WA Public Affairs Archives - WA Communications

Regaining momentum: Labour’s double by-election win despite political difficulties

Last Friday, Labour gained a double by-election win in the Conservative safe seats of Wellingborough and Kingswood, despite a tough couple of weeks for the party politically.

Labour secured 44.9% and 45.9% of votes in Kingswood and Wellingborough, respectively, with a 28.6% swing in Wellingborough, making it the second biggest Conservative to Labour swing in a by-election since the Second World War.

Critically, this boosts Labour’s tally of seats gained from the Conservatives in by-elections since July to six.

Last month, WA were delighted to host political polling guru Professor Sir John Curtice. His analysis outlined many of the issues at play in these two by-elections – the Conservative Party’s misreading of public priorities, the rise of Reform, yet a mixed record and lack of enthusiasm for Labour.

A strong cause for Conservative concern

Locally, in Wellingborough, Helen Harrison, partner of the constituency’s former MP Peter Bone, emerged as the candidate. The by-election arose after the suspension of Bone following allegations of bullying and sexual misconduct. While Harrison expressed confidence that these distinctive circumstances would not affect her electoral prospects, it would not be unexpected if they had done so.

Conservatives like Jacob-Rees Mogg have pointed to low voter turnout as the crucial element responsible, with 38% in Wellingborough and 37.1% in Kingswood. But when you delve into the details, the argument loses its edge. Low turn-out in by-elections is not unusual, and considering Labour’s prior successes, it seems they have developed a trend of consecutive by-election victories.

Nationally, the Conservatives have faced a myriad of issues that may have impacted electoral outcomes:

On Thursday, the ONS announced that the UK economy is in a recession, adding to voters’ concerns about the NHS and the ‘cost of living’ crisis. This is a significant setback for Rishi Sunak, who pledged to ‘grow the economy’, and instead is now faced with a 0.3% shrinkage in the economy in the last quarter of 2023.

Another influential factor in shaping the by-election results likely stemmed from the government’s handling of immigration issues – where ‘stopping the boats’ is now closely intertwined with ‘stopping Reform’.

The by-election has underscored that significant challenge posed by Richard Tice’s party to the Conservatives. Reform fielded candidates in both by-elections, securing 10.4% of the vote in Kingswood, and 13% in Wellingborough – demonstrating that their appeal translates from hypothetical opinion polling into votes (and more … with Wellingborough’s 13% result for the party a record result, and comfortably exceeding its 10% national poll figure).

Plans to put up a candidate against every Conservative in the upcoming general election means the Conservatives may find themselves engaged in a multi-front battle that hands victory to Labour – Reform splitting the Conservative vote to the extent seen on Thursday could result in dozens more Tory MPs losing their seats.

Tough time for Labour politically.

But Labour has also had a tough time politically. (One poll by Savanta conducted the weekend before the by-election even suggested a seven-point drop for Labour).

One source of this political difficulty stemmed from the abandonment of their flagship £28 billion green energy spending commitment. This decision has proven to be a significant dilemma for Shadow Chancellor Rachel Reeves – as she tried to balance the overriding priority of demonstrating responsible economic stewardship, with a spending pledge portrayed by opponents as reckless, and the perception that a policy reversal portrayed the party as indecisive and overly responsive to opposition critiques.

A second political challenge had arisen from the controversial remarks made by Rochdale candidate Azhar Ali that Israel had used the October 7th attacks as a justification for invading Gaza. Many criticised the Labour Party for not suspending him fast enough. Given Keir Starmer’s efforts to distance the party from the Corbyn era, especially concerning accusations of unaddressed antisemitism, the handling of this situation created opportunities for the opposition to attack.

A further setback for the Conservative Party than a substantial advancement for Labour?

The outcome is the same nonetheless, Keir Starmer adds a further two seats to his tally of consecutive by-election victories, and the political weather moves on (at least for now) from what has been a difficult few weeks for the Labour Party leader.

The double by-election victory has undoubtedly alleviated concerns within Labour, suggesting that these challenges have not significantly affected voter behaviour.

But for the Conservatives, public enthusiasm has waned, perceived government failure on immigration is pushing voters towards Reform, and those Reform voters are turning out at the ballot box.

While there remains a question regarding the level of enthusiasm among voters for Labour, the party seems to be on a trajectory toward forming the next government – while the Conservatives added a new front to their list of problems.

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In Conversation with Professor John Curtice

Sir John Curtice, professor of politics at the University of Strathclyde, gave his views on the current state of play in British politics in conversation with Tom Frackowiak, Partner at WA Communications. With the Conservatives in “deep trouble” and Labour seemingly headed to power, his analysis of the polls shed a lot of light on the year ahead.

The conversation is the latest in a series of events on the upcoming general election with senior political and media figures hosted by WA.

Deep trouble for the Conservatives…

With polling currently showing a 20-point Labour lead, it is easy to forget that for the first two years of this parliament the Government were never consistently behind the Opposition. The scale of the turnaround in the Conservatives’ fortunes can be put down to two decisive events: the unravelling of the Johnson Government due to the ‘partygate’ scandal, and the ongoing economic impact of the short-lived Truss Government. The first of these allowed Labour to decisively pull ahead of the Conservatives, while the latter pushed Starmer’s party up to 50% in the polls.

Following the dramatic departures of his two predecessors, Rishi Sunak inherited the premiership amid high hopes that the popular former Chancellor could reinvigorate the Conservative brand and pull off a 1992-style election victory.

However, his popularity has waned – having entered office almost 30% more popular than his party, both Mr Sunak and the Conservatives now have -49% favourability ratings. For this reason, Labour’s 20-point lead has remained consistent despite Number 10’s efforts.

Sir John Curtice attributes Conservative malaise in the polls to a misreading of evidence on the issues that matter to voters. While Jeremy Hunt, the Chancellor, prioritises tax cuts, the public – including a majority of Conservative voters – favour using the proceeds of increased tax to invest in the NHS and tackle record-breaking waiting lists. With dissatisfaction with the health service higher than in 1997, rescuing the NHS will undoubtedly be a key issue during the general election campaign.

On immigration, an issue prioritised by Number 10, the polling also suggests strategic errors. Not only does the subject not have the same salience to voters as the NHS or the economy, but evidence suggests that perceived government failure on the issue is pushing voters towards Reform UK rather than keeping them with the Conservatives.

A mixed bag for the Labour Party…

While it is undoubtable that the Labour Party owes much of its success to the chaos within the Conservative Party, they have made significant steps forward since 2019. With Jeremy Corbyn bequeathing just 203 seats – the worst general election result since 1935 – to Keir Starmer, the fact that they now look poised to win is a major achievement. 41% of voters now see Labour as moderate and only 19% as extreme, a major reversal compared to 2019.

Nevertheless, weaknesses persist for Labour. Most prominently, Mr Starmer’s personal favourability ratings trail those of his party by between 5 and 10 points. This is a marked contrast to the superstar status of Tony Blair in the run-up to the 1997 general election.

Labour has only a mixed record in its efforts to win back working class Leave voters. Amongst Brexit supporters – who overwhelmingly backed Boris Johnson in 2019 – Labour has gained some support since 2019. Yet more of these voters (17%) have switched their vote from Conservative to Reform.

Labour has also not managed to reassert its traditional overwhelming dominance amongst working class voters, instead seeing a relatively uniform increase in support across class groups.

Furthermore, a plurality of voters (44%) still believe that Labour is not yet ready to form a government. The party may be the bookies’ favourite to win the next election, but it seems that they will not be riding a wave of enthusiasm through the campaign.

Despite these issues, changing electoral geography is turbocharging Labour’s large lead. Data from YouGov’s recent MRP poll – which prompted a great degree of controversy – shows Tory support experiencing its sharpest decline in Conservative safe and marginal seats, making Labour gains more likely. Meanwhile, evidence from the local elections in May 2023 show clear signs of organised anti-Conservative tactical voting among Labour and Liberal Democrat voters. Following the premierships of Johnson and Truss, unionist Scottish voters have shifted their support to Labour from the Conservatives – a trend that has only been exacerbated by the turbulence within the Scottish National Party.

But take everything with a pinch of salt.

As usual, disclaimers about the value of polling evidence must be borne in mind. Shock election results in 1992 and 2015 show that pollsters can get it wrong as methodologies are tweaked to adapt to societal shifts. But it is worth noting that even if the polls are overestimating Labour support, this overestimation would have to be unprecedentedly large for Labour to lose in the autumn.

However, the UK electorate has shown itself to be increasingly volatile over the last decade. Poll watchers can no longer rest of simplistic assumptions. Boris Johnson believed in 2019 that he was headed for a decade in power but was proven wrong. With this in mind, it is not so hard to believe that Labour could win an historic majority in 2024 only to find themselves overwhelmed by the significant economic and international challenges facing the UK today.

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A tale of two Cities: Labour’s vision for financial services

A tale of two Cities: Labour’s vision for financial services seeks to balance stability and reform

Labour’s Shadow Chancellor Rachel Reeves and Shadow City Minister Tulip Siddiq this morning showcased ‘Financing Growth’ – the party’s long-awaited review of financial services – to over 400 private sector leaders at its annual business forum. The scale of the event is reflective of the extensive engagement that the Labour Treasury and Business teams have conducted with the private sector over the last few years. The advisory panel that fed into this review is made up of leading members of the industry, policy and regulatory spheres – it is clear that Labour officials have put in the hard yards in engaging with the City on this work.

That said, while there are some significant new policies announced in the document, many of the key areas of focus will not come as huge surprise to those who have monitored the Shadow Treasury team’s comments over recent months. This stays true to Reeves’ stated aim of providing stability and security with her proposals, avoiding any major upheaval in policy to promote investor confidence and growth.

Expected measures to foster ‘stability and security’

This continuity is offered in Labour’s policies around consumer protection and financial inclusion; its plans for supporting and promoting the UK’s fintech sector; and in leveraging green finance as a crucial part of their wider environmental initiatives.

Increasing levels of consumer financial protection – particularly the regulation of the Buy Now Pay Later (BNPL) sector – is an area which Labour has signposted for some time it will move quickly on should it win power. Labour has used the absence of regulation brought forward on BNPL as a stick to beat the government with over the last few years – as such, Siddiq and Reeves commit in the report to bring forward their ‘industry-approved plan for regulation’ quickly after the election.

The same is true of the proposals for the fintech sector. With Ron Kalifa on the advisory panel of this report, it is no surprise to see Labour seeking to build on many of the measures suggested by Kalifa in 2021 to increase the UK’s international competitiveness. These range from using its AI Strategy to encourage use-cases of the tech in financial services, to supporting the Joint Regulatory Oversight Committee (JROC) in delivering the next phase of Open Banking, and ‘working with regulators and industry’ on a new roadmap for Open Finance.

New announcements on regulation and savings have the potential to spiral

Whilst it is true that many of the policies set out in the report have been previously trailed, there are several new announcements that may have significant implications for businesses across the sector.

The first of these to highlight are a series of possible regulatory reviews and reforms in the name of ‘improving efficiency and promoting innovation’. Labour confirmed it will review how the entire range of City regulators operate in conjunction with one another, identifying areas of overlap and gaps in oversight. This will be supported by a major FCA ‘streamlining’ consultation with industry to align with the Consumer Duty, and a new Regulatory Innovation Office that will monitor performance, introduce new progress metrics and promote transparency. Clearly, a sector-wide review of regulatory mandates has the potential to be extremely impactful: inputting into these consultations and monitoring how the new watchdog shapes the industry-regulator dynamic will be critical for both established players and smaller innovators alike.

Another area of focus for Labour in the review is on measures to ‘reinvigorate’ capital markets and pensions – both from a consumer outcomes perspective and to channel more private capital into growth sectors of the economy. To this end, Labour today committed to undertaking a major review of the savings landscape, consulting across the whole industry and consumer group representatives to not only consider how the public can increase returns and be better protected, but also to encourage greater investment into UK-based assets. This was supplemented by the announcement of measures modeled on the French ‘Tibi’ scheme for Defined Contribution (DC) funds, who can opt-in to invest a proportion of their assets into UK growth assets.

While the exact scope of the review still needs to be clarified, it’s clear that like the current government, Labour recognises the potential value of private capital in generating the revenue it will need to achieve its policy priorities – Reeves speaks frequently about the ‘1:3 public-private investment ratio’ that she will aim for should she become Chancellor. It is clear Labour are exploring all possible policy levers it can pull in order to help achieve this.

Focus on diversity connects FS to the wider Labour policy platform

Finally, it would be remiss to not highlight the focus Labour has placed upon encouraging diversity in the UK’s financial services sector as part of this review – not only in the workforce itself but also geographically. Alongside introducing new diversity and inclusion guidance for the PRA and FCA to hold firms to account on their hiring pledges; and codifying two additional KPIs for the British Business Bank to channel investment into women and ethnic minority-led start-ups; Labour has placed a heavy emphasis on growing regional financial centers outside of London and Edinburgh. This leans on implementing the recommendations of both the Harrington Review into foreign investment and Labour’s own ‘Start-up, Scale-up’ – applying the same regional lens to the Labour FS agenda that exists across nearly all other aspects of the current party policy platform.

With this in mind, firms that are able to demonstrate how their work helps alleviate regional economic imbalances – avoiding mentioning the dreaded ‘levelling up’ – will be at an advantage when engaging with the Labour Treasury team on any variety of policy issues.

Wrap-up

In sum, much of ‘Financing Growth’ was unsurprising by design – in keeping with the regulatory direction of travel in the sector and reflective of the many conversations Labour has had with those in the City over the last few years. However, there are several new policies contained in the report that, given their as-yet undefined scope and ambitious nature, have the potential to pose challenges for firms across the sector and significantly impact the public. Gaining more detail from Labour on these proposals, and shaping the policy development process where possible, will therefore be critical as we move closer to the next election.

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Government pushes on with plan for cryptoassets regulation – but questions remain for business

The Government’s response this week to the consultation on the future regulatory regime for cryptoassets represents a significant, positive step forward – matching other markets around the world – in establishing a regulatory framework to allow crypto and blockchain to flourish as a driver of growth in the UK fintech sector.

The document released this week set out the Treasury’s plan to implement, following industry feedback, many of the proposals for the future regulatory framework of the sector outlined in April this year. The areas covered by the consultation range from fundamentals like the definition of cryptoassets and the broad legislative approach; to plans to regulate core activities such as custody and lending; and to bring centralised cryptoasset exchanges into the financial services regulatory perimeter for the first time.

What the Government is aiming to do with the proposed framework is manage clear tensions in designing policy that improves consumer outcomes; encourages investment and international competitiveness, all the while protecting against market failure – driven by high profile examples like the collapse of FTX. This is a tricky balance to strike. Heading into an election year, the plan outlined this week still has a number of unresolved questions that will need to be worked through with industry and addressed before implementation.

Lack of clarity on timescales

The Treasury was keen to make clear the consensus that exists across the industry for the plan presented earlier this year – highlighting that nearly 80% of respondents were in ‘broad agreement’ – indeed, many of the proposals set out in the original framework earlier this year were taken forward without any modification. This has seen a number of the issues that were raised by critics unaddressed – for example how crypto gambling will be dealt with under the new regime.

In addition, the document was relatively light on detail in terms of when the critical ‘phase 2’ secondary legislation, that will give the Financial Conduct Authority (FCA) its new powers to regulate the sector, can be expected, nor on the exact mechanisms for how this will be added to the statute. It was confirmed that legislation would be “laid in 2024” subject to Parliamentary time. This timescale, while offering a general idea of when we can expect forward movement, becomes murkier when you consider the political uncertainty (and crucially, the loss of Parliamentary time) that will occur due to the general election expected next year. Given the state of the polls, it certainly makes Labour’s position on the future regulatory framework equally as important as that of the current Government.

Where Labour stand

Speaking of the Opposition: shadow Treasury ministers were keen to stress to businesses at Party Conference last month that they would not be ripping things up and starting afresh with the Treasury’s current proposals for crypto and the wider fintech sector. Some concerns were raised by shadow ministers as to whether proposals go far enough on consumer protections regarding the promotion of cryptoassets – reflecting Labour’s focus on this issue across many policy areas.

As it stands then, the consensus is that the direction of travel on crypto will remain broadly the same. However, should an incoming Labour government, with this added focus on protecting consumers, inherit a half-finished regulatory regime in late 2024, there remains the risk that the checks and balances on firms contained within the proposals could be made more stringent.

Any additional measures placed upon the FCA in the name of consumer protection (on top of the already greatly expanded powers handed to the regulator as part of this plan) would run the risk of overburdening an already-stretched regulator and adversely impact all firms in the space – not just those who are subject to the specific consumer-facing measures that Labour may seek to introduce. This is a risk firms should consider highlighting to the Labour Treasury team as they consult with business on the future of fintech.

Further friction between innovators and traditional players to be expected

From a wider industry perspective, there remains questions around how new and innovative financial products would be prioritised and onboarded into the proposed framework as they emerge. The lack of detail here is critical in terms of how it relates to recent issues such as de-banking of assets, with its highly charged political debate and subsequent scrutiny from the FCA. De-banking is an example of an issue that is known to disproportionately affect cryptoasset businesses – both those in the DeFi space and beyond. Other markets around the world – including the US and the EU with their Markets in Crypto-Assets (MiCA) framework – are making changes that seek to resolve this issue, encouraging growth and cross-sector collaboration. The Treasury’s plan set out this week does not yet address this issue – leaving the door open for suggestions from business to prevent the UK from falling behind its international competitors.

Conclusion

Therefore, while its clear that the measures outlined in the Government response this week are, overall, the right approach, the timeline put forward for when this will become a reality remains somewhat unclear, especially given the uncertain year we are anticipating from a political perspective, and factoring in positive progress in other markets around the world. For fintechs and the wider sector, there is still a significant amount of work to be done in making the case to both the current Government and Labour in advance of the next election for a swiftly implemented and proportionate future regulatory framework.

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Labour Party Conference: Five key takeaways

As Labour concludes its annual party conference in Liverpool, Tom Frackowiak Partner and Head of the WA Financial & Professional Services practice outlines his five takeaways for business:

Five takeaways from Labour conference in Liverpool:

1. Conference momentum: Labour will be ecstatic with how the conference in Liverpool went! A record number of attendees, speeches from the Leader and Shadow Chancellor that landed a narrative focused on “national renewal” and rebuilding Britian, packed fringe events and receptions. The business community also turned up en masse to listen and engage with Labour’s vision for the UK economy. As one Shadow Minster said to me slightly tongue in cheek, “we are now the party of business”; having been in Liverpool it is hard to argue with that assertion.

2. Labour engagement will be difficult: Businesses in Liverpool were highly complementary of the efforts made by the Labour team to engage with their sectors, but many still struggle to secure individual meetings with Shadow Minsters and their advisers to have more detailed discussions on policy direction. Again, looking at the number of businesses in attendance in Liverpool this is unsurprising. Clear thought and consideration need to be given to how you achieve cut through! How is your business essential to Labour’s programme for Government?

3. So, listen to the words from conference: To get cut through, business need to show how they will help a Labour Government “build”, “invest”, “innovate” and deliver a “new direction for skills”. With aspirations to be a “Mission Government” how does your businesses corporate agenda align with Labour’s five national missions? Can this be framed in the short, medium, and long-term?

4. Still a lot of policy detail missing: While Labour has set out an overarching vision for Government there is still a lot of detail that businesses to hear for planning and investment decisions. Currently Labour’s ‘national wealth fund’ is doing a lot of heavy lifting for its economic vision for the UK economy. In sectors like financial and professional services – which only has four paragraphs in the final 112-page National Policy Forum paper – there is an eagerness and anticipation to know more.

