school meals vouchers, which was seen as an embarrassment for Downing Street.

Secretary of State for Education, Gavin Williamson: Williamson is perhaps the Minister who is the surest thing to either be sacked or reshuffled. The resignation of Sir Kevan Collins and the constant criticism for a lack of support for pupils during the pandemic are things Williamson is having put at his door and this doesn’t even speak on what went on around free school meals.

Secretary of State for Environment, Food and Rural Affairs, George Eustice: Eustice has been a very vocal opponent of tariff-free meat imports from Australia, positioning himself against Liz Truss and the PM. This could be a reason for Johnson to remove him. It is reported that Eustice and Truss have rowed over the deal, which Eustice believes is a bad for British farmers. Another reason he could possibly lose his role is that he is not fully on board with the green agenda the Government is pushing. There is talk that chief whip Mark Spencer could take over as Environment Secretary.

Secretary of State for Housing, Communities and Local Government, Robert Jenrick: Jenrick is a strong ally of Rishi Sunak’s and seems to be well liked by the PM, however, it is uncertain whether this would be enough to save him in a reshuffle after his role in the ‘cash-for-favours’ housing bid scandal.

Secretary of State for Transport, Grant Shapps: Shapps is perceived to have done a decent job as Transport Secretary and has become one of the Government’s more reliable communicators. He managed to secure a deal with France to open the border back after the Covid variant scare in December and despite being in Spain last summer when his Department changed the quarantine rules, he has largely managed to avoid any negative attention.

Secretary of State for Northern Ireland, Brandon Lewis: Lewis has kept a relatively low profile, apart from when he made the news after stating in the Commons that the Government would go against international law as part of a new Brexit proposal for trade across Northern Ireland’s borders.

Secretary of State for Scotland, Alister Jack:  Jack will probably stay in post as presuming the Prime Minister would only accept an MP from a Scottish constituency there are only five alternatives. Douglas Ross is also the leader of the Scottish Conservatives and an MSP, so he is surely of the running, David Mundell was sacked as soon as Boris Johnson became PM. That leaves only John Lamont, David Duguid and Andrew Bowie as possible candidates so Alister Jack is probably safe.

Secretary of State for Wales, Simon Hart: Simon Hart seems to be doing a good job of selling the Government’s Levelling Up agenda in Wales. There is no obvious reason the PM would want somebody else to take over the role.

Leader of the House of Lords, Baroness Evans of Bowes Park: Baroness Evans has been Leader of the House of Lords since Theresa May’s first Cabinet. There would be no apparent reason to move Evans so unless the Prime Minister just feels like a change, she should be safe.

Secretary of State for Digital, Culture, Media and Sport, Oliver Dowden: Dowden finds himself in a situation not too dissimilar to Robert Buckland, Covid has had a big impact on the area he oversees, but with the exception of Andrew Lloyd Webber’s defiance none of it has really been headline news.

Minister of State, Lord Frost: Frost has been in the news a lot recently as he has been angering EU diplomats over his approach to the Northern Ireland Protocol, so much so that the EU has reportedly been urging Boris Johnson to remove Frost from his Cabinet role.

Minister without Portfolio (Co-Chair of the Conservative Party), Amanda Milling: There is no real reason to think Milling will be moved, however the position she occupies lends itself to the possibility of her being moved.

Chief Secretary to the Treasury, Steve Barclay: Barclay stands as a figure who is probably unlikely to see himself drop out of the Cabinet, he might be an outsider for a position of Secretary of State if Johnson finds himself with one too many positions to fill.

Lord President of the Council, Leader of the House of Commons, Mr Jacob Rees-Mogg: Rees-Mogg is a controversial figure as one of the Conservative Party’s highest profile Brexiteers and a key member of the European Research Group. His latest gaffe was his attack on a journalist under cover of parliamentary privilege. A reshuffle could be a chance for the PM to get rid, however, not having Rees-Mogg on his side could be even more troublesome.

Chief Whip, Mark Spencer: Spencer is being touted for the top job at DEFRA if Eustice departs, if this happens there has been some rumblings that Gavin Williamson could go back to being Chief Whip.

Attorney General, Michael Ellis QC: Ellis is currently filling in for Suella Braverman QC who is on maternity leave, so it is unlikely to expect any change here.

6 May Elections: what to expect

Several elections are set to take place across Britain on 6 May. Voting will take place for the Scottish Parliament, Welsh Parliament, London and Metro Mayors, London Assembly, Local Authorities and Police Commissioners.

With Covid lockdown restrictions still in place, the campaigns for each of these elections are far from ordinary and some of the issues that will impact who voters choose to cast their ballots for will also be far from ordinary.

Vuelio has teamed up with the Local Government Information Unit (LGIU) to provide a weekly bulletin with the latest news and updates, ones to watch and campaign information from the elections taking place across the country.

You can sign up to receive the weekly bulletin, starting on Wednesday 7 April, here.

Local Elections
In England, the 2021 local elections slated include over 150 local authority elections in hundreds of wards and divisions for both the delayed elections of 2020 and the scheduled elections of 2021, as well as:

  • Directly elected Mayors and Metro Mayor from 2020 and 2021
  • Parish Councils
  • By-elections
  • Neighbourhood Plan referenda
  • 40 Police and crime commissioner posts

Every single eligible citizen in England is due to be an elector in 2021. All areas are holding Police and Crime commissioner elections, except for Greater Manchester and London where these powers rest with the directly elected mayor. In many areas, electors will be voting on four or more different ballots.

This isn’t just about the sheer volume of decision making. It’s about choosing the people who will be deciding on vital services, dealing with social care in crisis, and making the tough choices as councils are struggling through an unprecedented financial crisis after a decade of unprecedented financial cuts. Local government is fundamentally about where people live and voters will be choosing the people who will help lead us to sustainable economic recovery as we emerge from the Covid crisis.

Scottish Parliament
In Scotland, 129 MSPs will be elected with the SNP hoping to regain the majority they lost in 2016. However, things have not been smooth sailing for the SNP with questions relating to the integrity of senior members of the party in the handling of the Alex Salmond scandal, all the way up to first Minister of Scotland Nicola Sturgeon. Former leader of the SNP Alex Salmond has launched his new Alba Party and it will be interesting to see how much it can deliver on his ambition for a clear majority supporting Scottish independence.

Leader of the Scottish Conservatives Douglas Ross is putting efforts into creating a unionist alliance going into the election to combat the SNP and Alba, and Ross also seems willing to serve as both an MP and an MSP (providing he is elected). Anas Sarwar will have been the leader of the Scottish Labour Party for less than three months by the time the election comes around and has so far been unwilling to enter into any agreement with the Scottish Conservatives.

Ross, Sarwar and the Leader of the Scottish Liberal Democrats Willie Rennie all seem to be making a similar argument that now is the time for recovery from the coronavirus pandemic and the discussion of independence is a distraction.

Welsh Parliament
In Wales, 60 MSs will be elected and the initial campaign focus has been on judging how well the Welsh Government has handled the pandemic. First Minister of Wales and Leader of Welsh Labour Mark Drakeford has presented his plans as ‘honest and realistic’, as he has said Wales is not likely to return to normality in 2021.

The Welsh Conservatives are taking a different view and are campaigning to end social distancing restrictions earlier than suggested by Drakeford. The Welsh Conservatives will be hoping for similar success as in the 2019 General Election, where the Conservatives gained six seats in Wales at the expense of Labour.

The decision to build or not to build the M4 relief road will also play a part as a key campaigning issue, with the Welsh Conservatives pledging to build the road if they win in the election. Drakeford has previously said the plans cannot go ahead because of the cost and the impact on the environment.

London Mayor
In London, Sadiq Khan faces no shortage of opponents, the following candidates will be attempting to take his spot: Shaun Bailey (Conservative), Siân Berry (Green), Luisa Porritt (Liberal Democrats), Kam Balayev (Renew Party), Valerie Brown (Burning Pink), Peter Gammons (UKIP), David Kurten (Heritage Party), Mandu Reid (Women’s Equality Party) and Laurence Fox (Reclaim Party). Independent candidates include Brian Rose, Nims Obunge, Charlie Mullins, Winston McKenzie, Farah London, Max Fosh, Drillminister, Piers Corbyn and Count Binface.

Baily, Berry and Porritt are likely to present Khan with his sternest opposition. Porritt is campaigning on a platform of taking London forward with ideas such as converting office space into affordable homes and improving air quality in London.

Berry has run to be London Mayor twice, in 2008 when she got 3.2% of the vote and 2016 when she got 5.8% of the vote and came third. The Green’s are focusing on fairness and tackling inequality and are presenting themselves as an independent voice in politics that can often be dominated by the Conservatives and Labour. The Green’s may also seek to capitalise on those who have drifted away from Labour since Corbyn stopped being leader.

Despite numerous criticisms to the approach so far, Bailey seems set on basing the campaign on how Sadiq Khan has failed as Mayor and how he can give London the fresh start it needs. Interestingly, it seems as though both Khan and Bailey are blaming each other for crime in London; Bailey blaming Khan as he is the Mayor and Khan blaming Bailey as he was a special adviser on crime during David Cameron’s time as Prime Minister.

Keep up with all the latest election news from Vuelio and the LGIU.

Auditor image as the industry experiences a shake up

Audit sector reforms: Government publishes white paper

Today sees the release of a wide-ranging package of reforms for the audit sector by the Government, in the form of a white paper called ‘Restoring trust in audit and corporate governance’.

Launching the document, Business, Energy and Industrial Strategy Secretary Kwasi Kwarteng said: ‘It’s clear from large-scale collapses like Thomas Cook, Carillion and BHS that Britain’s audit regime needs to be modernised with a package of sensible, proportionate reforms’ and ‘restoring trust in our corporate governance regime and encouraging greater transparency’ would ‘provide investors with clarity and certainty, cement the UK’s position as the best place in the world to do business, and protect jobs across the country’.

How did we get here?
The audit industry has come under increasing scrutiny over the last few years, with cases such as those mentioned by Kwarteng drawing public and political attention to the sector’s practices and its regulation.

The joint report on the Carillion collapse by the Commons Business, Energy & Industrial Strategy and Work & Pensions Committees criticised the ‘Big Four’ audit firms. It noted that KPMG was ‘complacently signing off the directors’ increasingly fantastical figures’, Deloitte was ‘either unable to identify effectively to the board the risks associated with their business practices, unwilling to do so, or too readily ignored them’, EY provided ‘six months of failed turnaround advice’ and PwC had ‘benefited regardless of the fate of the company’, having advised Carillion and the Government prior to the collapse and served as its special managers subsequently. The Committees concluded that they had ‘no confidence’ in the sector’s regulator, the Financial Reporting Council.

These concerns have led to three reviews of the industry, whose findings today’s white paper reacts to:

  • In December 2018, Sir John Kingman’s Independent Review of the Financial Reporting Council It described the FRC as ‘an institution constructed in a different era – a rather ramshackle house, cobbled together with all sorts of extensions over time’ and called for it to be replaced by a new Audit, Reporting and Governance Authority.
  • In April 2019 the final report of the Competition and Markets Authority’s statutory audit market study proposed legislative change to improve competition in the sector in December 2018, including separating audit from consulting services and introducing a ‘joint audit’ system under which audits of FTSE350 companies would have to be conducted by two firms, one of which would be outside the Big Four.
  • In December 2019, the final report of Sir Donald’s Brydon’s Independent Review into the Quality and Effectiveness of Audit was published. Brydon called for ‘a fundamental shift in definition and approach’ and a ‘change in mindset’, noting that while ‘audit is not broken’, it ‘has lost its way and all actors in the audit process bear some measure of responsibility’. He stated that the central objective of his review was ‘making audit more informative to its users’.