5. Labour haven’t won the General Election: While clearly momentum is with Labour and national polling gives the Party a consistent double-digit lead over the Conservatives, there may still be over a year to go until a General Election. While there is a clamor from business to get to know Labour the General Election results of 2015 and 2019, plus EU Referendum should be a warning that election results can often ‘surprise’. Any strategic approach to advocacy and engagement should adopt a holistic or multi-stakeholder approach.

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From crisis to opportunity – the Education inheritance for a Labour government

As the Labour Party gathers in Liverpool next week, flush from a big by-election win and sitting on a healthy 20-point lead in the polls, attention will turn to what Labour will say about how it is going to govern.

For any incoming government, a major priority area will always be the education system. Education and Skills is central to Keir Starmer’s five missions and is one of the most prominent parts of the National Policy Forum report that will set the framework for the Labour manifesto.

The reality is though, that from early years through to university and beyond, the sector is facing systemic challenges. Whether it is the difficulties in the recruitment and retention of teachers; the failings of the apprenticeship system; the rising funding pressure pushing some universities to the brink of failure; the spike in pupil referrals; or school buildings crumbling. There are crises to be dealt with everywhere.

To discuss the legacy that Labour will be left with and what they can do to ensure that the education system is fit for purpose, I was delighted to welcome senior representatives from an array of organisations across the education sector to a roundtable discussion on what an incoming Labour government could do to break down the barriers of opportunity.

While the demands and challenges from each part of the sector are considerable, some of the key things to watch out for that came from that informative discussion are as follows:

Crisis managing schools. The first order of business is to address the personnel and workload difficulties facing schools. It is therefore entirely understandable why Labour has decided to stand by their pledge on business taxes and VAT on private schools to fund more teachers and mental health support in schools. Solving the immediate crisis in schools must be their top priority.

Incremental change not revolution. The education sector always seems to be in a permanent state of revolution, with new Quangos, systems, frameworks and products imposed on the sector. In many ways the sector does not currently have the capacity to manage a major curriculum or structural upheaval. You only have to look at the exasperated response from the education sector to Rishi Sunak’s announcement on replacing A Levels to understand the wariness of continual upheaval. A new Labour government could be bold just by saying what it isn’t going to do, pulling back from its interventionist instincts, allowing the sector experts the room to problem solve, and adopting an incremental approach to change so as not to heap further pressure on a sector already struggling to cope.

Rekindling a love of learning. Having said the above, there is a need to address the fact that Britian seems to have fallen out of love with learning. Whether there is a need to focus less on drilling Maths and English and more on socialisation skills in early years education; bringing more creativity and diversity back to the school curriculum; using technology to reconnect people to learning in more convenient ways; or investing in lifelong learning for those embarking on a second or third career; the challenge for a future Government will be reengaging and restoring faith in an education system that delivers for the British public at all stages of their life.

Addressing the skills challenge. Falling productivity, under attainment at levels 3 & 4, poor use of the apprenticeship levy, and the challenge of ensuring people have the training and skills to do the jobs needed in our rapidly decarbonising and AI-enabled economy, will all be in the in-tray of the new Skills Minister. The question for Labour will be where and how they want to address it. Either further devolution of skills funding and power to cities and/ or taking skills out of the DfE and closely attaching them to either the departments for Business or Work could reposition skills at the heart of the economy.

Recognising cultural shifts. The last Labour government boldly committed to a target of 50% of young people going to university, recognising the importance of this to driving social mobility. As they look to return to government, they see a system whereby young people and their parents are questioning the potentially poor return on investment against the high levels of debt attached to a university education, and where the mental health crisis facing young people is encouraging families to reconsider what is valued: educational outcomes or health and wellbeing. While there is no suggestion that Labour will retreat from its long-term goal of 50% of young people in higher education, it is clear there needs to be other pathways for young people in schools, and pathways with as much opportunity and prestige as that offered by a university education.

The last time a Labour government was elected, its central mantra was ‘Education, Education, Education’, and the Blair and Brown years saw the Labour government take bold decisions and heavily invest in education at all levels, trying to make good on this mantra.

Starmer’s Labour will not be in as fortunate a position this time and will need to make choices on where they can spend limited money and think creatively about how to use the resources they do have in a different way.

For those organisations businesses and institutions looking to ensure that their particular part of the sector gets the attention and resource it needs, then you need to be able to make a strong coherent case, showing how you can make effective uses of resources and deliver opportunities for all.

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Sunak shatters consensus on HS2 and opens new questions on UK transport policy

In the last 14 years we’ve had four General Elections, six Prime Ministers and nine Transport Secretaries. We’ve also had consensus among the leaders of the big political parties that HS2 is a good thing and needs to happen. Yes, it has been trimmed along the way, and phases have been delayed, but the idea has survived – and Ministers have been proud to talk about the benefits.

Yesterday all that changed when Rishi Sunak announced he was cancelling the rest of HS2 – everything except Phase 1 from Euston to just north of Birmingham. What’s more he didn’t just cancel it – the way he spoke about it was deliberately critical. HS2 is not just the ‘wrong project’ but the ‘ultimate example of the old consensus’. It’s difficult to imagine any Minister in this Government talking positively about HS2 again.

Here are a few reflections on what this announcement means.

First, the risk premium for new infrastructure in the UK. This is a public sector project but one that has been highly visible around the world. The inward investment strategies of some of our largest cities outside London have been based on it. A whole structure of advice and planning – the National Infrastructure Commission – started at the same time as HS2. Whatever the merits of the decision, investors will see it as another reason to be wary of government. They may think (unfairly) the UK just can’t do infrastructure well. Both major parties could usefully think about how to reassure them.

Second, it’s not just a consensus about HS2 that has gone: transport policy is now more unstable than at any time in the last 15 years. Expect to hear more from the Conservatives about car drivers and private individuals, less about active travel and modal shift; more about towns and suburbs, less about our biggest cities. There’s an obvious political dimension to this but the Prime Minister no doubt believes in it too. It’s also possible to discern another force at work: the Treasury, one institution that consistently opposed HS2. George Osborne overruled his officials when he was Chancellor, but it’s not difficult to imagine their advice to Rishi Sunak – the enormous risks of mega-projects, their poor returns compared to smaller schemes, especially roads.

Third, the Government has now created a huge range of hard questions by its commitment to Network North. Transport infrastructure is complex: it takes years to plan, get consents, design and build successfully. The plan includes everything from extending existing schemes (£2 bus fare) to new projects that sound just as challenging as HS2 (£12 billion for Liverpool-Manchester, over £2 billion for Bradford-Manchester). But the money that has been saved on HS2 would, mostly, not have been spent for years: when will these new projects happen, who will lead them, how will they be funded? Expect DfT to be busy for years answering these questions – and note caveats in the official document about costs, business cases, benefits and funding profile.

Finally, whatever happens to these plans, the transport sector needs to think long and hard about the story it wants to tell, and how to respond to this challenge. Even if Sunak’s term as PM is short, the story he is telling about transport is not going to go away – nor is that old consensus going to re-emerge.

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Railing against the consensus – Conservative Party Conference and Transport

After weeks of speculation, Prime Minister Rishi Sunak has used his keynote speech at Conservative Party Conference to wield the axe against HS2’s Birmingham to Manchester leg.

The announcement is the latest shift from the Prime Minister that impacts the transport sector and reiterates the prominence of transport issues as we head towards an election in 2024.

What happened at Conservative Party Conference?

HS2 cast a shadow across the Conference. Whilst rail featured heavily on the fringe – covering topics from rail reform, contracting, rolling stock and decarbonisation – the debate over HS2 predictably dominated discussion.

Leaks meant that industry, Ministers, backbenchers, and regional stakeholders all sought to make their case ahead of the announcement, with West Midlands Metro Mayor Andy Street unsuccessfully trying to fight a rearguard action. Many on the fringe and across the sector will be frustrated by how No10 has handled the comms for this announcement, especially considering reports first emerged weeks ago.

Sunak’s alternative to HS2 is the reinvestment of £36 billion into the new “Network North” plan. Spending will be spread across new road, rail and bus projects aimed to improve interconnectivity across the North and beyond. However, there is little to cheer for the rail sector with DfT subsequently confirming that only about 30 percent of the funding will go to rail, with the remainder for local transport and roads, and no new capacity for north-south rail passengers.

Whilst rail dominated Sunak’s remarks, Transport Secretary Mark Harper reiterated the government’s focus on motorists.

His ‘Plan for Drivers’ brings together 30 measures aimed at improving car journeys at expense of bus lanes, low traffic neighbourhoods and travelable 15-minute communities. It is the latest example of how the Conservatives want to project a ‘pro-car’ image, and position Labour as ‘anti-motorist’.

Other modes of transport – plane, maritime, active travel and more – were largely absent from the focus of senior politicians in Manchester.

The reaction to Conference

Sunak is realistic his announcements will not be welcomed by industry or many politically and predictably the immediate reaction has been largely negative. This was borne out by the criticism from prominent Conservative and Labour Party figures who have been quick to raise concerns and reflect doubt about the Network North alternative.

On social media, for every positive post there are three negative.

Stakeholder reaction

The Prime Minister’s gamble – like with the delay on petrol and diesel cars – is that it reignites support for the Conservatives among the voting public that he needs to win over in more rural and suburban parts of the country. He will be cheered to see positive support from several Conservative MPs in critical swing seats in the North.

What to look out for from Labour Conference

Yesterday’s announcement is the latest attempt in transport policy from Sunak to create a wedge issue between the parties. Labour must decide if it will support the government’s plans or risk supporting a project widely recognised as poorly run at the expense of many alternative projects that the electorate may prefer.

Like with continued support for the 2030 ICE ban in favour of EVs, Labour is caught between a rock and a hard place. Labour will need to use the Conference to set out its plans and give industry more confidence about what the future could look like, without falling into the Conservative bear trap.

For business, the transport battleground will require careful navigation. To be heard, sectors will need to recognise the competing priorities of both parties and how their case can align with them without becoming the focal point of a new debate. This calls for a balancing act of discreet engagement married with public communication that builds support with both.

To discuss how to achieve this balance, please get in contact with me on jamiecapp@wacomms.co.uk.

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Resetting net zero: the implications for business?

One of the key questions on the minds of business representatives attending Conservative Party Conference in Manchester this week will be just what the implications of the Prime Minister’s reset on net zero are. Industry will be looking for reassurance from ministers over the coming days that the broad net zero agenda remains in place and for confidence on other policy measures.

Last week, WA hosted a webinar with Nathalie Thomas, former Energy Correspondent and writer of the FT’S LEX column and Sam Hall, Director of the Conservative Environment Network to explore whether the political consensus on net zero is broken, and if it is, what that means for business.

These are our key takeaways:

1. There may have been limited substantial policy changes, but it has still caused uncertainty

The Prime Minister’s speech gathered significant interest, but on the substance, it arguably moved the dial less. While the phase-out date for petrol and diesel vehicles has shifted back five years, the ZEV mandate proposals announced by the government in recent days showed there will still be a very significant increase in EVs as a proportion of the market by 2030.

There are large swathes of the net zero agenda – particularly on industrial and power decarbonisation – that have not been impacted by these specific proposals. However, Sunak’s speech still caused concern and disruption to many of these businesses. For businesses and investors the sense that long-term policy frameworks could change so suddenly, has cast doubt over the certainty and stability of other policy areas.

2. It’s all about the politics

As we enter a critical general election campaign businesses need to recognise that politics is ruling the day. Ideas may stand up on pure policy and technical terms, but if they don’t fit into the government’s political agenda they’re unlikely to be taken seriously, and policy already in train that doesn’t meet this test could be under threat.

This means it is essential for business to fully understand the different factions and priorities within government, and knowing who’s influencing No10 and key departments. Messaging and policy asks from businesses need to be aligned with these political trends to succeed.

3. But how effective was the political trap the government tried to set for Labour?

The motivating factor within government was to force Labour into having to defend policies presented by government as expensive and disruptive to consumers. No10 wanted to create a ‘wedge’ between the parties. The Labour Party appear to have avoided this with a pragmatic commitment to reinstate the 2030 ICE phase-out date and by suggesting they will review the approach to domestic heating if they enter government.

The Conservative Party’s position in the polls has stabilised, and in some cases improved since the speech, but it is still to be seen whether it changes the fundamentals ahead of the general election. Currently, that doesn’t appear to be the case.

4. Businesses can do more to communicate the benefits of the green transition

Businesses are understandably frustrated at the policy instability. However, it also places the spotlight on the responsibility that businesses have to make the case for net zero and the green transition. The Prime Minister’s renewed focus on consumer affordability makes it even more critical for businesses to show that the agenda – and specific policies that will fit within it – will reduce costs for consumers and offer the best value for taxpayers and consumers.

Equally, the promise of ‘green jobs’ is made regularly, but there’s a renewed opportunity in the run-up to the next general election for businesses to be more specific and tangible about this – where are these jobs, what will they look like, how can they show they are ‘real’ and not just numbers from a spreadsheet?

This will make it much harder for policymakers to row back on the wider agenda in future, with clearer acceptance of the benefits and value, with net zero not just perceived as a cost.

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Labour Spotlight – Key people for financial and professional services

Under Keir Starmer the Labour Party has reset its relationship with corporate Britain and reestablished itself with the financial and professional services sector (FPS) through a sustained charm offensive in the City and beyond.

Led by Shadow Chancellor Rachel Reeves and closely supported by Jonathan Reynolds, Shadow Secretary of State for Business, and Tulip Siddiq, Shadow City Minister, this strategy is paying dividends. Bloomberg reported that the majority of money managers and traders backed a Labour government at the next General Election being the best outcome for the City.

While the Labour party can be pleased with establishing a receptive audience across FPS, which anybody who has recently attended an event with Rachel Reeves can testify, significant challenges remain.

Economic Growth

Primary among these challenges is delivering on the first of Labour’s five key missions for Government: ‘Secure the highest sustained growth in the G7 – with good jobs and productivity growth in every part of the country making everyone, not just a few, better off’. With the UK economy suffering from continued weak growth – currently forecast by the OECD to have the second lowest growth across the G20 in 2024 – high inflation and a cost-of-living crisis, the shadow team will be at the forefront of explaining, and then implementing, this incredibly ambitious target, if Labour forms the next government.

So how will Labour jumpstart UK economic growth? Plans are already being set out. Rachel Reeves sees the transition to NetZero as a significant opportunity. The party’s Green Prosperity Plan crystallises this thinking and scale of ambition, whilst also recognising the threat to UK competitiveness of the Inflation Reduction Act and European response. Equally, a robust Industrial Strategy is being developed under Jonathan Reynolds to set out a framework for a stable, long-term planning and investment. The FPS will be a critical partner for Labour in delivering on both these headline economic policies and has welcomed Labour’s commitments to reform planning laws, especially for renewable energy projects.

However, many questions remain on policy detail. For example, how will a Labour government meet its commitment to deliver 100% clean power by 2030? Especially, while delaying its pledge to invest £28bn annually in green investment until the middle of the next Parliament (2026), on the grounds of fiscal responsibility.

Financial and Professional Services

The last few years has seen major policy reform across the FPS sector. The Financial Services and Markets Act has created a UK regulatory framework for financial services, payment services and financial market infrastructure. The current government has set out its future vision for FPS through the Edinburgh Reforms and recently the Mansion House Reforms, with significant impact for the insurance and pensions sectors.

Labour has played an active role in this reform process, but again questions remain over how this policy landscape will evolve under a newly formed Labour government. Will it stick with the current vision for the regulatory framework for FPS in the UK? Will it fully implement the Mansion House reforms, given the shadow team have announced their own headline policy on pension reform? Will it align with the government on delaying some NetZero targets? How will it regulate the Buy Now Pay Later Market? How does it see the development of Open Finance? Will it continue with audit reform? How will it manage the tension between the supervisory role of regulators, with the ‘new’ secondary objective focused on competition. The list goes on!

Brexit

If this was not enough, Keir Starmer’s recent meeting with President Macron in Paris, and France and German proposals for a tiered EU membership has put Brexit in the media spotlight again. Labour is clear that there is no intention of re-joining the single market in a first-term Labour government, and the FPS sector has largely moved on from Brexit.

However, the review of the EU-UK Trade and Cooperation Agreement in 2026, and Starmer’s commitment to get a “much better” Brexit will ensure that 10 years after the EU referendum vote the UK’s relationship with Europe will remain a live issue for FPS.

WA Communications

WA’s Financial and Professional Services practice has put together a top line summary of the Shadow Cabinet and Ministers who will deliver on Labour’s ambitious plans for FPS and the UK economy. These are the people that your business needs to know and track as they develop the policy detail to achieve the ‘highest sustained growth in the G7’.

Labour Spotlight: Key people in Financial and Professional Services [PDF]

If you would like to find out more about WA’s Financial and Professional Services Practice and the services we provide, please contact Tom Frackowiak at Tom.frackowiak@wacomms.co.uk.

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In Conversation with Steve Richards — An Agenda-Setting Return to Westminster

WA Senior Adviser, broadcaster and journalist, Steve Richards and WA’s Head of Public Affairs, Marc Woolfson, gave their take on an eventful first week in the return to Westminster including the far-reaching reshuffle of Starmer’s Shadow Cabinet, as well as predictions for party conference and the repercussions of upcoming by-elections that are all to play for.

The conversation is the latest in a series of discussions with senior political and media figures hosted by WA, and we have outlined some key takeaways from the discussion below:

Leaders attempt to get a grip

Over the last two weeks, Sunak and Starmer have been getting new top teams in place ahead of a critical political period. Sunak attempted to capture momentum heading into the first week of term starting with a reshuffle of critical people into critical roles. This has been dwarfed by a nightmarish back to school week with the RAAC scandal dominating headlines and Labour capitalising on the government’s perceived negligence.

This week, Starmer carried out an extensive reshuffle of his Shadow Cabinet, coinciding with former civil servant Sue Gray’s first day as his Chief of Staff. The reshuffle saw many changes made, including the widely reported demotion of Lisa Nandy from the Shadow Levelling Up brief – a move some within the party deemed bold, somewhat brutal, and reflective of Keir’s win-at-all-costs mentality.

Angela Rayner has inherited Nandy’s Levelling Up brief which is set to deliver a historic transfer of power from central government to local and regional authorities. However, whether or not this shift in power will become a reality remains to be seen, given the substantial financial implications.

As anticipated, the most senior members of the Shadow Cabinet, and those with responsibility for Labour’s ‘five missions’ remained in post. Ideologically, there has been a power base increase of (what could be called) Blairite centrists. With a focus on fiscal rectitude, reform to create efficiencies, and ensuring all policy commitments are scrupulously costed – a position Rachel Reeves and her team are ardently championing.

This reshuffle, combined with the 20-point lead in the polls, has resulted in an uneasy excitement within Labour, as the outline of the next government begins to take shape and policy development gets in full swing.

Party conference fever

Unlocking economic growth via industry investment, transformative tech and R&D and will be a golden thread running through each conference.

For the Tories, this focus is reflected in the news that the UK is expected to re-join the EU’s flagship science research scheme, Horizon. And Sunak’s party conference speech will be an important attempt to show he and the party have a vision that goes beyond the next few months.

Echoing the rhetoric of Blair’s 1997 campaign, Labour will lean heavily into the theme of science and technology to regenerate public services and generate growth. Shadow Business Secretary Johnny Reynolds is set to outline detail on the industrial strategy – how the private sector and government can collaborate to facilitate fertile grounds for inward investment. This, alongside the green recovery programme – championed by both Starmer and Reeves – is regarded as the engine for economic growth Labour is committed to. However, it is unlikely we will gain clarity on the finances behind these strategies until given the green light by Reeves.