What is proposed?

The 232-page document contains a wide range of detailed proposals, which stakeholders will be grappling with in the weeks to come. Key proposals include action to tackle the dominance of the ‘Big Four’ firms in the market. Large companies will be required to use a ‘challenger’ firm to conduct a meaningful portion of their annual audit and, if competition doesn’t improve, there could be a cap on the Big Four’s market share of FTSE350 audits.

There will be a new regulator, the Audit, Reporting and Governance Authority (ARGA), replacing the Financial Reporting Council, with the power to impose an operational split between accountancy firms’ audit and non-audit functions to reduce the risk of conflicts of interest. It will be backed by legislation, funded by a mandatory levy and would have stronger powers to enforce standards. Audit and assurance professionals will be encouraged to work towards a new audit profession, rather than being a subset of the accountant profession. The definition of ‘Public Interest Entity’ will be widened to include very large non-listed companies, which will need to meet more stringent requirements.

Auditors and directors are to be given new reporting obligations on detecting and preventing fraud, and audit will be extended beyond companies’ financial reports to consider wider performance, such as on climate targets.

There are also a range of proposals to increase the accountability of directors of large companies, including fines and suspensions for the most serious failings and measures to reclaim directors’ bonuses in the event of these failings or company collapses. Large companies will also be required to be more transparent about their finances, not paying out dividends or bonuses when they could be facing insolvency, and being required to publish annual ‘resilience statements’ setting out how they are mitigating short and long term risks, such as climate change.

What has the reaction been?

Given the scale of the Government’s proposals, it’s clear that a lot of bodies in the sector will be taking their time to arrive at a detailed assessment of their implications. Nevertheless, they seem to have been broadly welcomed. Maggie McGhee, executive director of ACCA, said that the Government’s proposals contain ‘a lot to consider’ but her organisation’s initial response was ‘to welcome the depth and breadth of what is being proposed’. Michael Izza, ICAEW Chief Executive, said that ‘modernising corporate governance is a vital part of sustaining public confidence’ and urged the Government ‘to get on with implementation as quickly as possible’.

Deloitte has urged a wide range of bodies to give their input into the consultation, with UK managing partner Stephen Griggs noting that ‘only widespread input from across the business community will ensure audit and the whole corporate governance regime evolves to better meet society’s expectations’, and claiming the white paper ‘provides a significant opportunity to enhance the reputation of the UK as a leading capital market and strengthen its position in the global economy’.

This position was echoed by PwC, whose Chairman and Senior Partner Kevin Ellis said reform could make ‘the UK an even more attractive destination for foreign investment’ and ‘the views of a wide range of businesses, investors and other interested parties will be key’. KMPG agreed that the reforms would ‘demonstrate we are a fantastic country to invest in’ and welcomed the introduction of ‘a resilience statement, including Environmental, Social and Governance disclosures’.

Labour’s Shadow Business, Energy and Industrial Strategy Secretary Ed Miliband said there were ‘real questions’ about the sufficiency of the measures. He said he welcomed proposals such as ‘tougher penalties for individual company directors where there are serious failings’ but regretted that some independent reform proposals had been watered down, including ‘mandatory joint audits between the big four and challenger firms’. He called for ‘a structural split between the audit and non-audit parts of business practises’ to remain an option.

What happens next?

The consultation on the proposals in the white paper is open until 8 July 2021. The Government says that responses to this will inform draft legislation to be laid before Parliament when time allows, while many measures not requiring legislation are being taken forward by the Financial Reporting Council. It notes that auditors and others have the scope ‘to take action on their own initiative’ in the meantime, such as on ‘defining and developing a new audit profession’.

Kwarteng claims that an ‘appropriate timetable’ will be followed to implement the plans given ‘the serious challenges that businesses are facing because of the pandemic’. The Government says its overall approach will be to quickly bring into effect measures that don’t ‘directly impact on businesses’ and to quickly commence ‘measures with significant impacts on those regulated by the new regulator’ (perhaps with phase in or transition periods), but to consider ‘measures with significant impacts on wider business’ for later commencement, a transition period or phasing in.

 

 

Economy opening

Budget 2021 Speculation: rebooting the economy and protecting jobs

The economic outlook for 2021 is highly uncertain. Having started the new year with a renewed lockdown and an economy that shrank 9.9% in 2020, a stronger than expected vaccine roll-out offers hope for a recovery in the months ahead. The upcoming Budget on 3 March will be critical in terms of shaping the strength and nature of that recovery from this Covid-induced crisis.

The Chancellor has been under pressure to address two main issues: he has immediate decisions to make over many aspects of the emergency support packages that are due to expire soon, as well as a need to start looking at how to pay for the £394bn the UK is estimated to have borrowed in the past year.

Sunak warned that the Government could not ‘borrow our way out of any hole’. Speaking in the Commons after the third lockdown was announced, he warned that the public finances were ‘badly damaged and will need repair’. While the Chancellor has said that he wants to ‘balance the books’, the Government has also highlighted the ‘end to austerity’ for public spending. This suggests sizeable net tax rises will, at some point, be needed.