Starmer remains laser focused on delivering his “five missions”, meaning any policy recommendations put forward by businesses should aim be framed within these ambitions.

Bellwether by-elections

The upcoming by-election in Rutherglen and Hamiliton is a pivotal moment for Labour in Scotland. It is a litmus test for whether Labour’s messaging is landing well in Scotland and if won, is indicative of the electorate moving in their favour.

In Nadine Dorries’ contested seat of Mid-Bedfordshire, tactical voting between the Lib Dems and Labour may secure a blue defeat, but the Tory’s could win on a split opposition vote. A loss in this seat will no doubt stoke Tory fears that the Lib Dems are gaining traction in the so-called Blue Wall and will have implications for Sunak’s campaigning tactics. The Tories will also put up a fight against Labour in the election for Chris Pincher’s constituency of Tamworth.

Looking ahead, the most important event in the Commons calendar will be the Autumn statement on 22^nd November, followed by the Spring Budget in early 2024. It is expected that Chancellor Jeremy Hunt will amplify the UK’s post-Covid growth rate as a triumph of the Tory’s economic policy that has then allowed for tax cuts. Whatever shape and size these tax cuts take, Labour will not be in a position to oppose them.

We are gearing up for an exciting, potentially election-defining, political run in the lead up to Christmas. To learn more about what this means for you, get in touch with WA’s team to see how we can work together.

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Ruthless Starmer Appoints a Team To Win and To Govern

Most shadow cabinet reshuffles do not matter very much. This one does for several reasons. Most fundamentally Keir Starmer hopes this will be his last reshuffle before the general election. Barring unforeseen circumstances his new team is the one that will form the next government if Labour wins the election. But there is another bigger reason why the reshuffle matters. Starmer is at the height of his powers in relation to his party, a leader well ahead in the polls. He is in the rare position for a Labour leader of being able to do more of less what he wants without fearing dissent.

This is Starmer’s team of choice and therefore sheds light on the type of government he seeks to lead and who he calculates will help him to win the election. He acted with characteristic ruthlessness but he had the rare space to be brutal.

One shadow cabinet member described the changes to me as an ‘elite level Blairite coup’. The frontbencher, who remains in the shadow cabinet, noted that five former special advisers from the Blair era now have prominent posts. They join several of those in Starmer’s office who used to work with Blair in some form or other. Starmer makes many calculations in promoting the rise of those that worship at the Blairite altar. He and his shadow chancellor, Rachel Reeves, are obsessed with following New Labour before 1997 in making no significant spending commitments.

Labour’s Blairite wing are the true believers in the argument that ‘reform’ and ‘technology’ are the key to revising the UK’s economy and public services, not big spending increases. Starmer wants ‘reform’ to be a driving theme at the party conference next month.

Meanwhile the likes of Liz Kendall, Pat McFadden and Peter Kyle are effective interviewees. The previous shadow cabinet had few impressive performers. Starmer also wants to show in vivid colours that Labour has made big leaps away from the Corbyn era. There is no more effective way of doing so than including in his top team those that are as far removed as it is possible to be from the former Labour leader.

But it is too simplistic to argue that the new shadow cabinet is ‘Blairite’ whatever that term means in the current context. Other factors came in to play. His elected deputy, Angela Rayner, needed a meaty brief and she has got one with the Levelling Up remit. Rayner is a pragmatist but is no Blairite. She will need to be extremely supple. Her predecessor, Lisa Nandy, had pledged an historic transfer of power away from the centre. Nandy assumed Starmer agreed with her as this was the main theme of his new year speech in January when he spoke of communities “taking back control”. But there are inevitable tensions over how much power the centre will want to retain rather than give away to mayors and councils. Rayner will be Deputy Prime Minister giving her some leverage over wider government policy.

Some close to Starmer wanted Ed Miliband sacked. This has not happened. Miliband helped Starmer secure his seat in the 2015 election. The two live close to each other although do not speak often these days. But Starmer remains committed to the so called green recovery plan even if he has wobbled over the ULEZ policy after losing the Uxbridge by-election.

I’m told that Sue Gray, Starmer’s new chief of staff, was one of those supporting the appointment of three front benchers to shadow the cabinet office, rather than one. This is unusual. Gray knows the cabinet office can be a driver of change in government but can also be a department where ministers pull levers and not much happens. Now Pat McFadden, Nick Thomas Symonds and Jonathan Ashworth will be preparing to pull various levers from the cabinet office if Labour wins. Thomas Symonds will be responsible for improving the Brexit deal , a complex challenging task which he has already discreetly begun from opposition. The appointment of Hilary Benn as shadow Northern Ireland Secretary is also significant in this context. Northern Ireland and Brexit remain thorny issues in spite of Sunak’s improvements to the protocol.

In terms of policy making the reshuffle has little practical impact in the short term. The shadow ministers responsible for Labour’s so called ‘missions’ are all still in place. Meanwhile Starmer’s office is as controlling as Blair’s used to be in the build up to 1997. He and Rachel Reeves will make the key policy decisions. Currently shadow cabinet members are preparing their conference speeches, but the leader’s office is taking a close interest in what each of them are proposing in various drafts, often sending back detailed revisions and cuts.

Of more immediate importance to the fate of Starmer and indeed Sunak are the by-elections coming up. If Labour do not gain Rutherglen in Scotland from the SNP, a seat they won in the 2017 general election when Jeremy Corbyn was leader, there will be no substantial revival there at the general election. If Labour wins Starmer has a fresh narrative, Labour is back in a part of the UK they used to dominate.The Mid Beds by-election is also a big test. Tactical voting becomes tricky when both Labour and the Lib Dems want to win as is currently the case in that seat.

After the next couple of months of by-elections, party conferences and an Autumn Statement from the chancellor the outcome of the general election will probably be clearer and what Labour will do in government will also be less foggy than it is now.

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Will consumer scepticism and the cost-of-living crisis remain a roadblock to rolling out electric vehicles?

With just over six years to go until the UK government’s ban on new petrol and diesel vehicles comes into force, decarbonisation policies, EV charging strategies, and infrastructure plans abound – but consumers still need to be convinced that electric vehicles are cost-effective and practical.

Electric vehicles are the cornerstone of the UK’s transport decarbonisation agenda, exemplified in the government’s ambitious deadline for ‘all vehicles to be able to drive a significant distance with zero emissions’ from 2030.

The debate on the practicalities of the ban and the impact it will have on consumers is dominating political debate and it means understanding the challenges facing motorists and their experiences is essential.

With 83% of new vehicles registered in 2022 still fuelled by petrol or diesel, WA polled 1000 members of the public to find out their views on EVs and the potential barriers to adoption. Explore our findings below.

Will consumer scepticism and the cost-of-living crisis remain
a roadblock to rolling out electric vehicles? [PDF]

To find out more about WA’s work supporting high-profile organisations on sustainable travel, net zero, and energy issues, please contact Jamie Capp – by email jamiecapp@wacomms.co.uk or on 07910 004 035.

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2023 Mansion House speech analysis: common sense reforms that may require more sector management than the Chancellor would like

In his annual Mansion House speech, delivered last night to City executives, Chancellor Jeremy Hunt turned his focus towards the UK’s largest pension funds in his latest attempt to boost the flatlining UK economy, and address the lack of inward investment into the UK’s growth industries.

As part of the “Mansion House reforms”, Hunt set out proposals to channel £50 billion from Britian’s direct contribution (DC) pension funds into high growth companies – such as life sciences and high technology. At the centre of this is a “compact” signed by the UK’s nine largest DC pensions providers, committing these fund managers to voluntarily invest 5% of their assets into unlisted equities by 2030.

As well as the compact agreement focusing specifically on direct contribution firms, the Chancellor also outlined a package of other policies for pensions, including exploring expanding the role of government in establishing investment vehicles; a consultation on doubling existing private equity investments in local government pension schemes; and a call for evidence on the role of Pension Protect Fund, amongst other measures.

Hunt also confirmed the Government would continue implementing a series of capital market reforms (many of which were already announced) that aim to make the UK a more attractive place for companies to list – aiming to reverse a steady decline in listing numbers in recent years. The most notable of these was the backing of new recommendations from Rachel Kent’s investment research review. The proposed changes would partly roll back the EU’s Mifid II rules, which barred stockbrokers from providing research for free by “bundling” it with share trading services for which clients pay a commission.

The flagship announcement on pensions has broadly been received well by the City and the sectors of the economy that stand to benefit from the investment (most notably tech and life sciences). This is seen by industry as a rather overdue set of reforms, bringing the UK more in line with economies like the US and Australia who have been able to generate much higher returns for consumers in their pensions schemes.

There remains skepticism as to whether a non-binding agreement will be strong enough to push direct contribution fund managers to meet the target and provide the investment the government is promising – the headline £50 billion figure will only be met if the entire DC sector follows the lead of the 9 signatories.

Either way, the UK’s science and technology sector will benefit hugely from the extra funds channeled into it through VC and private equity, even if the £50bn figure isn’t reached – an extra £2bn to the sector would still amount to twice the funding in the Government’s 10-year semiconductor strategy.

Not every measure announced by the Chancellor has been met with praise from affected stakeholders however – Quentin Marshall, chair of the Royal Borough of Kensington and Chelsea pension fund (the UK’s largest), being quoted this morning saying he “had not seen the evidence” to support the plan for the DB local government pension schemes that the Chancellor is proposing.

As he demonstrated in his March Budget with the removal of the pensions cap, Hunt clearly believe this is key to reinvigorating the UK economy, and again had no problem in announcing policies that have previously been trailed in a similar form by his Opposition number Rachel Reeves. Based on the similarities in the measures announced in last night’s speech and those trailed by Reeves at a speech in New York 6 weeks ago, it’s clear that both parties are in a very similar place on pensions and investment policy – which will be a welcome piece of continuity for the markets and industry.

Crucially however, the plan announced by the Chancellor last night does not include a requirement for the money to be invested in UK companies – firms would be free to find high-growth investments elsewhere if they so choose. It should be expected that Reeves and Labour would not be as open as the current Government on allowing fund managers to prioritise foreign firms to UK ones.

Overall, the reforms announced yesterday evening by the Chancellor were a common sense, in many ways overdue, set of policies that attempt to put keep the City, and the wider UK economy ahead of comparative rivals around the world. It makes London’s capital markets more able to invest in the high-growth industries that the Government is so keen to foster.

However, given the voluntary nature of the compact agreement, a robust implementation period and close monitoring of fund managers by the Treasury will be critical – the Chancellor may need to crack the whip harder on the City than his ideology would usually allow.

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UK’s largest power generator, RWE, appoints WA Communications to lead integrated strategic comms brief

Energy giant RWE, which produces around 15% of the country’s electricity, has appointed WA Communications to lead a two-year-long integrated communications programme, following a competitive pitch process.

WA – ranked as one of the UK’s Top 3 Public Affairs agencies in this year’s PR Week’s Top 150 table – will be supporting RWE as they look to work closely with the Government to deliver on its energy independence, affordability and Net Zero ambitions.

With a diverse operational portfolio of renewables and gas, RWE is at the forefront of delivering the UK’s Net Zero transition – and leading the way in cutting edge energy technology such as Carbon Capture and Hydrogen.

The wide-ranging brief will cover both political engagement and corporate communications, building on WA’s experience in integrated strategic communications, and leverages the firm’s deep energy expertise – with RWE joining its extensive roster of existing clients across the sector, including energy storage company Eaton, and clean-tech innovator Enertechnos.

Commenting, Dominic Church, WA’s Managing Director said:

“Energy is in the political and media spotlight like never before, and the Government needs to show it is acting to address well-publicised energy security and affordability concerns of voters – while at the same time maintaining progress against Net Zero targets.
“This puts an enormous onus on the energy industry to be providing solutions now to the current Government, while Labour is increasingly eager for industry input to flesh out their ambitious green energy plans ahead of the upcoming election.
“RWE sits right at the heart of this challenge, and we’re hugely excited to have been brought on board to deliver an integrated programme of work, as they look to navigate the turbulent months to come for the industry.”

Alice Barrs, RWE’s Head of UK Policy and Public Affairs said:

“We knew from the outset that we needed an agency that would take an integrated approach to the challenges RWE were facing as the UK looks to transition to Net Zero, and ahead of a General Election most likely next year.
“With its deep roots into Labour, and the team’s energy sector expertise – across both public affairs and comms – we knew that WA would be a great fit for this programme of work.”

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Labouring to the point

Even though the energy crisis has taken a back seat in the news cycle, the impact it has had on consumers, their behaviour, and overall public awareness of where their energy comes from, is stark.

However many industry commentators believe that, to date, very little has been done by the Government to prevent such a crisis from happening again.

With several complex, but complementary, policy issues remaining high on voters’ agendas, the Labour Party has been tentatively navigating complex waters as it sets out its stall ahead of the next General Election, looking to capitalise on perceived current inaction.

Climate change, energy costs, and energy independence is a challenging trifecta to find a solution to at the best of times, let alone when the overriding priority is to project economic competence and fiscal trustworthiness.

An additional twist in the tale for Keir Starmer has been the dramatic way in which Scotland has electorally come into play, which 12 months ago he could only have dreamt of. Labour is now facing the very real prospect of tangible, double-digit Parliamentary gains north of the border, which could make the difference between a clear majority, or a hung Parliament.

Balancing each of these considerations has seen a number of previously solid commitments become softened, watered down, or changed altogether.

Two headline pledges, no new oil and gas licenses, and investing £28bn a year in green infrastructure, have been the main casualties.

The latter has been slightly amended so that instead of the full annual investment starting immediately, it’ll be built up to in the first half of a Labour Government. This has generally been interpreted as a pragmatic move, as deciding what to invest that level of money, finalising deals, and then spending it within 12 months was perhaps always an unrealistic timeline.

The former has been somewhat more eventful. Rifts have opened within the Labour front bench; and the unions, most notably the GMB, have started flexing their muscles. In addition, Anas Sarwar’s political capital has grown exponentially, making him an even more influential figure in the Party machine.

The result? A fudge. Labour will now honour any licences issued before the election, their position on CCS has suddenly become very positive, and the previous ban on new licences has now been limited to only blocking new exploration licenses, a minor but crucial difference, specifically aimed at keeping Scotland in play.

Beyond it being a fantastic case study for observers as to how the levers of power within the Labour Party work, it’s also a strong indication as to how seriously Keir Starmer is taking the Party’s policy development, not letting anything jeopardise any chance he may have of becoming the next Prime Minister.

‘Next Left’ – WA’s recently published Guide to Engaging with the Labour Party – explores the people, processes and politics shaping the development of Labour’s next election manifesto, and how businesses can engage with the party’s plans.

We will shortly be releasing a deep-dive specifically exploring the Labour Party’s emerging energy sector policies. To receive a copy, please email angushill@wacoms.co.uk.

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In Conversation with Steve Richards

WA Senior Adviser, broadcaster and journalist, Steve Richards and WA’s Head of Public Affairs, Marc Woolfson, provided their take on the latest developments in Westminster and Whitehall, and unpacked what this means for anyone seeking to engage with the Government and understand the potential priorities of a Labour administration.

This conversation is the latest in a series of discussions with senior political and media figures hosted by WA.

Yesterday morning, Steve shared his insights on the mood at No.10 before providing reflections on the Government-in-waiting and Starmer’s preparations to ‘take back control’ of the country.

We’ve outlined five key takeaways from the discussion below:

1. General Election still predicted for Autumn 2024

At the time of our conversation with Steve, the Privileges Committee had just released their report on how Boris Johnson misled the House. Following the resignation of Johnson and Nigel Adams over the weekend, Sunak now faces (at least) two challenging by-elections in Uxbridge and South Ruislip, and Selby and Ainsty. Amidst this upheaval, some in Labour are hoping for a snap election.

Steve, however, is still setting his sights on an election in Autumn next year. From his viewpoint, although there will be continuing challenges for Sunak arising from this event, Johnson’s exit from the Commons marks a significant diminishment of his political prowess and danger to Sunak.

Unless we see a significant closing in Labour’s lead, Sunak will likely delay the election in the hopes the tide will change by next year.

2. Zombie Parliament: Sunak’s five pledges

Beyond firefighting a constant stream of internal upheaval and scandal, Sunak remains focused – if not obsessed – on achieving the five pledges he set out in January (halve inflation; grow the economy; reduce national debt; shorten NHS wait lists; and stop the boats). Halving inflation by the end of this year is a must as Sunak cannot afford to approach an election with rising inflation rates.

As a result of this focus, there is talk of a ‘zombie parliament’ at Westminster. For the foreseeable future, activity in Parliament will mainly be used as a mechanism for building up to the election rather than to pass any weighty pieces of legislation. As an example, long-awaited proposed reforms to modernise the UK rail industry have fallen by the wayside.

Ultimately, there simply isn’t much legislative time available to the Government with preparation for the party conference in October, and long recesses pushing MPs back out to campaign in their constituencies.

Anyone seeking to engage with Government on legislation over the coming months may struggle unless it falls within the remit of Sunak’s five priorities.

3. Keir and Reeve’s cautious policy: Nothing without funding

Keir Starmer and Rachel Reeves are taking a cautious approach; every piece of policy is submitted to Keir’s office for scrupulous checking for any claims that might imply an increase in spending.

The party’s proposal to scrap ‘Non-Dom’ tax status – which Labour says costs the Exchequer £3.2bn – is increasingly the answer to almost any question about the viability of its spending plans.

But with Jeremy Hunt rumoured to be looking at announcing exactly this move in the Autumn Statement, effectively removing this potential uplift from Labour’s plans, Kier is especially nervous about any discussion on spending.

Labour is also being very quiet on their policy plans and recently rowed back on commitments in their green recovery programme and on universal childcare.

In line with this preference for fiscal responsibility, as well as Blairite influences at the heart of Keir’s team, Labour is driving their focus towards policies that symbolise change without spending money, including technology, innovation, and AI.

4. Labour and business: Now until Autumn is the prime time to engage with Labour

Between now and Conference is an important time for industry to engage with Labour if they are looking to shape the direction of policy.

Starmer wants Labour to look like the party on the edge of forming a Government by the time Party Conference comes around in October. Speeches will need to be policy-rich, trailing their manifesto, which is already being drafted.

Labour is sincere in its claim that its door is open to business. Industry interest in the party serves as a reassuring recognition that they are viewed as the next likely candidate to form a Government. If Starmer wants to realise his mission to get the economy growing faster than any other country in the G7, Labour will need close relations with businesses to achieve this ambitious goal.

Jonathan Reynolds (Shadow Secretary of State for Business and Industrial Strategy) is expected to announce further details of Labour’s industrial strategy at Conference, formalising their goodwill towards industry.

However, if in power, relations may be more strained as Reeves seeks to fill her funding gap, with the potential for businesses to face new ‘stealth taxes’. Industry will benefit from putting in the groundwork now, during a period when Labour is reticent to reveal any tax rises that may make headlines during the pre-election test period.

5. Public sector and unions: The challenge ahead for a Labour Government

Winning the election will only be the first hurdle for Labour. Should they win, they are set to inherit a challenging landscape, especially in the public sector.

Unions present a considerable challenge. Labour hopes relations will improve through greater goodwill and by restructuring who is involved in negotiations. However, as New Labour did in 1997, Starmer plans to stick with Conservative spending plans for the first two to three years, so will not have the money to meet the pay demands of the unions.

On the NHS, Labour’s plans have been ambitious but vague. Although they highlight scrapping non-dom tax status as a means to pay for recruitment into the NHS, internally, Labour knows this will not be enough. Moreover, Wes Streeting has asserted his ambition to ‘reform’ the NHS but has not defined this ubiquitous term. Internally the party is divided on their position over the use of the private sector to meet capacity.

Starmer is also acutely aware that he has U-turned on many of his leadership pledges, including plans to abolish university tuition fees. At present, the current model for higher education would not see much change, however, if in power, university schemes and the graduate tax are areas Starmer may revisit.

The theme of the first term of a Labour Government will be dominated by one question: where’s the money coming from?

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The policy platform that will shape Labour’s manifesto

Last week, details of the Labour policy handbook that serves as the initial blueprint for the party’s next manifesto was circulated, ahead of the next meeting of Labour’s National Policy Forum (NPF).

The full summary of policy positions was revealed online by LabourList.

The policies included will be subject to scrutiny and debate by members involved in the NPF, with amendments able to be filed until June. The National Policy Forum will meet in July to discuss its contents ahead of the Labour Party Conference in October, where voting will take place on the programme presented. Following this, once the official timeline for the next General Election has been called, Labour will hold a Clause V meeting to decide which policies make it to the manifesto.

Further detail of this process can be seen in WA’s Guide to Engaging with the Labour Party:

Following months of accusations levied against Keir Starmer that his leadership lacks ideological rigour – and whilst it remains far from a completed manifesto – the leaked documents give us an idea of what the policy direction for the UK could look like under his stewardship. Labour have signalled that their next manifesto will ‘under-promise and over-deliver’.

As such, with vital discussions and developments in the policy-making process still to take place in the coming months, NEC members will be fighting for space on what Labour will choose to fight the next election on.

Businesses should follow the next few months of the policy development process closely in anticipation for party conference – a key milestone in the policy-making process, with the shadow cabinet told to present a credible alternative plan for government at the gathering.

Reaction from those involved at the ground level of Labour policy towards the leaked document has been generally positive, but there are still disagreements in the direction of some critical areas.

Below WA’s sector specialists have set out what the initial policy handbook means for each key policy area:

Energy

Energy is set to take a leading role in Labour’s offering at the next General Election, with the Policy Forum recommending ambitious targets on energy infrastructure, building to the ultimate goal of delivering clean electricity by 2030.

Specific targets include doubling onshore wind capacity, quadrupling offshore, and tripling that of solar. Given these technologies currently have around 14GW of installed capacity each, hitting these targets would involve commissioning over 20GW of wind and solar every year from 2024 to 2030, no mean feat, given the current speed of planning and Grid approvals.

In addition to renewables, there is strong support for nuclear and hydrogen, and a recognition that the likes of floating offshore wind, CCS and marine energy will require Government assistance in their developments.

As for the other side, it’s clear the forum doesn’t want to see any expansion in the use of fossil fuels, pushing for no more oil and gas licenses, maintaining the ban on fracking, and avoiding using coal, and no mention of biomass.

There is no clear message on decarbonising tougher sectors, such as energy-intensive industries or aviation, meaning there is still opportunity to influence in these areas.

Financial Services

The party has shown significant commitment to partnering with the financial services sector and protecting the UK’s reputation as a global financial leader. Central to this is its headline economic ambition to secure the highest growth in the G7, delivered through the Green Prosperity Plan and driven by inward investment aligned to the Paris-agreement targets.

They have also outlined plans to introduce long-term policies relating to consumer protection in emerging markets, including in the buy-now-pay-later sector which has been a bedrock issue for the party whilst in Opposition. Businesses should anticipate a review of regulatory barriers and potential risks.

Health & Life Sciences

Nothing in the proposals will come as a surprise for those following Labour’s core offering during the Starmer and Streeting administration. Detail is light and centred primarily around the issues that currently drive the debate in health: tackling the workforce crisis and cutting waiting lists.

Notably absent from the proposals is a focus on reducing health inequalities, despite both the Conservatives and numerous think tanks sympathetic to Labour correctly identifying it as one of the health challenges holding back growth across areas of the country. Critically for Labour, these inequalities are often most prevalent in areas they will need to win at the next General Election. Streeting is expected to set out Labour’s position on this in due course.

A strict focus on addressing only the major systemic health challenges is typical for a party in opposition, but Labour will at some point need to set out its plan to address the knottier challenges that require targeted action: cancer; obesity; the ageing population; and cardiovascular disease to name a few. This next phase of the manifesto development will look to examine these areas in more detail, and businesses should be alert and on-hand to offer potential solutions in these spaces.

Addressing these critical challenges will not be quick, and Labour’s success in delivering against its objectives will be measured in years, not months. As the manifesto develops, Labour must look to balance its top-level agenda for reform against ‘oven-ready’ wins early into their potential Governance to ensure they are seen to be progressing against their own objectives in the minds of an electorate increasingly losing faith in the health service.

Transport

As anticipated, Labour’s flagship transport policy is the renationalisation of rail. Labour intend to bring the railways back into public ownership as contracts with existing operators expire. The scale of ambition for rail does not stop there, with the document setting out intentions to deliver Northern Powerhouse Rail and High Speed 2 in full. This will be underpinned by a long-term strategy for rail that’s consistent with Labour’s fiscal panning and gives communities more of a say on their local rail services.

With GB Railways still in formative stages ahead of a potential Transport Bill in the King’s Speech and no guarantee of it completing its parliamentary stages before a general elations, there remains significant uncertainty and a range of potential outcomes for the rail sector. For commercial interests in the sector now is the time to carefully set out a vision for how they’d align with Labour’s agenda and rebuild trust in the network.

Devolved governments and local authorities can also expect more responsibility over what Labour calls “the broken bus system”. Communities will be granted powers to franchise local bus services, lifting the ban on municipal bus ownership. With franchising still in its infancy in the northern metro areas, the next few years will be essential to assess how local control is working and define a model that will work in rural, semi-rural and other non-metro areas.

In addition to public transport, Labour are also seeking to turbocharge the just transition to more affordable EVs by helping households to manage the higher upfront cost of vehicles. To ensure EV infrastructure is able to keep up pace, Labour are planning a programme of electrification, including accelerating the rollout of charging points in left behind areas. A package of incentives may well be needed to help address an emerging challenge around access inequality.

Childcare, Education & Skills

Shadow Education Secretary Bridget Phillipson is determined to ensure that education is at the heart of Labour’s programme for Government, as it was when the party last came to power in 1997.

Labour recognise that one of the most significant challenges facing the country today is the need to rebuild the economy and ensure that workers have the right skills required to support the jobs of the future. This cuts across different departments and policy areas, but remains a core ambition of the Shadow Education Team, who want to deliver a “landmark shift in skills provision”.

Where Labour differ from the Government in this regard, they have linked future skills needs closely to their ambitions for the green agenda, they want to devolve adult education and skills budgets to metro mayors and combined authorities, and they want to give businesses more flexibility to use skills funding to meet specific employer needs.

Another key priority of Labour’s is to reform childcare, right from the end of parental leave to the end of primary school. These plans are still light on detail – perhaps because of the need to work around the announcements made by the Government in March’s Budget, and perhaps because of the funding implications required to meet their ambitions for a so-called ‘childcare revolution’.

Looking ahead, Keir Starmer is set to launch his opportunities mission ahead of the summer recess in July – we look forward to seeing the detail then.

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In Conversation with Toby Perkins MP – Unlocking opportunities to ‘earn while you learn’

Last week, WA Communications hosted a roundtable with Toby Perkins MP, Shadow Minister for Further Education and Skills, to discuss Labour’s approach to skills and lifelong learning, with a particular focus on the party’s views on degree apprenticeships. Bringing together key players within the HE, apprenticeships, and skills sectors, the discussion highlighted the potential of degree apprenticeships for learners, industry, and the economy.

Perkins shed light on Labour’s current thinking around the skills agenda, confirming the party’s support for degree apprenticeships, advocating for FE and HE to “work hand in hand”, and calling for more investment in skills. However, he also stressed that spending the current levy funding should be the priority.

At the event, WA Associate Director, Lorna Jane Russell previewed WA’s latest education research report on degree apprenticeships, presenting the findings from original consumer polling and setting out the challenges – and potential solutions – to expanding these qualifications throughout the UK. We will launch these publicly next week.

Key Insights from the Roundtable:

1. Degree apprenticeships have the potential to be a valuable opportunity for policy in lifelong learning, especially in the context of increasing education costs and the skills shortage. However, they are still not widely available, and there is a lack of awareness about them among the public. There is also a perception gap about the prestige of degree apprenticeships, which may deter potential applicants.

2. To increase access and participation in degree apprenticeships, there is a need for new models that can widen participation and increase access to industry placements, especially for disadvantaged students who are currently underrepresented within the sector. This should be coupled with initiatives to support young learners in making the transition from school into work, including greater support throughout the qualification.

3. The government has adopted an employer-led approach to degree apprenticeships, which means less investment and fewer opportunities for students. This approach may also limit the development of new models that prioritise access and participation, rather than just meeting the needs of employers.

4. Universities and skills providers alike want to see more flexibility and fewer regulatory burdens in order to widen their degree apprenticeship offerings. Employer investment in skills is also down, and the apprenticeship levy needs reforming to be more flexible and help SMEs attract apprentices.

5. Finally, there is also a need for investment in upskilling the existing workforce to deliver future jobs in decarbonisation and technology. Degree apprenticeships could play a role in this upskilling effort by providing a pathway for workers to gain new skills while also earning a degree and gaining work experience.

So, what’s the upshot for the skills sector?

The cross-party consensus about the need to invest in skills training and degree apprenticeships favours skills providers, though universities that work with employers to offer degree apprenticeship qualifications will benefit.

Labour’s promise of flexibility in their approach to the apprenticeship levy presents significant opportunities for skills providers to expand their degree apprenticeship offerings, and for universities to access a new funding stream.

However, higher education could lose out to FE and apprenticeship providers in post-18 education reforms, so they will need to demonstrate how they can work alongside skills providers and local FE colleges to play a critical role in delivering on the reskilling agenda.

While for policymakers, degree apprenticeships have the potential to be a valuable opportunity for lifelong learning and addressing the skills shortage, more needs to be done to increase access and participation, support new models, and revise funding and regulatory frameworks to support students to ‘earn while they learn’.

If you have any questions or are interested in learning more about WA’s education team, please contact Lorna Jane Russell, WA Communications, at lornarussell@wacomms.co.uk.

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Powering up?

Yesterday’s Powering Up Britain announcement had been trailed as a gamechanger for the country’s energy transition: the UK’s response to IRA in the battle for green investment. But to what extent does it shift the dial on the government’s priorities and give confidence to investors? WA’s energy team reflects on what it means and looks ahead to what’s coming next.

1. Yesterday’s announcements mark an important albeit incremental drive to ‘power up Britain’

Much of the commentary following yesterday’s package has focused on the relatively limited nature of the announcements: there was very little in the way of new funding announced, many policies from existing strategies and publications repurposed, significant reforms that are urgently needed – for example on planning reform for onshore wind – pushed into the future, and the number of specific projects backed on the low scale of expectations.

All this is true, but the fact that ‘Powering up Britain’ was neither radical or fast enough to meet key national ambitions, doesn’t mean it’s not welcome or important. Industry repeatedly calls for a renewed focus on ‘delivery’, with key targets and objectives already agreed. Yesterday’s announcement represents movement on ‘delivery’ – the hard policy grind that is necessary to move progress to targets forward.

Upcoming announcements on grid connections and onshore wind will also be critical to increase the pace of renewables deployment.

2. Picking winners (and losers)

Governments – particularly this one – dislike being seen to be ‘picking winners’ and choosing which businesses thrive. However, it’s a core theme of yesterday’s package, particularly picking the early leaders within technologies. Yesterday showed that government is committed to backing a broad range of technologies – as the Energy Minister Andrew Bowie reiterated at a dinner hosted by WA earlier this week. However, not every project within those technology types will progress – there will be winners and losers.

Across different sectors – from new nuclear to CCUS and hydrogen – government is using competitions between projects and firms to identify which they will back. This isn’t new – in effect this has happened with the CfD regime within renewables for some time – but it’s now been embedded across the sector. This very starkly exposes that within the UK energy market, project developers and investors are dependent on government permission and support to progress. There are clear commercial consequences – the impact on the share price of both the winners and losers of CCUS and hydrogen competitions yesterday neatly demonstrates this.

One critical consequence of this is that it makes it even more essential for those wishing to progress projects to make a strong case for their individual investment and to be able to differentiate it from competitors. As well as having a strong technical case, this means telling a story. How will this specific project or technology tangibly improve the local community by delivering economic growth jobs and a strong supply chain? How will it meet the government’s ambition for low cost, homegrown power more effectively than other solutions? Do you have influential champions for your project? It’s no coincidence that Teesside was a big winner on CCUS and hydrogen yesterday, with a Mayor in Ben Houchen who has made this a priority. In an election year, showing the political ‘win’ as well as technical competence is critical.

3. Home decarbonisation is the piece of the puzzle policymakers still struggle to solve

The one part of the decarbonisation challenge that arguably lost out yesterday was home decarbonisation and domestic heat. It’s a problem that successive policymakers have struggled to grapple with, but the measures announced yesterday will not yet do enough to fundamentally address the scale of the problem.

Take the government’s announcement on the establishment of a Great British Insulation Scheme. The 300,000 homes this will focus on are just a drop in the ocean of the number that need to be improved. Unlikely power decarbonisation, addressing this is much more piecemeal and requires significant consumer engagement and behavioural change.

The second big challenge is the choice of technology to heat those homes. This is one area where the government is – perhaps understandably – less keen to pick winners, worried about the political consequences of mandating higher cost solutions that will require significant disruption to consumers.

However, yesterday’s announcement conceivably gave the biggest steer yet that the government is leaning towards electrification over hydrogen as the primary solution for homes (albeit ultimately there will need to be a mix of technologies) with an extension to the Boiler Upgrade Scheme and a vision that in the future, “people’s homes will be heated by British electricity, not imported gas”.

4. Bigger things to come?

This package of announcements is important, but not enough. It is a critical step in providing clarity on the competitions, policy frameworks and future schemes required to encourage external investment but it won’t be a gamechanger.

Industry will be looking ahead to see what’s beyond this that might fundamentally shift the dial, and there’s two things to consider:

Greater financial firepower at the Autumn Statement?

The Chancellor has promised that the government’s full response to IRA will come in the Autumn, arguing that it will be ‘different – and better’. Those looking for a game changing moment – matching the simplicity the IRA mechanism – have the next six months to make the case for what this looks like.

While we’re currently in a fiscally constrained environment, the government has signalled that it will turn the spending and tax cutting taps on ahead of the next election. The argument needs to be made – partly through Lord Harrington’s review into foreign investment – as to how deploying it to support the green transition will give the government the greatest political impact. However, the delay in getting this full response to IRA and the Chancellor’s insistence that the UK isn’t about to enter a subsidy race, should constrain confidence amongst the industry.

A future Labour government?

In stark contrast to the incrementalism of this government, is the radicalism of Labour’s plans on energy. In his speech earlier this week, Ed Miliband highlighted the differing approach a Labour government would take – more ambitious targets, greater public spending (£28bn in borrowing per year and a new national wealth fund),and a much more muscular and interventionist role for the state (including a public sector energy company, Great British Energy). The ambition and pace can’t be doubted, but there remain questions over the deliverability and the solidity of this level of public spending in a challenging financial context.

WA’s upcoming report into Labour’s energy plans will delve much deeper into this, looking at the outstanding questions that remain.

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E-scooters at a crossroads

E-scooter manufacturers, providers, schemes and riders have been left waiting for certainty on their future.

After last year’s Queen’s Speech, Ministers confirmed their intention to legislate on e-scooters, moving beyond the time bound and limited role e-scooters currently have. Two Prime Ministers and 3 Transport Ministers later, the future of e-scooters is back up in the air.

The Transport Bill – that would have been the vehicle for legalisation and legislation – has been a casualty of upheaval at the heart of government. Now Ministers and officials are left having to bid for parliamentary time again, with even fiercer competition for time in the last King’s Speech of this government before an election.

Despite the transformational role e-scooters could play for travel, particularly in urban areas, there is a risk that new decision makers have lost track of e-scooters’ congestion busting, cost saving and carbon cutting benefits. The Ministers, advisers and champions that secured the announcement from government have moved on, and the new crop have yet to make a full throated endorsement.

In the face of this challenge, WA’s latest transport temperature check polled public attitudes to e-scooters to analyse the challenges in the road ahead.

Whilst there is still a route to legalisation and legislation, we have found that more of the public is opposed to e-scooter legislation. It means advocates start on the back foot, and need to both convince the sizeable number of ‘don’t knows’ (one in four people) and address the concerns of opponents. Safety risks to other road and footway users is the most commonly cited reason for opposing legalisation, driven by persistent coverage of dangerous incidents.

If these and other concerns are not addressed, the case for legalisation will diminish. Ministers, advisers and officials will either be unwilling or unsuccessful in their bids for time to act in the King’s Speech later this year, with Number 10 instead deciding to focus on less controversial and easier to deliver policies.

In turn, Labour has been able to stay largely silent on the e-scooter debate. There is a narrow window to ensure Labour’s transport team prioritises e-scooters, to keep pressure on the government now and ensure it does not drop off the agenda completely should they win.

The next 6 months are critical if the industry wants to escape the legal limbo it is in. Only by delivering a gear change in engagement can the industry secure its long term future and make sure that the key political decision makers in both the Conservatives and Labour understand the benefits e-scooters will deliver for their agendas.

Doing so will help build a new consensus on the future of e-scooters, but missing this opportunity means the wheels could fall off completely.

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Budget Analysis with Jim Pickard and Kitty Ussher

On Thursday 16^th March, WA Communications hosted Jim Pickard, Deputy Political Editor of the Financial Times, and Kitty Ussher, Chief Economist at the Institute of Directors and former Treasury Minister, to discuss what the Budget means for businesses and the big unanswered political questions following Chancellor Jeremy Hunt’s statement.

Chaired by WA’s Head of Public Affairs Marc Woolfson, the panel discussed the revised economic forecasts, Hunt’s focus on supply side policy, the upcoming challenges for the government, and policy areas that did not attract significant attention in the Budget.

Our panel outlined five key takeaways during the session:

The single biggest piece of good news in the Budget for business is the improved economic forecasts, which will provide greater confidence over the coming year and the government will have more money to fund its priorities. This meant the Budget was far easier for Hunt, with fewer difficult decisions to make, helping the government present a more optimistic picture and focus on delivering its central ambition of more economic growth.

The government has bet on supply side policy to deliver on its priorities and spur medium term economic growth, but it still might not be far enough. The focus on high growth sectors, getting people back into work and time limited investment support may not be a silver bullet to the UK’s wider productivity problem across the wider economy. Furthermore, Hunt has now used up a lot of the fiscal headroom meaning if the gamble doesn’t pay off or a new crisis emerges, the government could be in fiscal trouble.

The long-term implications of the Budget may not be down to the individual policies announced, but the continued impact of ‘fiscal drag’ on households. it may be a big money maker for the Treasury, but it has also contributed to the highest tax burden in decades. With the cost of living continuing to bite, and the importance of standards of living in determining elections, expect debates on tax cuts to continue in the coming year.