Many economists have warned the biggest risk to the economy in 2021 was that an ‘over-thrifty’ Chancellor would damage the recovery by tightening fiscal policy too early. According to analysis by the Institute for Fiscal Studies (IFS) and Citi Research, next month’s Budget should focus on securing the economic recovery from the Covid-19 pandemic, rather than trying to fix public finances. Similarly, former Chancellor Lord Darling has warned Rishi Sunak against ‘choking off’ the Covid recovery with higher taxes.

However, HM Treasury has announced it will publish a range of tax consultations three weeks after the Budget, a move some have suggested will allow the Government to announce a ‘good news’ agenda focusing on economic recovery while delaying decisions on potential tax rises until later in the year. Moreover, because of the slow path to reopening the economy announced on 22 February, it has been reported that the Chancellor has been forced to delay decisions on tax increases until he delivers a financial statement in the autumn.

It seems that Treasury officials are examining plans for major stimulus to the economy and are shelving plans for tax rises. Sources now say the Budget is likely to echo Sunak’s autumn ‘plan for jobs’ and be dominated by measures to protect jobs and shore up support for shuttered sectors.

Outside of fixing public finances, as already mentioned, the Chancellor has decisions to take on the support measures introduced in response to the pandemic, which are set to expire shortly. Many, including Paul Johnson at the IFS, have argued that these support measures should be extended for as long as restrictions are in place and phased out gradually as restrictions are phased out rather than coming to an abrupt halt. Budget decisions that need to be made include:

  • £20 per week boost to Universal Credit. While there is a case for maintaining the uplift and extending it to legacy benefits, if it is not to be made permanent it should be at least phased out over several months. Members of the Work and Pensions Committee argued that the Chancellor must maintain for another year ‘at the very least’ the £20 uplift. According to The Times, Boris Johnson is expected to support Sunak by backing plans to only extend the £20 increase in Universal Credit for six months, rather than a year.
  • Job Retention Scheme and Self-Employment Income Support Scheme. Britain’s most influential business groups and the trade union movement warned the Chancellor of mass unemployment unless he extends the schemes. Unemployment could reach 5% or 2.5m people by the end of the year if the job schemes end in April. IFS warned that the schemes should not be extended much beyond the point at which most restrictions are eased, otherwise it will actually choke off recovery. A much more tightly targeted version may be needed where activity is more restricted for longer: perhaps the aviation and airport industry for example.

    The Daily Telegraph reports that self-employed workers may be offered a new wave of grants of up to £7,500 through the Self-Employment Income Support Scheme, before the scheme ends in May. Labour and members of the Treasury Committee have also urged the Chancellor to open his support scheme for the self-employed; to the 200,000 people who only have a 2019/20 tax return.

  • Business rate holiday and VAT deferrals and cuts. An extension to the Chancellor’s business rates holiday and VAT reduction would create tax cuts of £9.4bn and £3.5bn respectively in 2021-22, a total of £12.9bn. According to the TaxPayer’s Alliance this could be key to reviving the economy, boosting the hospitality sector and saving summer holidays. On a similar note, IPPR published new analysis which concludes that more than half a million UK employers are at risk of collapse in the spring without the extension of business support, as cash reserves fall ‘perilously low’. According to The Daily Telegraph, the Chancellor is reportedly set to announce further VAT and business rate cuts.

Alongside the existing measures, the Labour party suggested converting the Bounce Back Loans scheme into a ‘student-loan style’ arrangement, so that businesses only have to start repayments when they are making money. Labour also called for the establishment of a British Business Recovery Agency that would manage the Coronavirus Business Interruption Loans Scheme and Coronavirus Large Business Interruption Loan Scheme in order to create terms that secure the future of businesses, including employee ownership, preference shares and subordinated debt.

Labour also proposed the introduction of Covid recovery bonds which could raise billions of pounds for the National Infrastructure Bank and would give financial security to millions, many of whom have saved for the first time. Keir Starmer also explained how he would directly help to create 100,000 small businesses across the country over the next five years by boosting funding for start-up loans. Shadow Chancellor Anneliese Dodds also demanded U-turns on the council tax hike being forced on councils and the public sector pay freeze.

The Resolution Foundation said that Chancellor Rishi Sunak should combine a £30bn extension of emergency COVID-19 support with £70bn in additional stimulus. This should include a £9bn voucher scheme focused on supporting Britain’s high streets and retailers.

The Daily Mail suggested that Treasury officials are examining plans for major stimulus to the economy. This could include vouchers for high street shoppers and lower alcohol duty for restaurants and pubs, and perhaps a return of last summer’s Eat Out to Help Out.

Vuelio Political clients will receive the Budget Summary on 3 March. 

Covid-19 vaccine with syringe

Budget 2021 Speculation: supporting the vaccine rollout and boosting the health and social care sector

The Spring Budget will likely set out what the Autumn Spending Review of last year attempted to achieve: support the health sector in its immediate efforts to reduce the spread of Covid-19 transmission and then help the wider sector recover from the battering of the pandemic.

Another coronavirus wave later, the Budget needs to support the continued roll out of the Covid-19 vaccine and NHS Test and Trace. As it is hoped that the current lockdown is the last, the Budget should lay forward plans to drive improvement across health and social care following on from the pandemic. This imperative given the wide impacts Covid-19 has had on NHS health services and social care.

Measures to prevent the spread of the pandemic have proven costly during the past year. The controversial NHS Test and Trace scheme has seen its budget for 2020-21 grow over time, now standing at £22bn. Despite initial concerns that the system was only having a ‘marginal impact’ in reducing Covid-19 transmission, figures in recent months are more promising. More than three million people were tested during a single week in February and NHS Test and Trace successfully reached 87% of those who received a positive test result, and 93.5% of their contacts.

However, even with this progress, the scheme is far from perfect. Giving evidence to the Science and Technology Committee in early February, Dido Harding, Chair of NHS Test and Trace, said an estimated 20,000 people a day who are asked to isolate were not doing so fully.