The government’s Net Zero agenda was notably absent from Hunt’s Budget, and a significant gulf between rhetoric on new technologies like CCUS and the plan for delivery. Whilst Energy Secretary Grant Shapps has a ‘Green Day’ scheduled later this month to set out further action on the UK’s energy security and decarbonisation ambitions, there is scepticism this will be a big or defining moment and risk that government is becoming complacent in the face of big pushes to attract global sustainable investment from the US and EU.

Rishi Sunak and Jeremy Hunt are happy to constrain Labour by stealing their policies. The continued windfall tax and childcare reforms mean Labour may find it difficult to disagree with the substance of the Budget. Keir Starmer and Rachel Reeves may need to refocus their attacks and priorities in the face of the Budget, with training and Net Zero early contenders for more attention.

To learn more about what the Budget means for you and other takeaways from the Chancellor’s Statement, get in touch with WA’s team to see how we can work together.

WA regularly host high-profile political figures and leading journalists to explore the intersection between politics, the media, and business – our recent event speakers include Rachel Reeves, Shadow Chancellor of the Exchequer; Chris Giles, FT Economics Editor; and Katy Balls, Political Editor at The Spectator.

To be the first to hear about our upcoming events, follow us on LinkedIn or email events.rsvp@wacomms.co.uk.

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Will the ‘Back to Work’ Budget work?

Sunak and Hunt are emerging from a bruising few months.

The cost of living crisis, questions about the fiscal competence of the Conservatives, and languishing poll ratings meant the duo face a political and economic mountain to regain momentum ahead of an election.

Today’s Budget therefore had to serve two purposes. It needed to continue the government’s response to the immediate economic and financial challenges facing businesses and households. It also had to offer a plan for the future, responding to Labour’s recent polling dominance.

Hunt responded to this challenge with a lengthy statement, which put meat on the bones of the Prime Minister’s five priorities and set out a direction for how the government plans to grow the economy.

Here are our key takeaways from Hunt’s Budget:

Economic growth is the central mission of the government

The more positive fiscal outlook – driven by falling energy costs and wider economic changes – has given Hunt more headroom to act. He used it to focus on supporting businesses and driving economic growth, which has become the defining mission of the government.

He will seek to achieve this by supporting businesses that invest through the capital expensing policy, further support for life sciences and creative industries and even producing a ‘Quantum Strategy’. It reflects a more targeted, transactional approach to this government’s relationship with business and prioritisation of high potential and high growth sectors. For those that invest, or have a plan to do so, this government wants to help those plans come to fruition.

The programme for growth can only be delivered with business help

The flip side of this Budget is a reflection that the government has limited resources, time and money to make big things happen. Governments of the recent past would highlight big infrastructure programmes to drive growth and support the economy. Even Hunt highlighted these types of policies in his last statement.

This Budget strikes a different tone. Through a mixture of tax changes and funds, government wants businesses to work closely with central and local government to deliver its priorities. The new Investment Zones are the clearest example of this, with government wanting combined authorities, universities and businesses to work together to drive regional transformation. It means that whilst the Government has set an overall direction, it is now looking to others to fill in the detail and help make its plans a reality.

Stealing a march on Labour

Labour has been on the front foot, with Starmer’s national missions defining the early battleground for the General Election campaign. Hunt’s statement began the Conservative Party’s fightback, stealing his headline childcare policy from Labour. By capitalising on Labour hesitancy to release specific details, the government has now taken the initiative in this debate.

Questions on the pace, scale and ambition of the policy are likely to follow in the days and weeks ahead, but the biggest impact could be on Labour. This episode is a lesson for Starmer and his Shadow Cabinet. By not fleshing out their platform, they are now at risk of a significant ‘love bombing’ operation from Sunak and Hunt. For businesses and public affairs professionals, it means Labour may accelerate its policy development and programme of big announcements.

The election starting pistol has been fired

This budget will focus minds in the Government and Opposition. Hunt focused his statement on the audiences that could provide a route to retaining power. More money for red wall constituencies, support for older voters and backing for businesses that could help fill the party’s coffers set itself up for the coming battle.

Meanwhile Labour faces a wake-up call that the road to power will not be straightforward and that there is still fight left in the Conservatives. A mixture of targeted funding, retrenchment of core messages on the value of work and businesses and the assault on Labour’s programme is the clearest demonstration of how the Conservatives plan on rebuilding their political momentum.

Sunak and Hunt will hope this Budget is the beginning of a long road back from the dismal poll ratings they face, and for Labour marks the first stern challenge they have faced since taking a commanding lead. The reaction to the Budget will define whether this is a turning point, or another nail in the coffin of the Conservatives.

To find out how the Budget is landing, and what it means for businesses, you can join our Budget analysis webinar by signing up here.

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Starmer speech – On a mission for a decade of renewal

Yesterday Keir Starmer set out the five ‘missions’ which will form the “backbone of the manifesto and the pillars of the next Labour government”, in the first of many pre-general election speeches to come over the course of the next year.

With Labour maintaining a commanding lead in the polls, and the Conservative government in constant crisis mode, the Labour leadership’s main concern is not to do anything to upset that trajectory.

However, it’s not the first time Starmer has tried to “reset” Labour’s vision and there is still work to be done by him and his top team to fully rehabilitate the Party’s image before voters go to the polls. Starmer needs to prove that he – and his Party – can take up the mantel of Government and deliver significant reform in a short time frame.

Importantly though, for the first time in a long time for a Labour leader, the national media treated the speech as a significant political event, giving it the live broadcast, rolling news coverage and instant analysis that is usually reserved for a Prime Minister’s speech.

Bearing all this in mind, this was, understandably, a carefully crafted (and clearly heavily focus grouped) speech, designed to reassure the public that Labour has the ideas and clarity of purpose to address the challenges facing Britain and the long-term vision that has been found lacking from the Conservative benches.

Drawing heavily from management theories used commonly in the business community, Starmer was setting out his goals – painting a picture of what success would look like by the end of his government’s first term in office:

To have the highest sustained growth in the G7
To fix the NHS
To make the streets safe
To raise educational standards
To make Britain a clean energy superpower, decarbonising the energy system by 2030

For businesses and investors there was the strongest possible message that a Starmer led government’s approach to the economy would be neither “state control” nor “pure free markets” with Starmer stating that “I’m not concerned about whether investment or expertise comes from the public or private sector – I just want to get the job done.”

With the foundations set, the window for influence is open. Work is clearly well underway to put more meat on the bones of these missions, with measurement criteria and granular detail to follow as we get closer to a likely Autumn 2024 general election, with Starmer due to speak on Monday to set out his thinking on the economic mission.

For businesses looking to future proof and inform policy in the long term, these missions provide a framework for engagement at a critical time for the Labour Party.

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What does a government restructure mean for the energy sector?

You’d be forgiven for having a sense of déjà vu with the announcement of a new separate Energy department, with a return to the structure of the Brown and Coalition governments. With Rishi Sunak committing to this change in his summer leadership campaigns, and recent reports from Chris Skidmore and Andrea Leadsom both recommending this, it felt inevitable. It is however unusual to make such a radical change so close to the next election.

So what does this mean for the energy industry, currently seeking to deliver a transformational shift to a low carbon economy?

A risk of short-term disruption as the department ‘beds in’

Major machinery of government changes take time, effort and focus, particularly from senior officials. Establishing a new department creates short-term uncertainty amongst officials and risks urgent policy priorities being deprioritised.

The retention of the current political team – Shapps, Stuart and their advisers – maintains policy leadership and largely ensures a continuation in approach.

A more focused department doesn’t necessarily mean better outcomes

One school of thought is that a singular focus from the new department on energy will deliver better results, without the distraction of other business issues and with the whole department aiming in the same direction.

This may well be true, but a new department – even with a competent and respected Secretary of State – is on its own not going to move the dial on key sector agendas, such as planning reform and changes to the grid to speed up offshore wind deployment or establishing a hydrogen market in the UK. Achieving these requires a more radical and ambitious approach to policy delivery, which ultimately needs the support of the political centre, namely No10 and the Treasury.

As the next General Election gets closer, there’s a clear risk for the sector that the singular narrative focus from government on the Prime Minister’s ‘five key priorities’ pushes aside the detailed policy action required for the UK to stand any chance of achieving its 2035 power decarbonisation target. The industry’s priority has to be to frame its case in terms of helping achieve these goals, specifically on driving economic growth and halving inflation.

Framing arguments through an energy security lens

Government messaging on energy has been shifting to focus on energy security for the last year, with an even greater focus post the Johnson government. The unveiling of the new department does highlight this shift in government focus very starkly: energy security is specifically mentioned in the name, and prioritised over Net Zero; and the absence of any reference to low carbon power or green growth in the government’s overview of the department, focusing purely on security and affordability.

The industry has made a strong case that low carbon power and energy independence are two sides of the same coin, and there needs to be no choice between them. However, there will be a need to double down on this case, and to shift messaging to emphasise the benefits to security of supply when seeking government support.

The industry will have to work harder to make the link to economic growth

Climate advocates within the Conservative Party have long sought to frame the case for action on Net Zero through the lens of green growth and jobs. The location of major projects, be that the renewables sector, hydrogen projects or new nuclear sites are in traditionally economically left behind areas of the country. The Net Zero transition is one of the clearest routes to delivering levelling up.

The combination of energy and business policy within one department made it easier to make this case, and for the government to recognise it. That now may become harder. Tying energy to jobs, skills and growth (particularly in the right, electorally important areas) is still the clearest route to securing government backing, particularly from the Treasury. It will be incumbent on industry to make this compelling argument even more effectively, bringing data and human stories to the fore to show why government needs to quickly push the right policy levers that support industry.

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Return of the Online Safety Bill

The first month of Rishi Sunak’s premiership has been full of speculation about which of Boris Johnson’s 2019 manifesto pledges he will keep and which he will scrap.

One of the most contentious pieces of legislation coming down the track is the Online Safety Bill. It has been confirmed that the Culture Secretary, Michelle Donelan, is ready to present an amended version of the Bill to MPs after progress on it stalled due to recent political turmoil.

The Bill is intended to regulate social media platforms with the threat of criminal sanctions, including jail terms and fines, if firms do not regulate content. The Bill would assign Ofcom as the enforcement agency for a new “duty of care” that would be placed on platforms included in the scope of the legislation.

With the UK cementing a reputation as the capital of tech investment in Europe, implementing a regulatory framework that is fit for purpose is crucial. Regulatory stability is a core risk assessment tool that can determine the appetite for tech investment.

Coming out of Covid, countries around the world have faced economic downturns, and the tech sector has not been immune. Many firms have cut their online advertising budgets and now some of the largest tech businesses, including Amazon and Meta, are laying off staff.

Investors have also piled on the pressure to cut costs, accusing tech firms of being too slow to react to warnings of an economic slowdown. Now that tech companies are not growing at astronomical rates, investor scrutiny has swung to profitability.

Many investors, faced with inflation, and rising interest rates, are gravitating towards more traditional sectors like energy and consumer staples that deliver tangible goods, make a profit and reward shareholders. Staple stocks are often viewed positively by investors during times of economic uncertainty.

There are obvious headwinds in 2023 for tech companies, and with this backdrop of instability, it is even more important that the sector keeps up with regulatory changes.

Tech businesses have been calling for legal clarity during the period of extensive parliamentary scrutiny of the Online Safety Bill so that they can prepare for the new regulations. New laws contained in the Bill will be applied to companies that host user-generated content, such as images, videos, comments and messaging. The Government estimates around 25,000 search and user-to-user platforms will fall under the scope of the legislation.

With two-thirds of adults concerned about harmful content online, the Online Safety Bill presents an opportunity for investors looking to generate healthy returns in the UK tech space. Tighter regulation will drive out bad actors and grow market share for well-regulated platforms, and there will be a cooling-off period before enforcement activity is initiated, minimising the risk of hefty fines. An online safety regime that is workable and adopts the Government’s aims of addressing illegal content online would make the UK a safer environment for users, where tech companies will have clear responsibilities and greater accountability.

The proposed framework includes giving the regulator powers to compel tech companies to publish annual transparency reports on the content on their platforms. This will incentivise online-service providers to become best in class and allow investors to make informed choices.

Better intelligence sharing on evolving online harms will enable tech businesses to develop products that are safe and less exposed to risk. The Bill proposes a “Safety by Design” framework that’s intended to help companies include online safety features in new apps and platforms from the start of production.

Tech regulation is often presented as a problem child, but it could tackle many of the challenges the digital economy faces. Regulation brings certainty and is critical to value creation. Failing to keep on top of evolving technological trends and threats could have major implications for UK based tech businesses, particularly when other countries are bringing in their own regulations.

There is a fear that the Online Safety Bill could hurt small businesses by hitting them with additional costs, but any teething issues are expected to be temporary and in the long-term, it is anticipated the Bill will boost the competitiveness of smaller tech firms as it disproportionally impacts Big Tech. Curbing the influence of Big Tech will present new opportunities for private equity as it will spur smaller competitors and innovation in the digital market. If investors aspire to identify the future winners in the tech space, their first concern should be understanding the rules which will govern it.

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Autumn Statement 2022: A double-edged sword for a nation in recession

Today’s Autumn Statement paints a mixed picture for the UK, with growth, investment and long-term ambition perching on a knife-edge as Hunt announced a swathe of real terms cuts to public services and immediate tax changes for millions.

The core measures – NHS funding, short-term windfall taxes, and efficiency reviews – all point to the tough decisions a Government facing down a recession has had to take and will undoubtedly reassure the markets. However, it will almost certainly come at a further cost to the Conservative Party’s poll ratings amid fresh criticism of their understanding of the real-world impact of their policies and the OBR forecasting the largest fall in real household disposable income on record.

For Labour, today’s statement presents an immediate opportunity to go toe-to-toe with the Conservatives on the long-term vision for the country, with many of the measures announced today not due to kick in until after the next general election.

It’s all about tax

As ever, tax – freezing it, cutting it and introducing it – is the dividing line between the Conservative and Labour parties, with Shadow Chancellor Rachel Reeves MP immediately jumping on Hunt’s plan to freeze the basic rate tax threshold until 2027-28.

Coupled with the decision to reduce the threshold for higher rate taxpayers by £25,000 a year, today’s tax announcements will prove to be an unpopular move for a Conservative Party which was re-elected in 2019, committed to a low tax economy. The Government urgently needs to repair its reputation with voters ahead of the next general election, but it is unlikely these measures will do so, as it provides an immediate opportunity for Labour to cement its poll lead by going on the offensive over rising taxes and falling living standards.

Cuts, cuts, cuts

For departments now facing reduced real term budgets and efficiency pressures, the door will be open to businesses, industry voices and campaign groups offering solutions which improve the outlook for key industries and make sound economic sense.

Whilst protecting existing budgets until the end of the spending review period in 2025 is a sign of the Government’s commitment to minimising the immediate impact of the economic downturn on public services, ultimately double-digit inflation putting immediate pressure on pay deals coupled with a 2.7% reduction in funding increases going forward, points to a difficult period for a public sector that is already under considerable strain. There are also clear plans for widespread public service reform in the not-too-distant future.

However, with many of these real term cuts backloaded to after the next general election, public spending will now be a difficult territory for both parties – and particularly the Conservatives – as they tussle over long term spending commitments with voters.

Schools, the NHS and social care are cushioned

Additional funding and a public display of gratitude for schools has taken many by surprise, following speculation that the education budget would be amongst those facing a squeeze. The £4.6 billion additional funding announced today will go some way in plugging the funding gap the sector has long highlighted.

Pots of funding were also made available to the NHS and social care sector, totaling £8 billion next year. However, this was followed by an immediate double-edged sword of efficiency measures and improved productivity requirements, with a politically astute decision to announce a review by former Labour Health Secretary Patricia Hewitt to commence next year.

Having put the NHS and schools top of the priority list at the start of his speech, this double-edged sword of increased funding and pressure for future reform of the system is a microcosm for the Tory agenda.

The green agenda

Despite economic pressures, Hunt again reiterated the Government’s commitment to the 2026 COP agreement to reduce emissions, positioning the Sunak administration as more pro-environment than the Truss administration. But the energy and investment measures today suggest there is little meat on the bones for the green agenda.

A short-term windfall tax on energy companies and a new 45% levy on electricity generators might go some way in plugging the energy cost bill and reducing pressure on households, but coupled with a new tax for EV drivers, industry is likely to argue that this Conservative Government just made investment more difficult.

Difficult decisions ahead for everyone?

Taking today’s mixed bag of good news and downbeat outlooks as a litmus test for the debate ahead, there are difficult decisions ahead for senior members of both the Conservative and Labour parties as they consider their future economic policies in the run up to the general election.

The tax and spending picture outlined in this Statement will form the backdrop to an election campaign in which household budgets, long term growth and access to services are a central feature.

There are likely u-turns ahead from the Conservative Party and strongly worded criticism from the Labour Party, but ultimately with the economic realities difficult to ignore. Both parties will be in listening mode and looking for input on reform in regulated industries, the public sector and skills and innovation in order to build a blueprint for prosperity.

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Cabinet reshuffle: who’s who?

Rishi Sunak has reshuffled his Cabinet, looking to restructure government round his key priorities.

With little positive movement in the polls and his government hit by a series of distractions in recent weeks, one hundred days in, this is Rishi Sunak’s attempt to regain momentum and refocus government on his core aims.

The Prime Minister has remodelled government to reflect the areas he wants to make progress on in the next 18 months. Taking over as Prime Minister at a time of economic crisis, making radical machinery of government changes before steadying the ship would have been difficult. He has long articulated his belief that the UK is lagging behind on science, innovation and technology, reflected in what is in effect intended as a new ‘department for growth’. On energy – the policy area that dominated BEIS – it has been clear for some time that the government’s focus is on energy security and resilience.

These reforms – and the ministerial appointments that accompany them – might theoretically be the right thing to do but the big question for the Prime Minister is whether they improve his political standing heading into the crucial election period. Major departmental and personnel changes take time and focus to bed in. They’ll be judged on whether they help meet the ‘five priorities’ the Prime Minister has set out, including driving economic growth.

This reshuffle provides an opportunity for businesses: making their case against these core priorities and helping the government meet their urgent need to show positive news and progress on delivery in these areas. New departments – and the ministers and advisers in them – will look for high impact, well-packaged ideas that align with government (and voter) priorities and create early wins.

To download the new cabinet chart, click here.

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Who’s in charge of resetting Government policy?

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‘The Grown Ups are back in charge’: Analysis of Post-Truss, and Rishi Sunak’s new Government

Last week it looked like Liz Truss’ legacy might not just be the smouldering remnants of the oldest democratic party in the world, but its possible extinction altogether.

Now, it seems her parting act has been something rather extraordinary – and for once, in a good way; the Conservatives now look, and feel, like they are in a more sane and unified place than for quite some time. No one is pretending the polls predicting almost total wipeout aren’t problematic, but the acute desperation that had set in amongst many Tories during the Truss tenure has dissipated, almost overnight.

Having sailed so close to disaster last weekend and the mad flirtation of a Boris return, it was almost as if by Monday afternoon the Conservatives realized they needed to re-find their collective marbles, sharpish. Their roar of approval as Rishi Sunak got to his feet at PMQs yesterday was in stark contrast to the awful, deathly, sickly silence of Truss’ later appearances.

As a first run-out, PMQs was quite spicy, with Sir Keir Starmer going straight on the attack over non-doms and the reappointment of Suella Braverman as Home Secretary, despite her having resigned over a security issue days earlier (watchers of the Westminster runes are suggesting ‘she will blow herself up sooner rather than later’). An occasional slight twitch of the PM’s right leg might have denoted some nerves, however, there was nothing here to cause him undue bother and the performance had his trademark polish.