With testing and contact tracing expected to be used for the country to come out of lockdown during spring, it seems likely that political focus will once again switch to NHS Test and Trace, with long term commitment to the scheme essential to keep the country out of lockdown.

The roll out of the Covid-19 vaccine will need continued momentum from the Treasury. The Government has already invested over £300m into manufacturing a successful vaccine. This includes securing 100m doses of the Oxford/AstraZenca vaccine and 40m doses of Pfizer/BioNTech vaccine, which are both currently in deployment. However, the emergence of Covid-19 variants across the world could hinder the effectiveness of these vaccines, and new vaccines may need to be developed and deployed in the future.

The Health Secretary suggested earlier this month that new treatments and vaccines would play an important role in turning Covid-19 from a pandemic into another illness that we have to live with, like we do with flu.

Aside from the pandemic response, the upcoming budget must support the wider health sector. With many non-Covid treatments cancelled and delayed over the past few months, the think tank Reform has suggested that 10m patients could be on an NHS waitlist by April 2021.

Large amounts of funding have already been earmarked for NHS services, including a £3bn NHS recovery package announced in the Spending Review last autumn. £1bn of this was allocated to support the NHS in tackling the elective care backlog and support hospitals to cut long waits for treatment by carrying out extra checks, scans and additional operations or procedures.

It is likely that this support will have to be expanded in the upcoming Budget to account for the pressures faced by the health sector in recent months, which saw hospitals severely stretched by unprecedented levels of Covid-19 hospital admissions, almost double the number seen during the first wave in spring 2020.

Cancer Research recently argued the sustained disruption of the pandemic has ‘left a deep rift in cancer care’, with 40,000 fewer people starting cancer treatment across the UK last year. Meanwhile, the British Heart Foundation (BHF) has highlighted that tens of thousands of potentially life-saving operations have been cancelled or delayed during the pandemic. BHF has called for the Chancellor to announce an additional £10bn investment this year to deliver the aims of the NHS Long Term Plan as well as invest in public health programmes.

NHS Providers has appealed for support to tackle the growing and long-term pressures arising from Covid-19, as well as funding to drive forward improvements in patient outcomes, quality and efficiency. Additionally, it has called for the Government to recognise the contribution to the pandemic response from NHS staff over the past year, with a pay rises and a workforce plan.

Social care cannot be forgotten in the upcoming Budget. When the Government published its White Paper on NHS reform earlier this month, it promised to publish separate proposals for social care later this year. It would be encouraging if the Budget could set out some of this essential long-term investment for the sector.

NHS Providers said that this is vital considering the impact the Covid-19 pandemic has had on social care. The Association of Directors of Adults Social Services also recently called for wide reform across social care including a commitment to long- term funding.

Vuelio Political clients will receive the Budget Summary on 3 March. 

DCMS budget

Budget 2021 Speculation: supporting digital growth while saving culture and sport

The effects of Covid have created extensive issues that have decimated the creative sector and it now needs to be supported by the upcoming Budget. However, Covid has also scaled digitalisation across the UK and may prompt Chancellor Rishi Sunak to drive more funding towards the roll out of digital connectivity.

The creative sector is predominantly made up of freelance artists who have been badly affected because of lockdown measures. Many freelancers have been unable to find work due to cancellations of events, with some forced to retrain to find employment.

There have also been stark criticisms directed towards the Government as the Self Employment Income Support Scheme (SEISS) did not cover those with jobs that involve moving from freelance contract to freelance contract on a short-term basis. This includes many people who work in creative industries, such as musicians. The Treasury Committee’s third report on the economic impact of coronavirus: ‘Gaps in Support and Economic Analysis’ stated that ‘ONS data indicates that 3% of all self-employed in the UK have become self-employed since April 2019, which, roughly estimated, suggests that around 150,000 newly self-employed are unlikely to be eligible for support under the SEISS.’

It is therefore essential that the upcoming spring Budget tackles this issue and in the words of Mel Stride MP: ‘the Chancellor must not forget those who have fallen through the gaps around previous support packages and must provide the necessary workforce support measures and economic plan for the self-employed.’

Another issue within the creative sector has been the complete cancellation of festivals and gigs. The flagship economic study by UK Music by Numbers revealed that before COVID-19, the UK music industry contributed £5.8bn to the UK economy, with live music making up £1.3bn of this and contributing to the employment of 34,000 people. As all these events were cancelled last year, this left a huge financial gap in takings for the industry, and prospects for events to go ahead this year look increasingly unlikely.

In a recent DCMS Committee evidence session, which focused on the future of UK music festivals, witness Sacha Lord, co-founder of Parklife and The Warehouse Project, spoke about necessary Government intervention that is needed for events to restart and go ahead this year, including the need for a Government-backed Coronavirus cancellation insurance scheme, an extension to the VAT rate reduction on tickets carrying on at 5% for the next three years, extension on business rate reliefs, and a ‘more nuanced, specified furlough scheme for specific industries, for festivals’ until events are fully running with 100% capacity.

These are all measures that could be introduced in some capacity in the upcoming Budget.

Committee chair Julian Knight has also called for the Government to address these issues, where he has emphasised the need to introduce a Government-backed Coronavirus cancellation insurance scheme, saying: ‘Insurance must be the first step in unlocking the huge contribution that festivals make to our economy, protecting not only the supply chains, but the musicians who rely on them for work’, and that ‘the industry says that without Government-backed insurance, many festivals and live music events just won’t happen because organisers can’t risk getting their fingers burnt for a second year.’

The upcoming spring budget provides the Government with the perfect opportunity to introduce this much needed measure.