So, to yesterday afternoon, back to building his team. Probably the biggest surprise of the Cabinet appointments on Tuesday was Penny Mordaunt remaining in the junior post of Leader of the House; she will have expected more – unless this is just a ‘holding pattern’ in expectation of Ben Wallace’s resignation from the Ministry of Defence if he doesn’t get the Truss-promised three per cent of GDP defence spending (allowing him to resign ‘on principle’, releasing him to go after the head of NATO job, which is what he really wants).

Michael Gove regaining his previous empire puts ‘Levelling Up’ right back up the agenda. We can expect Grant Shapps to bring his usual enthusiasm to BEIS and the role gives him ample opportunity to continue his energetic broadcast appearances. Mark Harper’s return to Government in the DfT is good news; he’s universally known as a safe pair of hands and as being ‘all over the detail’. Steve Barclay’s reappearance at health means he knows what to expect, but that doesn’t make the scale of the challenge ahead any less daunting, compounded (as everywhere) by spiralling inflation.

Across the board, there is a real desire to get back to some kind of ‘business as usual’ after this summer and autumn of psychodrama, and real recognition of the need to deliver on a domestic agenda, if the Conservative Party is to claw itself back out of the electoral oubliette in which it’s managed to land itself.

Sunak’s backroom team is also extremely important – not least if they are to swerve the huge structural weakness in Truss’ team; that she didn’t have anyone who understood economic and fiscal policy. Sunak himself, and Liam Booth-Smith, his Chief of Staff, think in Excel – so that issue is at least overcome. As a clear sign of how differently this incarnation of Government is viewed by the markets, they remained overall stable when it was announced the new Autumn Statement would be delayed by three weeks, taking place in November. Imagine what would have tanked if Truss had tried to pull that one off?

Truss’ own Chief of Staff Mark Fulbrook (of Sunday Times ‘under investigation by the FBI’ headline fame) still seems intent on demonstrating real ill-judgement. His suggestion that Truss should reward her N10 team in a resignation honours list has not gone down well. That’s without going so far as to question whether those short-lived advisers would even really want it. Talking to them in the aftermath, ‘bruised’ is the word that comes up time and again. One noticeably leaner advisor darkly joked his smaller waistline was down to ‘the Liz Truss stress diet’.

There is a largely prevailing sense of being embarrassed by having been involved in any of it, and a desire to quickly leave the whole sorry period behind them.

The Government is crossing its fingers and toes, hoping they can do the same with the last three months in the public’s mind.

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‘Where’ve yer bin?’ – how Truss lost the battle for local media

When your first appearance on the media since a major economic intervention causes you to tank in the polls and face mutiny from your own MPs, then it is probably safe to assume it hasn’t gone well.

Despite many Truss detractors claiming that this was a move of arrogance – underestimating the journalistic prowess of local hacks – there was more strategic thinking at play by the Truss camp. The premise made sense when faced with a ‘Westminster Bubble’ rebellion and days before Tory conference – bypass the bubble and get straight to the people that matter – the voters.

However, if ever there was an example of a well thought through comms strategy with poor delivery, this was it. With a little more preparation, maybe some of the disasters could have been averted.

So what went wrong?

Local journalists are connected to the concerns of their local readers or listeners in a way that national journalists never can be. While the national news outlets are the scene setters of the national mood, the regional reporters are the ones with the ability to get under the skin of the real-life impact on voters. Truss simply wasn’t prepared for the local-level questions fired at her by, for example, BBC Radio Lancashire. A by-election due there soon will be dominated by fracking – banned at present but which Truss wants to allow, but only with ‘local consent.’ Presenter Graham Liver leapt on this, asking ‘what does local consent look like?’ before pointing out that the local MP, Mark Menzies was anti-fracking. Similarly, on BBC Leeds she was asked for her thoughts about the Leeds bus services. Being able to answer these kinds of a local-level questions is a must for anyone going up against regional press – Truss simply wasn’t over the detail.

With the Prime Minister only having a few seconds between each interview – and within such a short time-frame – she was on the back foot from the start. Had she appeared on one of the flagship BBC Programs, the scope for longer, more in-depth questioning would have been greater, but the fight would have been fairer. The presenter and their producers would have worked up questions in advance; Truss’ media SpAds would be working from the opposite side, anticipating the obvious questions and nailing down their defensive messages.

The reality of the situation was far from ideal for Truss – whilst she was bounced from one interview to another, the producers at each of the radio stations were able to revise questions in real time, pointing out flaws on answers given only minutes or even seconds before. With her final interview kicking off on BBC Radio Stoke at 8:52am, this gave the Stoke presenters nearly an hour of prep time where Truss wouldn’t have been able to consult her media advisors. Far from getting into any kind of ‘flow,’ the PM was left running around in circles and tying herself in knots.

The format of the regional programs didn’t just give journalists the upper hand on the questioning – it also created the perfect short sound-bites for digitally savvy national media, with the opening ‘where’ve yer bin’ question from BBC Leeds shared embedded into national articles far and wide. In what rapidly became a national media blood bath, even the pro-Truss Telegraph struggled to defend the performance, while the Independent led with a simple ‘Seven best local radio takedowns of Liz Truss as she fails to defend ‘disastrous’ mini-budget.’ In a world of clicks and shares, the articles practically wrote themselves.

While Truss isn’t renowned for having the media flair of Johnson or even Sunak’s smooth delivery, it was something she was widely reported to be working on, with her performance throughout the leadership contest getting markedly better. However, this interview round showed a Prime Minister still clearly uncomfortable in front of a microphone, and lacking Johnson’s flexibility and ability to pivot away from difficult questions.

The result was a stilted performance that, by the fourth round of questioning started to sound more like an actor rehearsing their lines than the bold, trailblazing leader of the Tory revolution that party members voted for.

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Is Labour Back?

There is a clear change of mood within the Labour Party. This year’s Conference didn’t feel like a party still riven with the internal battles of recent years. Keir Starmer has complete control of the National Executive Committee and party machine, the ‘grownups’ are running the show and the suited young men and women, and corporate sponsors are back in force.

Importantly, following the Conservatives’ disastrous fiscal event and consequential Sterling crisis at the end of last week, there is also genuine belief seeping back into the assembled activists, councillors, MPs, and shadow ministers, that their years of opposition could be coming to an end.

Some key take-outs included:

It’s still the economy stupid: Rachel Reeves is considered a class act and has carefully manoeuvred the Labour Party to be seen as a safe pair of hands with the economy, spending time wooing business and dramatically improving her media performances. Not quite believing the gift that was handed to her last Friday, she now needs to occupy the ground of economic competence that has been vacated and consolidate Labour’s poll boost.
Some meat on the policy bones: while caution remains the watchword of Labour this week, we have started to see a pattern emerging of what a Labour government could look like with some interesting announcements. A commitment to R&D spending to support innovation at the heart of a new industrial strategy; rail re-nationalisation (the populist nationalisation), helped enormously by the Herculean task it took to get Liverpool on a train; reinstating the top rate of tax; a National Wealth Fund, offering returns for taxpayers while targeting investment towards infrastructure; zero carbon energy by 2030; new powers to local and regional leaders; and a commitment to substantially increase the percentage of social housing as part of the UK’s housing stock. All solidly centre left policies that hark back to the days of Labour governments past.
Handed a poisoned chalice: Yet the legacy they would inherit if elected, will be nothing like the favourable conditions that Labour found in 1997. The room for manoeuvre for an incoming Labour administration is non-existent; for example, the £28 billion a year borrowing identified to tackle climate change no longer exists because of the spiralling cost of UK debt. As one leading light in the party said, “the problem with referring back to the 1972 Barber budget, is that it was a Labour government in 1976 that had to go to the IMF to repair the damage and then pay the price in 1979.”
Country first: Keir Starmer capped off an encouraging week for Labour with easily his best speech as leader. While he will never provide the soaring oratory of Blair or Brown, he has grown into the role, and he gleefully occupied the space that had been gifted him at the centre of British politics with the departure of Johnson and the tilt to the right under Truss. While the rhetoric of ‘country first’ has not been seen since the conference speeches of Tony Blair, he is probably the wrong comparison. Instead, Keir Starmer represents a Labour tradition closer to John Smith, Harold Wilson, and indeed Clement Atlee. The question that will be answered at the next election is, is the country ready once again for a re-pitch of classically social democratic policies packaged up for the challenges of the coming decade.

As things stand, and buoyed by commanding leads in all polls, Labour look set to form the next government. This comes with huge expectations and pressure. They need to be providing their answers to the overwhelming challenge facing the country, which are only set to get worse over the next 12-18 months.

For business, it’s no longer just about just ‘paying attention’ to Labour, it’s engaging with the people, priorities and policies that are looking increasingly likely to be those of the next government.

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Former Special Adviser Amy Fisher joins WA Communications

Following 45% year on year growth across the agency, Amy has joined WA as a Director in the Strategic Communications practice, as WA continues to broaden its political insights and strategic counsel.

Amy will play a key role in servicing client accounts across the business, with a focus on providing insight and senior advice for clients on around issues and reputation management and crisis comms.

The creation of the Strategic Communications practice last year came amid not only strong growth for WA, but also with high profile new business wins including Novo Nordisk, Newcastle University, Landmark Information Group, Roadchef, Edenred, and Simplyhealth. The new offering draws on the strengths of both Corporate Communications and Public Affairs teams to further strengthen WA’s reputation for outcome-based results for clients.

Amy has joined WA after spending time, since 2010, in senior roles in government as a Special Adviser in four different Whitehall departments (Northern Ireland Office, Home Office, Ministry of Justice, Department for Environment, Farming and Rural Affairs), and as Director of Communications for the Conservative Party. Latterly, she has joined WA from the think tank Policy Exchange, where she was Director of Policy and Communications. Amy has worked previously in the private sector, including at Google, but laid her roots in Westminster, working in Conservative HQ’s press office, at the outset of her career.

Marc Woolfson, Partner and Head of Public Affairs, WA Communications, said:

“Amy is a hugely respected political figure and we’re delighted to welcome her as we build our senior team. She will bring unparalleled insight to our Strategic Comms practice, both from a political and media standpoint. This unique blend of expertise is a perfect fit for WA as we continue to develop our team of experts and create more holistic offerings for our clients, rooted in deep insight.”

Amy Fisher, Director, Strategic Communications, said:

“It’s clear that there are significant challenges ahead for the country; at such a time, it’s even more important that clients receive properly integrated PR and PA support, and carefully thought-through advice.
“I hope to add significant value to WA’s pedigree in the public affairs landscape, and combined with my experience in communications, and crisis comms, contribute to WA’s truly blended offering across the market. I look forward to helping clients navigate their way forward.”

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What are the chances of a breakthrough on the Northern Ireland Protocol?

In the early hours of 8 December 2017, a bleary-eyed Theresa May shook hands with a sleepy Jean-Claude Juncker on an interim Brexit agreement, supposedly resolving the issues around Northern Ireland. That handshake has plagued the UK’s relationship with the EU ever since.

The interim agreement was supposed to allow progress in the exit negotiations to move to other issues such as trade. For a while it seemed to do so, but recriminations soon began. In June 2018, then Secretary of State for Exiting the EU, David Davis, was actively briefing against the so-called Northern Ireland backstop. He resigned the following month. By December 2018, then First Minister of Northern Ireland, Arlene Foster, said removal of the backstop ‘has been our message from the day a backstop was conceived.’

That was then. What about now? Despite agreeing to an amended Protocol and backstop as part of a revised Withdrawal Agreement in December 2019, the British government argues that the Protocol in practice is not working as it should. Rather than maintaining Northern Ireland’s place in the UK and its internal market, the government believes that it is doing the reverse: threatening the province’s economic settlement within the UK.

With images of food shortages in Northern Ireland and complaints of burdensome customs paperwork, the UK government has evidence to back up its assertions. The EU for its part argued that the Protocol is a consequence of Brexit and the only solution to challenges in Northern Ireland.

But the consequences are more than economic. In May, the republican Sinn Fein party became the largest party in Stormont. For the first time since power-sharing in Northern Ireland began in 1998, there would not be a unionist politician as First Minister.

The second largest party in the May elections was the unionist DUP. But its leader, Sir Jeffrey Donaldson, stated that his party would refuse to nominate a deputy first minister, unless the Northern Ireland Protocol were replaced. The DUP blames the Protocol for endangering Northern Ireland’s economic and constitutional settlement with the UK and since the Executive requires cross-community consent, there can be no government unless the DUP changes its mind.

The deadline for forming an Executive is not infinite. Unless an Executive can be formed by 28 October, further elections will be held. Political instability in a constitutionally fragile province during a cost of living crisis is not an ideal situation.

But there might be light at the end of the tunnel. Vice-President of the European Commission, Maros Sefcovic, has said in recent days that the pressure of the Protocol and the restrictions placed on trade could be reduced. Checks on only a few lorries a day would be required if the UK were to agree to the EU’s new plan.

It sounds almost too good to true.

The EU’s new plan would require the UK to provide the bloc with real-time data on trade movements. According to Sefcovic, checks would only take place ‘when there is reasonable suspicion of…illegal trade smuggling, illegal drugs or dangerous toys or poisoned food’.

Will the UK agree to it? Not publicly at the moment. As well as unilaterally extending grace periods, initially intended to ease the transition for Northern Ireland and Great Britain into the Protocol arrangements, the Government has a further proposal of its own. The new Prime Minister, Liz Truss, introduced the Northern Ireland Protocol Bill in Parliament in June while she was then Foreign Secretary. This Bill would seek to unilaterally disapply those parts of the Protocol that the government believes are hampering the constitutional and trade relationships between Great Britain and Northern Ireland: customs processes, regulations, tax issues and governance.

Speaking in Parliament in her first Prime Minister’s Questions, Liz Truss re-stated her preference for a negotiated settlement but that this had to ‘to deliver all the things that we set out in the Northern Ireland Protocol Bill.’

The EU cannot countenance the UK taking unilateral action to extend grace periods and disapply parts of the Protocol and is taking legal action against the British government. Both the UK and EU have solutions they claim to be practical and logical. But neither, it seems, wants to accept the other’s solution.

Which means that uncertainty – the great enemy of investment – remains a real and present danger in Northern Ireland. The next early morning handshake to try to resolve issues in Northern Ireland is a long way off.

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Who’s in charge of fixing crisis Britain?

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My week in Westminster

Jack Powell reflects on his week of work experience in the world of public affairs

It would be easy to think the world of public affairs is currently dominated by the buzz of the Conservative leadership election. After all, within only a week in Westminster I have picked up on this buzz myself. But it is actually so much more. My week of work experience at WA Communications has taught me that the work that is undertaken is about the weird and wonderful processes and events within a parliament that never rests, even when the world’s attention is on Liz and Rishi.

It would be counter intuitive to say the dominance of the leadership story has no effect on the work of public affairs. Clients want insight; they want to know what Liz or Rishi would think of their company or how policy they may introduce would affect them. This morning, for instance, I was probing through the depths of Twitter to uncover the candidates’ views on the housing support fund. Of course, this is not a centre-piece policy up for debate in the leadership race, but it will nevertheless will be a part of their time in office as Prime Minister and is still of interest to countless businesses across the UK.

I did take the opportunity to indulge in the drama of the leadership race by attending a husting for Liz Truss’ campaign on Tuesday afternoon. At the event, I took the opportunity to ask her about larger issues, such as her tax policy and commitment to pragmatism, and to contribute to the debate around the future of the Conservative Party. This was a big change from the very same morning, when I watched the five-hour second reading of the public procurement bill in the House of Commons, which will have gargantuan implications on how the procurement sector will operate. It just goes to show that whilst column inches are focused on the leadership race, arguably bigger decisions are being made in the corridors of power for some sectors.

So, what I’ve learnt from the week is that although the media is glued to the Twitter accounts of our prospective Prime Ministers, pre-empting who the next Chancellor may be, or even the price of Liz’s earrings – the world of public affairs is not. They are in the background, continuing to fight for companies and push for policy change. And that is the real world of politics.

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Sunak V Truss – A Defining Contest For The Modern Conservative Party

And then there were two. In the final round of the Conservative leadership contest, Boris Johnson’s longest serving Chancellor, Rishi Sunak, faces the current Foreign Secretary, Liz Truss.

During the early phase of the Conservative leadership contest, there was a lot of talk about the need for a clean break with the past. Indeed, for one day last week at Westminster there was almost an assumption that Penny Mourdant would be the next Prime Minister. That was before her indifferent performances in the TV debates and the onslaughts from other camps, including the stridently pro-Truss Daily Mail. In the end, the MPs chose the two most experienced and best known candidates.

There is though, a significant twist. In this topsy turvy contest, Truss is running as the ‘change’ candidate even though she is the longest-serving minister in the cabinet. During a remarkable interview on the Today programme this morning, she argued that there had been a misplaced economic consensus for twenty years, thereby distancing herself from the policies of the Conservative governments since 2010. Her big pitch is for tax cuts to be implemented from “day one”. Specifically, she would reverse the National Insurance rise and the planned increases in Corporation Tax. Her belief, not widely shared amongst economists, is that such a move would trigger economic growth and avoid a recession. She also claims that the tax cuts would reduce inflation, whereas Sunak has argued repeatedly that the opposite would happen. Inflation would rise.

In fairness to Truss, she is speaking truthfully when she insists that she argued against the NI rises in cabinet last summer. She said then in private what she now declares in public, that the additional spending on the NHS or social care could be paid for by borrowing. I am told that Boris Johnson had also hoped originally to pay for his still vaguely defined social care plan without increasing taxes. In frantic meetings a year ago, Sunak insisted that if Johnson wanted the additional cash it would have to be paid for through a tax rise. Johnson agreed reluctantly. In his final Prime Minister’s Questions yesterday, Johnson could not resist a dig at ‘the Treasury’ when he told MPs that his successor should sometimes challenge that mighty department’s tight spending orthodoxies.

Johnson and his allies are out to stop Sunak. Apparently, there was talk of little else at his farewell party at Chequers on Sunday.

Yet here is another twist. In some quarters Truss is presented as the ‘Thatcherite’ candidate while Sunak is portrayed as the ‘centrist’. But Thatcher never did what Truss is pledging to do. For Thatcher tax cuts had to be paid for. It was not until 1988 that her Chancellor, Nigel Lawson, cut the top rate of income tax. She had been Prime Minister for nearly nine years by then. Truss’s approach is much closer to President Reagan’s in the 1980s. Reagan funded tax cuts from increased borrowing. In a contest largely defined by the 1980s Truss is a ‘Reaganite’.

Sunak is the Thatcherite candidate, even though some of Thatcher’s most ardent admirers in the parliamentary party are backing Truss. Like Truss he wants to implement tax cuts, but only when he has addressed inflationary pressures. This produces another oddity about the contest. Although Sunak resigned from Johnson’s government and spent a lot of his time when he was Chancellor engaged in tense disputes with Number 10, he is the one seen more widely as the ‘continuity’ candidate. This is because inevitably he is not going to disown his economic policies.

Sunak’s pitch is very different to the one that Truss is making. Already he has made clear that only he can win the next election for the Conservatives. His supporters also argue that because Truss plans to make sweeping changes she will be obliged to call an early election to secure a new mandate. Party members dread an early election. In interviews later today and in the coming days Sunak plans to argue that the Conservatives’ reputation for economic competence is the key to their appeal. If they lose that with unfunded tax cuts, they are finished for the time being.

As a result of this fundamental divide on the right of the Conservative party over when to cut taxes, there will be big consequences arising from this contest. If Truss wins, Sunak and his close supporters will struggle to support her new government’s economic plans. How can they vote for policies in the Commons when they have argued they are ‘fairytale’ tax cuts that will fuel inflation? In the longer term, I suspect Sunak would leave British politics at the next election. He would not serve in a Truss cabinet. Conversely, although throughout her career Truss has been a much more flexible politician than Sunak, it will not be easy for her and her closest allies to back Sunak’s economic policies this autumn if he wins. The leadership contest is a symptom of a division over how to achieve economic growth and there will be no resolution when a new Prime Minister is crowned in September.

There is one final twist. Both candidates seek a smaller state in theory. Yet almost certainly whoever wins will begin by spending more. To take a precise example, the hugely influential financial guru, Martin Lewis, is already calling for an emergency package this autumn when the new energy price cap is announced. The night before Sunak unveiled his most recent programme of financial assistance, he phoned Lewis to check that he was doing enough. He wanted Lewis’ backing and feared further opposition. No new Prime Minister will want to have Lewis as an enemy. There will be further help with fuel bills.

More widely the next election will be moving into view. A new Prime Minister will be in no position to cut spending on the NHS in advance, nor resist demands for increases in defence spending. There is also the thorny issue of social care. The additional spending from the NI rise is being spent largely on the NHS. How is the new Prime Minister going to find additional funds for social care or will they dump this commitment? What about ‘levelling up’, a concept that neither Sunak nor Truss is as enthusiastic about as Johnson?

The Conservatives need to retain some of those red wall seats if they are to win next time. To do so the new government will have to spend more money rather than cut departmental budgets. But for now, there is a single target audience, the party membership. Every word uttered in the next few weeks will be aimed at pleasing the members alone. They will elect the next Prime Minister.

Polls suggest Truss is well ahead. Sunak knows he has little time to sway the membership. Most are likely to vote early in the contest. He and his team plan to work around the clock for new week or so as the ballot papers are sent out. Sunak will need to be at his most persuasive. Polls on the ConservativeHome website suggest early tax cuts are the members’ top priority. Truss is pledging to give them what they want as well as delivering better public services.

When Johnson used to pledge tax cuts and higher public spending, he acknowledged he was a ‘cakeist’. He would have his cake and eat it. Such an approach was the main source of tension between Johnson and Sunak. Now Sunak must go public and put his case for what he describes as fiscal conservatism. Polls suggest he is the more popular candidate with the wider electorate. That is rarely a decisive factor in Conservative leadership contests.

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The By-Elections and Boris Johnson’s Future

By-elections often trigger a minor political explosion but before very long the noise subsides. What happened in the early hours of this morning is different. There were three significant eruptions before most voters had woken up. The noise is about to get louder.

The least seismic development was Labour’s gain in Wakefield. In mid-term, an opposition party would expect to win such a seat. But even this win makes bigger waves than might have been the case in different circumstances. Boris Johnson’s great distinctive pitch as a leader of the Conservative party has been his appeal in the so called Red Wall. Most Tory MPs know he is a chaotic figure and is, in many ways, unsuited for government. However, some still dared to hope that only he could keep together the contradictory coalition of support that won them a near landslide in December 2019. There is vivid evidence that he is becoming an electoral liability even in those seats that turned to him at the general election. Let us not forget the Conservatives gained Hartlepool in a by-election a year ago, largely because of Johnson’s appeal. His fall as an electoral asset has been speedy.

Losing Wakefield is made much worse by the outcome in Tiverton. The swing to the Liberal Democrats shows that the Conservatives could face their ultimate nightmare, losing to Labour in some parts of the country and to Ed Davey’s party elsewhere. This was a seat the Conservatives held even in the 1997 general election, when Tony Blair won a landslide.

The third development is the most significant. The resignation of the Conservative chairman, Oliver Dowden, breaks the spell that Johnson is in full command of his government even if many of his backbenchers had no confidence in him. It was when the cabinet turned against Margaret Thatcher in 1990 that she fell. In his own way, Dowden’s resignation letter was scathing not least given he backed Johnson in the Conservative leadership contest and had been devotedly loyal since.

What happens next? Having spoken to some Conservative MPs this morning, I sense the mood is even more febrile than in the build up to the vote of confidence in Johnson earlier this month. Some are wondering if other cabinet ministers might resign. As I write, there is no indication of that. They had the chance to act when that vote of confidence took place and they opted to stay. Dowden did not consult cabinet colleagues. He acted alone.

For sure Johnson will seek to stay in Number 10. He is not going voluntarily. I am told he has convinced himself that he has a personal mandate from the 2019 election, and nothing can override the voters’ endorsement of him then, at least until he calls the next general election.

In theory there can be no vote of confidence in Johnson for another year, but that rule can be revised. The chairman of the 1922 committee, Sir Graham Brady, though not a great fan of Johnson, is extremely reluctant to bring in rule changes. It will take a new development to bring about another vote of confidence in the coming weeks or months, more cabinet resignations or Tory MPs who voted for Johnson in the vote of confidence now saying publicly he must go. But look out for elections to the 1922 executive to be held before the summer recess. Almost certainly the balance will move towards Johnson’s critics within the parliamentary party.

The by-elections have intensified the storm over Johnson’s leadership when there are many more mountainous challenges to come this summer and autumn, most specifically the cost-of-living crisis and the related industrial action. Crises tend to feed on themselves. Capable of fleeting introspective melancholy, Johnson will wonder whether the strategy of seeking new Brexit style divisions is working. Some in Number 10 had hoped that the strikes, the new Rwanda policy for asylum seekers, and further battles with the EU over Northern Ireland would help them at least win the Tiverton by-election. These policies did not do the trick. Others in Number Ten have had their doubts about this provocative strategy. Their doubts will be reinforced and internal tensions within Johnson’s team are inevitable amid political and economic crises.

I would also follow closely Johnson’s relationship with Rishi Sunak in the build up to the autumn budget. They do not get on. The differences are not just ideological, though Sunak’s “fiscal conservatism” clashes often with Johnson’s big spending instincts. They are also incomparably different personalities. Sunak is diligent and methodical. Johnson is erratic and disorderly. The contrast infuriates Sunak. Relations between Prime Ministers and Chancellors are often tense but can be managed when a leader is strong, which Johnson is not.

But critical Tory MPs I have spoken to are still unsure what to do next. There is no easy route to remove a Prime Minister who is determined to stay. They hope cabinet ministers make a move in the coming weeks or months. Let us see.

By-elections are not a wholly reliable guide as to what might happen at a general election, not least when it is possible that the Conservatives will have a new leader by then. But a hung parliament seems a likely option, in which case a minority Labour government will almost certainly be formed. The other parties, including the SNP, would not keep a Conservative government in power for a fifth term. In the meantime, Keir Starmer expects to get the verdict from Durham police within days. This will be a volatile summer and autumn.

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Natasha Egan-Sjodin wins Mark of Excellence at the CIPR Awards 2022

We are extremely proud of WA’s Natasha Egan-Sjodin for winning the Mark of Excellence award in the Outstanding Young Communicator of the Year category, at last night’s CIPR 2022 awards ceremony.

The highly regarded award commends the outstanding work of young professionals in the industry who are making a valuable contribution to the organisations they work for and show considerable promise in their future career.

Natasha’s triumph is recognition of her many work-related achievements, hard-fought campaign wins, and her contributions to the wider industry – a well-deserved win!

We thoroughly enjoyed the evening celebrating excellence in the UK’s PR industry and offer our congratulations to all the winners.

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Hanging in the balance? What we can learn from the local elections

Boris Johnson lives on to fight another day. The local election results were bad for the Conservatives but not good enough for Labour. Johnson’s MPs are not terrified enough to remove him in the immediate aftermath. I suspect the elections were never going to be the trigger. Leaders can always point to a success somewhere in the country. In his case, Johnson notes that parts of the so-called ‘red wall’ are holding firm.

This does not mean Johnson is safe for the long term. Over the weekend I spoke to several Tory MPs alarmed at the collapse of support in London and the south of England. They fear a fatal dynamic, the Liberal Democrats gaining seats from them in some parts of the country and Labour doing the same elsewhere. Their anxieties deepen when they reflect that the cost of living crisis is likely to intensify.

Johnson’s first substantial response to the election losses takes the form of tomorrow’s Queen’s Speech, a legislative programme composed with the next election in mind. The forthcoming Brexit bill is emblematic. Nearly all the initiatives aimed at moving away from EU regulatory frameworks have already been announced. By putting them together in a bill, Johnson seeks to make Brexit a defining issue once again. Similarly, I am told that some of the proposals that will be included in a ‘levelling up’ bill do not necessarily require legislation. The theme is what matters as much as the content. For businesses wondering what the dividing lines will be at the next general election, Johnson’s words in the Commons tomorrow afternoon following the Queen’s Speech will provide part of the answer.

What is not in the Queen’s Speech is also as significant as the content. For all the huffing and puffing there will be no bill clearing the way for the government to unilaterally disown the Northern Ireland protocol. Even Johnson at his most populist does not want to alienate the Biden administration and the EU in quite such a provocative manner, not least with the Ukraine crisis far from resolved. Even so, expect renewed ministerial attempts to renegotiate the protocol in the next few weeks, accompanied by threats to trigger Article 16. The other ‘missing bill’ on housebuilding is also a sign that Tory backbenchers are becoming more muscular. Johnson’s plans for what was one hailed as a “house building revolution” are dumped as a result of the insurrectionary threats from Conservative MPs in the south of England.

The calm ceremony of the Queen’s Speech will be in marked contrast to the wider political storms. Politics has rarely been more topsy turvy. For months there was speculation about whether Boris Johnson could survive ‘partygate’. Now there is a near panic at the top of the Labour Party about Keir Starmer’s fate being in the hands of the Durham police.

We do not know what the police will decide in its reopened investigation. But if Starmer survives, shadow cabinet members reflect privately that there are already lessons for him arising from ‘Beergate’. The first is that he will face hostile newspapers that are out to get him and to hail Johnson. Although he has sought to be as inoffensively ‘centrist’ as Tony Blair was in the run up to 1997, he is not going to enjoy a similarly supportive set of newspapers. The Daily Mail, The Sun and The Telegraph have played down Johnson’s partying and propelled Starmer’s work meeting in Durham to the top of the political agenda. At the very least they have succeeded in neutering Starmer. He was due to give interviews at the weekend and attend an event today at the Institute of Government. To the bewilderment of some in the shadow cabinet these were cancelled. If Johnson gets more penalty notices while the Durham police continue their investigation, Starmer’s response will be impossibly constrained. I have spoken to several shadow cabinet members who are genuinely worried about this development and what it might portend. Even if Starmer is cleared, he knows he must be prepared for a newspaper onslaught similar to that experienced by Neil Kinnock. His media operation will need to be much more robust in the face of inevitable further attacks.

The local elections suggest that a hung parliament is a possibility after the next general election. This would mean a minority Labour government or a Lib/Lab coalition. None of the other parties would do a deal with the Conservatives. For businesses trying to make sense of the current wild political context perhaps the most useful comparison is with the two elections in 1974 that took place during an economic crisis even deeper than the current one. There was considerable disillusionment with both major parties then and their leaders. The Liberal party was enjoying a revival and in a minor way so was the SNP in Scotland. The February 1974 election produced a hung parliament and the October election a few months later gave Labour a tiny overall majority. Over the last weekend Number 10 carried out an effective spin operation suggesting Johnson was fairly pleased with the election results. If he was, he must be delusional.

Perhaps the most significant results were in Scotland and Northern Ireland. The SNP wins every election in Scotland almost as a matter of course. Some Tory and Labour MPs wonder whether this will change until there is a second referendum. Nicola Sturgeon can always deploy the Westminster resistance to another poll as a weapon: Scotland votes for independence but Westminster won’t allow us to have a referendum. Labour is taking comfort from coming second in Scotland and some at the top of the party dare to hope it might win a few more seats there at the next general election.

The rise of Sinn Fein in Northern Ireland was perhaps inevitable following Johnson’s chosen Brexit route. Although he protests about the subsequent protocol, he was the one that proposed a border between Northern Ireland and the rest of Great Britain. There would have been no such barrier under Theresa May’s Brexit deal. Inevitably Northern Ireland’s economy moves closer to Ireland’s and is more distant from the rest of the UK, not a bad context for Sinn Fein to make its moves. This does not mean a united Ireland is a feasible prospect in the near term, but it becomes part of a destabilising mood in which a significant number of voters in Scotland and Northern Ireland want to break away from the UK. Johnson is not well placed to address the situation as his presence and conduct fuels the mood.

The key developments to look out for in the coming months are the Gray report and the end of the Metropolitan police investigation, the outcome of the Durham police investigation, embryonic leadership campaigns on both sides, a reshuffle if Johnson survives the Gray report, but above all the build up to Rishi Sunak’s budget in the autumn, a pivotal event and one made more demanding by the failure of his Spring Statement. On many fronts get ready for a turbulent summer and early autumn.

Steve will be unpacking what the government’s legislative programme will mean for businesses and, in the wake of the local elections and what we can expect from the next parliamentary session in the latest WA webinar at 9am on Wednesday 11th May. You can register to join the event here.

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Boris Johnson is Safe… For Now

On the surface Boris Johnson commands the support of nearly all his MPs. He will derive some comfort from this public display of loyalty. In terms of his future, the relationship with the Conservative parliamentary party is all that matters. Quite a lot of voters may tell pollsters that they regard Johnson as a ‘liar’. Normally calm constitutional historians and Archbishops may fume. Parts of the media and Twitter can be in uproar. But, as long as Johnson keeps his MPs on board he can carry on. The power to remove him lies with Tory MPs alone. During his post-Easter statement to the Commons, the first since he received his penalty notice for the birthday party in Number Ten, only one backbencher called on him to go.

But the surface does not tell the whole story. Over the bank holiday I phoned several Tory MPs including a few who are uneasy about their Prime Minister becoming a ‘law breaker’. They told me they would not contemplate for a single second speaking out in public against Johnson before the local elections. Their party members are spending their spare time campaigning energetically and they would not undermine such effort by condemning their party leader. They would never be forgiven by activists if they did so. In other words the May local elections are a big protective shield for Johnson and also a threat. In advance of the vote, quite a lot of Tory MPs feel they have no choice but to suspend judgement. Any critical quotes would help Labour. That does not mean their support is guaranteed if the Conservatives perform poorly in the elections.

As has been the case since ‘partygate’ erupted, the mood of the Tory doubters in the parliamentary party fluctuates on a near daily basis. There have been times when they were ready to make a move against Johnson. On other occasions they are resolved not to do so. Ukraine is another factor fuelling the changing judgements, although from my conversations this is becoming less potent compared with the fact that that important elections loom. Political parties are at their most tribal during a campaign. There is another reason why the mood constantly changes. Many of the MPs, especially those from the ‘red wall’, are new to national politics. Suddenly they face the most daunting of decisions, whether or not to remove a Prime Minister. They do not quite know what to think or what to do.

In reality the parliamentary party divides into three sections. There are the Johnson loyalists who will stick with him even if he receives more penalty notices and the Sue Gray report is damning. There is a tiny minority for now calling for him to go. In the middle there is a significant section waiting to see what happens next. That includes some ministers who are unsure how this is going to play out. All are loyal for the time being except for the significant resignation last week of Lord Woolfson, a Justice Minister. It’s easier for peers to resign when local elections are being contested. They are above the electoral fray. In some cases Johnson cannot assume that loyalty will endure across the government after the May elections.

The strategy in Number Ten, a more nimble operation after recent changes, is clear. They call for “perspective” as Johnson focuses on Ukraine, the cost of living crisis and his plans for dealing with the migrant crisis. Johnson’s every move is made with his own survival in mind. He and his new inner circle know he is not safe yet. Johnson seeks to be the indispensable ‘man of action’, visiting Kiev earlier this month and off to India this week. After his act of contrition in the Commons he delivered a different more upbeat performance to his own MPs at a private meeting, linking his plan to send migrants to Rwanda with an attack on the BBC and the Archbishop of Canterbury, suggesting they were soft on Putin. This is a classic Johnson tactic, seeking to tick several boxes in a single assertion. He knows most of his MPs approve of the Rwanda scheme, admire his approach to Putin and are angry about the BBC and the Archbishop. After the May elections Johnson plans to unveil a Queen’s Speech that will again be aimed at pleasing his MPs with bills on ‘levelling up’ and other legislative items that he will claim represents the ‘people’s priorities’.

But Johnson and his advisers are not wholly in control of events. The metropolitan police investigation continues without any indication of which party is being scrutinised and when the next penalty notices will be handed out. No one in Number Ten knows when the investigation will end. When it does the Gray report will be published and, on the basis of her interim findings published earlier this year, it will be damning. In his Commons’ statement Johnson focused only on the Number Ten birthday party. If charged for other events he will have to find new explanations. Johnson has a distinct capacity for climbing out of deep holes. But he is not entirely lacking in self-awareness. Indeed he can be introspective and melancholic at times. Mostly I hear from his allies how he is robustly determined to keep going but one did note that this crisis is getting Johnson down. With his ‘Churchillian’ sense of destiny, being the first prime ministerial law breaker was not meant to be part of the narrative.

The context is as much a key to his fate as the scale of the law-breaking. If the Conservatives do badly in the local elections and Labour soar, Tory MPs will begin to worry about whether they will lose their seats. The elections next month might not be as clear cut as that. They rarely are. But then there is the Wakefield by-election probably to be held later in the summer, a big test for both Johnson and Keir Starmer.

There are some other big themes that will dominate the coming months. The IMF has forecast that the UK economy will suffer the weakest growth out of the G7 countries. Rising inflation is destabilising for even the strongest of governments and the Johnson administration is fragile. The collapse in the standing of Rishi Sunak might have removed a leadership rival but any government needs a Chancellor with authority when the economy is weak. The dynamic between Johnson and Sunak will be pivotal. At the moment both are vulnerable. Usually one has been in a stronger position than the other. Sunak’s spring statement was framed when the Chancellor was at his most assertive as Johnson fought for his political life. In the past Johnson’s deeper interventionist instincts have tended to win out because he was in a strong enough position to prevail over his Chancellor. For now at least they dance together after Sunak decided to stay on rather than resign after receiving his penalty notice and with Johnson currently too weak to sack him. If Johnson emerges safely from ‘partygate’ he might be tempted to appoint another chancellor, but none of the options are straightforward. The likes of Liz Truss and Sajid Javid share Sunak’s fiscal conservatism. Javid’s tax affairs are also attracting media interest.

For whoever is Prime Minister and Chancellor this autumn, the budget will be a moment of great significance for the economy and the future of this government. There could well be a further economic statement from Sunak this summer although he is keen to avoid one, wanting to focus on his budget and not give the impression of ‘panic’ reactions before then. Sunak has spent some time studying what happened in the 1970s when inflation raged more wildly than now. He noted that there were endless emergency budgets that tended to fuel further panic.

Even so the autumn is a long way off. There will be many twists and turns before then.

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Tax Rises Now, An Income Tax Cut To Come

Rishi Sunak has just delivered one of the oddest economic statements in recent years. Sunak punctuated his speech to MPs with warnings from the Office for Budget Responsibility that we were living through a period of “unusually high uncertainty”. Indeed, as confirmation of the gloomy economic climate, the OBR’s growth forecasts for the coming years were revised downwards. Ominously, the Chancellor made clear that these forecasts had not considered the consequences of the war in Ukraine. Sunak was blunt. He acknowledged the economic situation could “worsen”.