Both of these issues have been highlighted by the Creative Industries Federation, which has set priorities it expects from the upcoming spring budget that include: extending the Self-Employed Income Support Scheme for as long as restrictions on work remain, urgently plugging the gaps in support for freelancers, extending the Job Retention Scheme, temporary business loans, grants and rate reliefs across all UK nations for as long as restrictions remain, introducing a Government-backed insurance scheme for live events, extending the VAT rate reduction on tickets beyond March 2021 and repurposing the Tradeshow Access Programme to support virtual, not just physical, events.

It also expects the Budget to reevaluate and boost funding towards digital connectivity, especially as COVID-19 emphasised the need to boost digital connectivity. The pandemic has forced the workforce towards remote working and has digitalised many aspects of society.

Focusing on digital connectivity, it is widely expected that the upcoming budget will replace the current Rural Gigabit Connectivity Programme (RGC), which is due to end by 31 March 2021, with a new progamme and fresh funding.

The RGC was launched in 2019 and focused on helping properties in rural locations to access faster broadband. A main part of this was a voucher scheme that, as defined by Building Digital UK, allowed ‘community and small to medium sized businesses to aggregate vouchers together in group schemes to fund the cost of gigabit-capable broadband to their community.’

DCMS has reported that an independent review revealed that ‘The £2.6bn Government scheme to roll out superfast broadband to ‘commercially unviable’ parts of the UK sparked a surge in home values of up to £3,500, according to a new report, and more than 96% of homes and businesses can now access superfast broadband.’

It is expected that a successor programme will be introduced to continue progess on the Government’s £5bn UK Gigabit Broadband Programme, which aims to provide ‘gigabit-capable’ network coverage to a minimum of 85% of society by the end of 2025. DCMS also recently published the Planning for Gigabit Delivery in 2021 report, in which it stated that ‘following the success of the Gigabit Broadband Voucher Scheme, we’re keen that we continue voucher-supported delivery during 2021’, and ‘the voucher team will continue to work with suppliers and communities to transition smoothly from the current to the new voucher.’ The question remains of how much funding will be made available for the new voucher, expected to be announced in next week’s budget.

The closures of gyms and leisure centers because of COVID-19 has become a worrying issue that also needs to be addressed. This issue has been highlighted by Rebecca Passmore, the managing director of PureGym, at a DCMS committee oral evidence session. She said: ‘Gyms have had no income for 34 of the last 54 weeks, we have had no revenue coming in. We haven’t been able to do click-and-collect or takeaways. It’s clearly taking its toll on operators. Balance sheets are being pushed to their limits.’

The Guardian reports the measures representatives from gyms and leisure centers are seeking from the Government to help them recover and survive from the effects of coronavirus. The Budget could include these measures, which ask the Government to apply ‘the same VAT rules to the physical active sector as it does the hospitality industry, which has had to pay the Government only 5% of the 20% VAT it has collected in lockdown’, and calls for the Government to ‘extend the rent holiday and to also legislate so that the burden of rent was shared between landlord and tenants during the lockdown.’

The BBC has also reported that ‘A coalition of athletes, celebrities and health bodies have written to the prime minister asking for the “fullest possible support” to help sports and exercise facilities survive the pandemic.’ Overall, there is a clear need and expectation that the upcoming budget will outline plans and funding towards the survival and recovery of gym and leisure centers.

It is clear that digital, cultural and sport sectors are among the most adversely affected by COVID-19 and the upcoming budget is expected to outline plans to resolve these issues, and support Covid recovery and job protection. At the same time, the acceleration of digitalsation within the UK because of COVID-19 could see accelerated measures introduced to boost digital connectivity.

Vuelio Political clients will receive the Budget Summary on 3 March. 

Budget 2021 education predictions

Budget 2021 Speculation: the education and skills crisis

According to the Institute for Government, the upcoming Budget will focus on the Treasury’s ‘Plan for Growth’, although growth may be a little hard to envisage while the UK remains in lockdown and unemployment rises. However, it safe to assume, even in ‘the new normal’, that much of the Budget this year will focus on protecting jobs and promoting skills.

According to IPPR, half a million employers are at risk of bankruptcy once job support schemes close, together employing approximately nine million people. Labour is joined by a plethora of voices calling for Chancellor Rishi Sunak to announce an extension to the furlough scheme, due to end in April, to prevent more large-scale job losses.

Despite emerging data on the positive impact of the UK’s vaccine roll-out on transmission and severity of illness,  2021 will undoubtedly pose another challenging year for the labour market. It is therefore essential that Sunak sets out how crisis support will meet the winding down of restrictions.  Another furlough extension does seem quite likely, given that the last extension was granted before the current lockdown was announced.

The Government already set out a plan for jobs last summer, with a number of schemes to incentivise businesses to take on apprentices or to support individuals to upskill in order to find work, so one could assume these bases have already been covered. However, the Lifetime Skills Guarantee won’t come in until April this year, with the further education sector already voicing concerns about the probability of its success. These worries join concerns about the uptake of incentives like Kickstart, despite the Education and Skills Funding Agency recently sharing how employers are benefitting from the scheme.

At a time when young people are struggling the most to gain and maintain paid work, it is essential that job support is offered where it is needed, and that schemes for job creation are changed quickly if found to be ineffective. Such changes have been suggested by the Institute of Fiscal Studies, who support an extension to the Kickstart Scheme beyond 2021. A strong focus on jobs is therefore essential if the Government is to deliver on the mantra of ‘building back better’ from the pandemic.

One way to do this is to keep the commitment to raising the minimum wage in April, which would go some way to addressing the low pay of keyworkers we have all relied on over the course of the last year. However, as the Learning and Work Institute argues, this must be part of a broader package of ‘good work’ practices to reduce job poverty and improve standards in the UK.

Another obvious and immediate need is for a well-resourced catch-up programme for children who have now been learning from home on and off for a year, with a devastating impact on education across the board. Anyone who regularly listens to Prime Minister’s Questions will have heard Prime Minister Boris Johnson say that remedying the damage to children’s education is a focus for the Government.

Large amounts of funding have already been allocated for tutoring, catch-up and digital access, although there is further discussion on how best to implement catch up. This funding has recently been supplemented with a further £300m, in light of the delay to reopening schools. However, there are reports that even this amount will not cover the damage, and that schools per pupil funding has fallen in real terms this year to below what it was in 2010-11 due to the pandemic. Despite this, it seems unlikely that more catch-up support will be offered in this years’ Budget although it would be welcome.

Yet to be addressed (depending on who you ask) is the need for an equivalent catch up programme for the early years sector, requested by The Sutton Trust last year. Crucial to educational attainment and even job prospects later down the line, lost access to high quality early education either through choice or forced closure is already having an impact on school readiness. But as Fleur Anderson MP recently pointed out in a session of the Education Select Committee, with ministers Nick Gibb and Vicky Ford, there has been no catch-up programme for the early years. Ford, the Minister for Children and Families, said this was due to providers staying open in lockdown while schools had to close. This has not stopped Labour’s Shadow Minister for Children and Early Years Tulip Siddiq asking the Secretary of State for Education Gavin Williamson what discussion on a long-term funding settlement for maintained nursery schools he has had with the Chancellor.

The Budget this year is likely to feature heavily on job support and creation, as the job market continues to be impacted by restrictions caused by the pandemic. Although it is clear the Government will have to prioritise certain areas of support after an incredibly difficult year, the consequences of inadequate funding for education and the early years sector has the potential to push another crisis further down the line.

Vuelio Political clients will receive the Budget Summary on 3 March. 

Green recovery budget 2021

Budget 2021 Speculation: How might Rishi Sunak deliver a green recovery?

Much has changed since Chancellor Rishi Sunak delivered his last Budget almost a year ago, but one thing which hasn’t is the need to tackle climate change and to protect the environment, both in the UK and internationally.

When the Treasury announced that 2021’s Budget would be on 3 March, it said that it would ‘set out the next phase of the plan to tackle the virus and protect jobs’. As the widespread calls, both from within the Government and from a wide variety of interested parties, to ‘build back better’ and deliver a ‘green recovery’ show, these two aims can be delivered in parallel.

So far, the Government has released some of the building blocks to inform and help deliver these aims. We’ve had the Ten Point Plan for a Green Industrial Revolution, the National Infrastructure Strategy, the Energy White Paper, the interim report of the Treasury’s Net Zero Review and the Dasguta Review on the Economics of Biodiversity. More strategies are promised, digging into some of the toughest areas of decarbonisation: heating, transport, energy-intensive industries. With the UK hosting COP26, the UN’s climate change conference, this year, the Government will want to show that it is leading by example.

But to deliver on these strategies, the Chancellor will need to pull some of the levers at his disposal. To look at it in the most simplistic way, the Government has two ways of doing this: spending and tax. Sunak could announce investment in technologies and projects to deliver a ‘green recovery’ or changes in taxes to incentivise others to do so, such as new reliefs. Equally, he could announce increases or adjustments to taxes to penalise those responsible for emissions and environmental damage, embracing the ‘polluter pays’ principle.

One tax which could rise is fuel duty. The Daily Telegraph recently reported that Conservative backbenchers believed that an increase is ‘inevitable’. A ‘Northern Tory’ told the paper that ‘the Government can wrap itself up in the green cloak of COP26 and the British public might not love it, but they will stomach it’. However, ending the decade-long freeze would not be without political problems. The Sun, which strongly backed the freeze, has already mobilised against the change, enlisting backbenchers Robert Halfon, who said ‘a fuel duty increase would level down – far from building back better and would damage the foundations of economic recovery’, and Craig Mackinlay, who claimed it would be ‘bad for the economy, bad for business and bad for jobs’.

The Times has reported that the Government has been considering options for new carbon taxes, with departments ordered to set ‘prices’ for emissions from all parts of the economy as part of a plan to ‘implement some form of carbon pricing’ in the next decade. This would form part of a strategy to ‘deliver a carbon price for the whole economy’ ahead of COP26. However, this plan has been blocked by Boris Johnson according to the Daily Mail.

BDO suggests that further changes to taxes linked to climate and the environment could be announced, such as capital allowances ‘that support the Government’s carbon reduction agenda’, new taxes on more single-use items such as coffee cups, or higher VAT rates for ‘environmentally damaging goods and services’.

If the Government is minded to go down this route, it would do well to examine the findings of a recent National Audit Office report that concluded the Treasury and HMRC ‘tend to focus more on the revenue that environmental taxes raise rather than the environmental impact they achieve’ and ‘do little’ to identify measures ‘which impact on Government’s wider environmental objectives but which are not recognised as environmental in nature’. If the Government wants to use the tax system to incentivise environmentally beneficial behaviour and penalise irresponsible activity, it needs to be sure that it’s doing so in an effective way.

Of course, another way in which the Government can act is for Rishi Sunak to produce the national chequebook. As the Institute for Fiscal Studies notes, ‘we need a plan for measures that increase the productive capacity of the economy and help steer and ease the transition to a new normal’ which should include ‘investments in physical and digital infrastructure, training, and science’ to help ‘achieve goals such as reaching Net Zero by 2050’.

The use of Government investment to deliver this green recovery is being advocated by business and unions. The TUC is continuing to push its plan to create 1.24m jobs in green infrastructure by bringing forward at least £85bn of infrastructure investment. This would see investment across a range of industries, including energy, land, buildings, transport, waste, manufacturing and digital, delivering a range of positive outcomes both for the environment and the economy.

The CBI has recommended that the Government commit to deliver seven more gigafactories by 2040 (these build batteries for electric vehicles), ensure that private sector investment is crowded-in by the new National Infrastructure Bank and invest in sustainable aviation fuels, as well as introduce reliefs for businesses which invest in property and machinery energy efficiency.

The Institute for Directors has advocated the creation of a ‘new digital and green Recovery Credit incentive for SMEs’, helping to support their investment in digital and green technologies, noting that at the moment British small businesses ‘tend to lag peer nations when it comes to adopting best practice’. It also wants a ‘retraining Recovery Credit incentive for SMEs’, which would especially focus on digital and green skills.

One area to particularly watch out for will be the future of the Green Homes Grants. Launched with much fanfare by Sunak as part of his Plan for Jobs last summer, recent news has not been encouraging. The grants were advertised as being worth £2bn, allowing homeowners and landlords to apply for vouchers for energy efficiency improvements. However, 95% of the £1.5bn for householders has not been spent and, while the grants have been extended until March 2022, the funding is not being rolled over to the next financial year. Instead, £320m will be available from March – a much smaller sum.

Shadow Business, Energy and Industrial Strategy Ed Miliband said that the Government was ‘denying homeowners the energy improvements they need, denying installers the work they need and denying the country the green transition we need.’ The Government blamed the low take-up on ‘an understandable reluctance on the part of the public to welcome tradespeople into their homes.’ If Sunak does want to revisit the design or funding of the scheme, the Budget would be a good opportunity.

With so much happening in the environmental and climate policy landscape in 2021 – including another budget, the UK’s Sixth Carbon Budget – it would be a missed opportunity if the Chancellor didn’t take the Budget as an opportunity to ensure that the Government’s tax and spending decisions were in line with its ambitious climate ambitions.

Vuelio Political clients will receive the Budget Summary on 3 March. 

Budget speculation Housing

Budget 2021 Speculation: Housing

In the run up to next month’s Budget, housing industry bodies have been leading numerous campaigns – from protecting leaseholders from cladding costs, to extending various tax cuts, to accelerating the decarbonisation of buildings.

Here are six policies that could be included in the Chancellor’s statement.

1. Stamp Duty holiday extension
Many in the housing sector are calling for the six-month Stamp Duty holiday to be extended beyond the current 31 March expiry date. Both buyers and sellers have called for an extension to the six-month tax break, introduced to support the property market during the pandemic. Experts have predicted that the end of the scheme could see house prices decrease significantly. Other than setting the end of the Stamp Duty holiday to another date, the Chancellor could choose to introduce exemptions for buyers already at a certain stage along the process, or permanently maintain the threshold for eligibility at properties over £500,000.

2. Property tax
There have been reports that Stamp Duty could be scrapped altogether, along with council tax, to be replaced with a new property value tax. This could appear in the form of a proportional property tax – a levy that homeowners would have to pay each year on the value of their property. For landlords with more than one residential property, the tax would apply for each property owned. There have been suggestions that the money raised from the levy could be split between the Treasury and the local authority.

Housing Secretary Robert Jenrick has already announced that developers seeking permission to develop certain high-rise buildings in England will have to pay a ‘Gateway 2’ developer levy. In addition to this, a new tax will be introduced for the UK residential property development sector, expected to raise at least £2bn over a decade to go towards cladding remediation costs. Details of this will be the subject of a consultation paper, which could be put forward at the Budget.

3. Domestic reverse charge
The ‘domestic reverse charge’ change means companies in the construction supply chain will no longer receive their 20% VAT payment when they submit bills. The VAT cash will instead be paid direct to HMRC by the customer receiving the service, who will reclaim it in the normal way.

Despite the changes coming into effect on 1 March, industry bodies, such as the Construction Leadership Council and the Federation of Master Builders (FMB) are hoping for a last-minute change of plan ahead of the Budget, warning that more than 150,000 construction companies will experience a 20% drop in cash flow as a result. In a letter to the Chancellor, Chairman of the Construction Leadership Council Andy Mitchell argued that the policy ‘risks reversing any recovery industry has made from Covid-19 and will limit the scope for protecting and creating jobs across the UK’. An Early Day Motion expressing concern over the Treasury’s decision to go ahead with the policy was tabled last week by SNP MP Kirsten Oswald.

4. National Retrofit Strategy
There have been numerous calls from industry bodies, including the National Housing Federation and the FMB, for a National Retrofit Strategy. Decarbonising homes and buildings is a vital step in achieving net zero emissions by 2050. In its Energy White Paper released in December, the Government said a programme for retrofitting homes to improve energy efficiency will be introduced. This could happen at the Budget.

5. Another extension to the Green Homes Grant
The Green Homes Grant has already been extended once, until March 2022, however, poor uptake of the scheme – described as complex and difficult to access – has led the Government to cut funding by £1.5bn from April. Chair of the Environmental Audit Committee Philip Dunne argued that unless the scheme is further extended, it will fail to meet its ambitions.

6. Extension to the Universal Credit uplift
Universal Credit claimants have been receiving a weekly £20 rise during the coronavirus pandemic. The Government is under increased pressure to extend the rise past 31 March, however, speaking on the Andrew Marr Show, Foreign Secretary Dominic Raab said it was a ‘temporary measure’ and that the Budget would set out support ‘in the round’.

Instead of extending the rise, there have been numerous reports in the media that the Chancellor is contemplating offering Universal Credit claimants a one-off payment of £500. However, this was rejected by Work and Pensions Secretary Thérèse Coffey.

Vuelio Political clients will receive the Budget Summary on 3 March.