Yet he felt the need to stride through the foggy future and announce a cut to the basic rate of income tax in 2024. The strange announcement is illuminating for several reasons. For businesses wondering when the next election will be here is a big clue. Boris Johnson and Sunak are targeting 2024 and not an early election next year. They seek a campaign following a tax-cutting budget.

Usually a pre-election tax cut is kept as a surprise until the very last minute to propel a governing party towards a campaign. But, given today’s announcement, two years before implementation, there will now be no surprise in 2024. The far-off pledge shows that Johnson and Sunak are alarmed by the commentary about their tax-rising policies over the last couple of years. As worried Tory MPs have noted, the duo have presided over more tax rises already than Blair and Brown did in ten years. For different reasons both Johnson and Sunak needed some good news now about a cut in income tax. As a result, they announced it early. Johnson wants to keep his job; Sunak would like to be Prime Minister. They tried to give Tory MPs some distant good news, but the pledge is both politically and economically risky. Will they have to find other surprises by 2024? Will the cut seem credible then?

The measures that take immediate effect are broadly unsurprising: a cut in fuel duty and the lifting of the threshold before National Insurance is paid. Some Tory MPs were delighted that the threshold was raised by £3,000, higher than they had anticipated.

But on the whole Sunak did the least possible in the short term. He knows he will have to do more in the autumn when he delivers his official annual Budget. This was only meant to be an economic update, but there has not been a single statement from Sunak during a period of economic calm. This was no exception. He had no choice but to deliver in effect a mini budget.

Looking ahead Sunak could not have been clearer as to how businesses can engage with government in the run up to the Autumn Budget. If he has had a distinctive theme as Chancellor, it is his search for a ‘business-led recovery’. This was the main topic in his Mais lecture, delivered on the day Russia invaded Ukraine and therefore largely overlooked. Sunak had spent huge amounts of time on the lecture, traditionally regarded as the address that defines Chancellors. In his statement to MPs, he expanded on the Mais lecture, telling them he was exploring “tax cutting options” that encourage the private sector to “innovate”, invest in vocational training, spend more on R and D, and on capital investment. He plans a big package of fiscal reforms this autumn and will be consulting with businesses in the coming months. Sunak sees these reforms as a way of addressing the UK’s relatively low productivity and to boost economic growth when the economy is weak.

I sense he genuinely wants to engage with businesses as to how this can be brought about. He has not yet decided on the tax policies that he plans to unveil in the autumn budget.

For businesses wondering how Labour will approach the next election, the Shadow Chancellor, Rachel Reeves, provided several answers in her response. She adopted a similar approach to that of Gordon Brown when he was Shadow Chancellor in the run up to the 1997 election. In her case she attacked Sunak’s National Insurance rise and accused him of wasting taxpayers’ money in spending billions on useless equipment during the pandemic. Brown did the same in 1997, arguing for ‘fair’ taxes rather than ‘higher’ taxes and pledging ‘competent’ spending rather than wasteful expenditure. Reeves also accused Sunak of ignoring the needs of businesses. Like Brown, Reeves wants to be seen as a pro- business Shadow Chancellor. She is keen to engage with business and is struck by how businesses are increasingly keen to engage with her.

For now, the return of inflation has some advantages for Sunak. Higher prices mean higher tax receipts. This has given him some wriggle room to play the fiscal conservative that also intervenes by spending money. But those benefits do not last very long. Soon public sector pay claims will soar in order to meet rising prices. High inflation can also undermine already low levels of economic growth. Inflation – more than any other economic factor -tends to destabilise governments. Sunak is keeping his fingers crossed that he has done enough in the short term. Some Conservative MPs are not so sure. The OBR’s official forecast is that this year, real household disposable income per person – or living standards – will fall by more than at any time since reliable data was collected. His promotion shortly before the pandemic means that Sunak has endured a turbulent time as Chancellor. Arguably the biggest storms are still to come.

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Boris Johnson’s Survival Strategy – but will it work?

Conservative MPs head off for their half term break in a state of bewildered exhaustion. One senior backbencher told me she had never yearned to be away from Westminster as much as she did now, even if only for a few days’ respite. She is typical. Most Conservative MPs have still not decided whether to act against Boris Johnson or when to do so. Businesses must plan for the next few months without any clear idea who will be Prime Minister by the summer. Only Conservative MPs have the power to remove Johnson and most agonise about what is going on without knowing what to do next.

Despite this unavoidable haziness, we still know quite a lot. Johnson is determined to stay on. He will not go voluntarily. Amidst the dark chaos, he continues to enjoy being Prime Minister and has no intention of giving up. His sense of history and Etonian destiny mean he will not want to depart as a Prime Minister forced out of office for setting rules, breaking them, and lying about doing so. Johnson is not a natural leader, but he has two of the qualities required of leadership. He is resilient and ruthlessly competitive, bouncing back from nightmarish situations as if they had never happened, a lifelong pattern.

Most immediately he has tried to make the most of the delay in the publication of the Gray report, reconfiguring Number Ten and conducting a mini reshuffle. Every move has one sole objective, to buttress Johnson’s position in relation to his parliamentary party. There was a lot of speculation about whether his new chief of staff, Steve Barclay, could do the job as well as fulfilling his other responsibilities. For now, Johnson is not interested in the practicalities. He has chosen a solid technocrat, a Brexiteer, and an MP who Tory backbenchers will be able to see in the House of Commons. That is the key, convincing his MPs they will matter more under the new Number Ten regime. The same considerations apply to the appointment of Andrew Griffith, his new head of policy. He is also an MP. In theory at least there can be more of a dialogue with other MPs over policy development.

Johnson has been told MPs found his old operation far too distant. He is trying to make it less so in the hope that this will deter them from toppling him.

The mini reshuffle was carried out with similar calculations in mind. The former Chief whip, Mark Spencer, was unpopular with many Conservative MPs. He was replaced by the smoother Chris Heaton-Harris. In addition, Brexit supporting Tory MPs want to hear more about the benefits of Brexit. The Brexiteer Johnson loyalist, Jacob Rees Mogg, becomes minister for ‘Brexit Opportunities’.

The same objective applies to any move with policy implications. Johnson’s statement in relation to the lifting of all Covid restrictions this week was revealing. In effect he announced at the start of Prime Minister’s Questions that he would be making an announcement on Monday week when MPs returned to Westminster, one that would delight his libertarian wing. He told his MPs in advance that this was what he planned to do in the hope that the prospect of ‘Covid freedom’ would keep them quiet until then. None of the top scientists, nor the devolved institutions in Scotland, Wales and Northern Ireland were told in advance of what Johnson was going to say. The words were aimed at getting him through the next week or so. The formal statement on Monday week, he hopes, will give him another boost.

The sudden change in the political dynamics of this government is unprecedented. Up until the late autumn Johnson was the most powerful and omnipotent Prime Minister of recent decades. From Brexit to HS2 he took the key decisions, without much scrutiny or criticism. Conservative MPs felt ignored but Johnson felt no need to consult them. Now it is Conservative MPs that call the tunes.

As part of Number Ten’s campaign to save Johnson, his new media team is briefing journalists to expect a bigger ministerial reshuffle this summer. Every briefing is aimed at giving the impression that Johnson is in charge and planning for the future. But note in the mini reshuffle this week no one was sacked. A few ministers were moved but Johnson is too weak to risk sacking ministers in case they become part of the embryonic insurrectionary mood on the backbenches. If he survives to the summer I doubt if he will be in a strong enough position to carry out a big reshuffle, dropping ministers to bring in more of the doubting MPs. Still, he will be talking up such a prospect in private during his discussions with parliamentary colleagues. The power of patronage is his most potent lever.

Meanwhile every move Rishi Sunak makes is seen through the prism of a possible leadership vacancy. The reality is more nuanced. Here is one example of several. This week when there was a delay in the hugely important announcement over how the additional cash for the NHS would be spent, there was frenzied talk about Sunak blocking publication in order to disrupt Johnson’s attempts to stay in Number Ten. This was not the case. There is considerable anxiety in the Treasury about the tax rise this April. Sunak wants to show that every penny will be well spent. He seeks more robust targets to show that that the rise in National Insurance is worthwhile. As part of their mood of fearful bewilderment Conservative MPs are increasingly restive about the tax increase. If there were to be a vote on it now, I suspect it would be defeated. Sunak is under considerable pressure to deliver in terms of speedy, tangible improvements in the NHS. The Treasury interventions were not a clunky attempt to stop Johnson from making announcements on the NHS.

But Sunak and others know they might be candidates in a leadership contest and make calculations accordingly. Sunak has many admirers, from senior journalists to former cabinet ministers. He is not short of advice. He was advised that he needed to distance himself from Johnson’s comments about Keir Starmer and Jimmy Saville. He did so, to the anger of Johnson’s loyalists, by declaring that he would never have said such words. Here is an example of Sunak’s tricky position. As his most senior cabinet minister he does not want to become fatally contaminated by Johnson’s conduct, but any distancing can seem self-interested and disloyal. Quite a few Chancellors, seen as the likely next Prime Minister, failed to get to Number Ten. Sunak does not want to be on that list of prime ministers we never had.

For now Johnson has the public support of his entire cabinet. Only when Margaret Thatcher lost the backing of cabinet ministers did she resign in the autumn of 1990. Meanwhile most Conservative MPs are keeping their heads down. Those that publicly back Johnson on the media are fairly limited. Think of the number of times Michael Fabricant has been rolled out to support Johnson. This does not mean that the majority has decided to remove the Prime Minister. It does mean they have not made up their minds.

The next key moment is the publication of the full Gray report and the outcome of the police investigation. In a competitive field this will be the most daunting junction in Johnson’s career. Based on her ‘update’ alone, Gray’s full report will be damning. All Johnson’s energies are planning for this next development. He will insist that the lessons are already learnt, that Number Ten is changed radically. As a former political columnist, he knows that stories can “blow over”, a phrase he has deployed in conversations with some Tory MPs. But, in his desperation to remain in office, he misreads the significance of the Gray report combined with the police investigation. No one knows for sure but a lot of Tory MPs I speak to assume that either the police/Gray report or the May local elections will be the moment when a vote of confidence is triggered. Such a vote could happen at any time. No one is fully in control of the dissenters in the parliamentary party. But it would be harder for Johnson to win that vote of confidence after the Gray report. In my view the outcome of the police investigation and the Gray report are Johnson’s moment of maximum danger, much more so than the May local elections.

For businesses there are important staging posts to come in policy terms, not least Sunak’s statement on the fiscal and wider economic outlook next month. Yet much is on hold. Johnson is suddenly weak and a few cabinet ministers, including Sunak, are becoming more muscular. For certain Johnson will never be as strong as he was from December 2019 to the autumn of last year. From now on this will be a different government, whoever leads it.

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Sorry, not sorry

Little more than two years since Boris Johnson won a near landslide election victory he is in deep danger. In this blog I’ll outline Downing Street’s strategy aimed at saving Johnson and why a significant number of Conservative MPs and party members do not believe it will work. I’ll also highlight three other big themes in 2022 that will shape British politics whether Johnson survives or not.

At Prime Minister’s Questions Johnson sought to square a circle. He knew he had to issue an apology, but that the contrition had to be extremely limited. If he had apologised for attending a party, he would have had to resign for misleading the House of Commons, irrespective of whether he broke his own lockdown rules. Instead, he said ‘sorry’ for the way the garden gathering was perceived, admitted he attended but that he regarded it “implicitly” as a work event. Then he hid behind the shield of the investigation being conducted by the senior civil servant, Sue Gray.

The Gray report forms the second part of Number 10’s strategy. Johnson and his closest allies hope that Gray will take a limited view of her remit. She will investigate what happened without making judgements on whether Johnson broke the rules. Johnson’s allies point to her brief. She has been asked to conduct an investigation and not to answer the question “Did the Prime Minister break his own rules?”

On this assumption of Gray’s narrow responsibilities, Number 10 may well prove to be correct. She is a civil servant. Arguably it is not her role to reach a judgement on whether Johnson is lying when he claims he regarded the garden party as a work event. On this basis, Johnson dares to hope he will be able to claim that the investigation clears him of misconduct and mendacity. In the meantime, he has sent out cabinet ministers to defend him on the airwaves, although all are struggling to do so effectively. Jacob Rees Mogg has generated further waves describing the party’s leader in Scotland as a lightweight.

Number 10 do not know for sure what Gray will conclude or when her report will be completed. I have spoken to several politicians investigated by Gray in the past, or who have worked with her. They broadly concur that while she is forensically independent, she will not choose to be the judge over whether Johnson broke the rules and lied about doing so. We will know soon enough. If she does reach such a conclusion, Johnson will resign immediately. If she does not do so he will try to keep going. Johnson is ferociously competitive and seeks a ‘Churchillian’ legacy, Churchill being his great hero. He does not want to be forced out in this shaming context.

The problem with Number 10’s strategy is that the Gray report is bound to be damning even if it is written in measured prose and avoids overt judgments. We know enough already without waiting for Gray’s investigation. Johnson has admitted there was a garden gathering and that he attended. Voters have decided it was a party even if Johnson has not. So have most of his MPs and party members. There is also much speculation at Westminster that there are more revelations to come. Even if that proves not to be the case, there has been plenty of material already.

More immediately the airwaves are punctuated by Tory voices calling on Johnson to go. This is not that unusual. There were plenty of Conservatives demanding that Theresa May went. But note that she did indeed resign in the end. In Johnson’s case his authority over his government and party was derived solely from his ability to win elections and remain popular. After the Conservatives gained Hartlepool in a by-election last summer, he was the most powerful Prime Minister in modern times with no figure in the government or beyond daring to scrutinise him critically. Blair had Brown as a mighty counter. Cameron had to work with the Lib Dems in a coalition. May led an unruly party in a hung parliament. Johnson was master of all he surveyed. Now the Conservatives are ten points behind Labour in the polls and a majority of voters believe Johnson should resign. His mighty authority over his party has collapsed.

The only mechanism that removes Johnson is in the hands of Conservative MPs. If fifty five of them send letters of no confidence to the chair of the 1922 committee, Graham Brady, Tory MPs will vote on his leadership. Theresa May endured such a vote and won, but it was only a fleeting victory. I doubt if Johnson could survive such an insurrectionary move. I know a few of the MPs who have sent in their letters. They are from the older generation in the parliamentary party, ministers from the Cameron era. They had sent in their letters before the latest revelations about the garden party. Brady will never even hint at how many letters he has received, but he will have had a few more in recent days. Neither Sunak nor Truss will seek to overtly topple Johnson, but their much-delayed tweets of support on Wednesday night were one of many signs that they are making feverish calculations about a possible leadership contest.

Whether Johnson stays or goes, this will be a testing year for the government on several other fronts. Sunak had hoped that the coming twelve months would be one of fiscal consolidation. He seeks to hail prudent management of the economy in this mid-term phase so that he has the space for credible pre-election tax cuts. Although Johnson agreed with him in their discussions last year that he would need to keep a tight rein on public spending for now, there are already counter pressures. Sunak has told Gove that there will be no additional money for his levelling up white paper. The publication of the white paper is seen by Johnson as a pivotal moment. One of the many reasons that the much-delayed White Paper will focus on devolution of power is because such constitutional reforms do not cost money. Gove has brought in Andy Haldane, formerly from the Bank of England, to advise him. I suspect Haldane’s private view is that much higher levels of investment are required to make ‘levelling up’ work. Sunak won’t give them an additional penny for now. Nonetheless Sunak will reluctantly spend more in other areas. The government will intervene to cut energy bills and that will cost additional cash in the short term at least.

The NHS will be the other big theme, whether Coivd fades or rages once more. Johnson and Sajid Javid are acutely aware that the backlog of operations, the record-breaking waiting lists, could become a huge issue at the next election. But even with the substantial tax rise being implemented in April they are not confident that the delays can be addressed speedily. Meanwhile the national insurance rise was supposed to pay for elderly care in the long term. Will ministers go into the next election arguing that they are transferring the additional cash from the NHS budget to pay for social care? If not, how will they pay for social care? More widely Javid inherited a White Paper that will introduce further sweeping reforms of the NHS, not all of which he fully supports. These will be big issues for whoever is Prime Minister.

Finally, the year is a challenge and an opportunity for Keir Starmer. An opinion poll lead is a gift for an opposition leader. The media will take him more seriously. He and his Shadow Cabinet will be viewed as a potential alternative government rather than as a bunch of losers. If he rises to this newly elevated perception, the poll lead will feed on itself. If he does not do so, Johnson will not be the only leader in trouble. His challenge will be to connect policies to broadly expressed apolitical values such as ’respect’ and ‘prosperity’. This is not easy, but Starmer has the huge boost of facing a government that appears vulnerable for the first time since the December 2019 election and he is performing more confidently.

The fate of Johnson is not yet decided. For certain, the cost of living, the internal debate in the Conservative party over whether the government should cut taxes or spend more, the future of the NHS and the performance of Starmer will be big themes in 2022…as the next general election moves in to view.

Steve Richards is a new member of WA’s advisory board, providing political intelligence and strategic counsel to WA’s extensive client roster. Over the last few turbulent years, it has been imperative for clients and organisations to have unrivalled political intelligence to inform their businesses. This year looks to be no less tempestuous and, consequently, Steve’s insights will be invaluable for all WA clients.

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What we can expect from the Heat and Buildings Strategy

The imminent publication of the much delayed and highly anticipated Heat and Buildings Strategy is expected to have significant consequences for the fabric and the fuel source of our nation’s homes. The scale of change – as the Government seeks slash into the 40% of CO2 emissions that heat, and buildings are currently responsible for – is set to be even bigger and more impactful on peoples’ lives than the nation’s move from coal to gas 50-years ago.

We’ve all read the headlines about gas boilers, so here we pull together a summary of what industry, investors, consumer groups and environmental campaigners are calling on the Government for if we are to smoothly accelerate progress towards net zero.

1.Plug the hole left by the Green Homes Grant.

The scheme, shelved less than a year after it was announced, was plagued by criticism for being too bureaucratic and laborious to access. Despite condemnation of its complicated set-up, there remains a sense that uptake of energy efficient and insulating products will continue to be insufficient without market intervention to stimulate demand. These products – used in our homes at scale – are critical to reducing emissions from existing housing stock, but the high upfront costs are often prohibitively expensive and off-putting. The Government has committed to bringing forward a new scheme and will be hoping it is a case of ‘third time lucky’ (readers will remember the Green Deal debacle of the Cameron era and the eye-watering interest rates homeowners were expected to pay on loans).

2. Answer how we will have enough skilled tradespeople to carry out the scale of work required.

Fewer than 2 percent of UK homes are heated by a low-carbon source and estimates put the number of gas boilers that will need to be replaced, either by a heat pump or hydrogen-ready boiler, at around 20 million. That’s not counting new homes yet to be built where Government plans to halve energy use by 2030, compared to today’s standards. These figures are set alongside an exising shortage of approximately 100,000 gas engineers. The Government is expected to set out detailed plans on how it will attract, train, retain and upskill the huge number of engineers we are going to need to install new heating systems across the country.

3. Detail how the remaining £6 billion committed to energy efficiency in the 2019 manifesto will be spent.

Less than a third of the £9.2 billion earmarked for energy efficiency has been allocated to projects and programmes to date. While the fiscal situation has changed markedly since Covid, industry is looking to the Government for a steer on whether the scale of this commitment remains in-tact and, if so, where resource will go.

4. Support new supply chains.

Buying energy efficient products and using new sustainable infrastructure is brilliant but putting in place the building blocks to establish a deep-rooted supply chain for their design and manufacture in the UK is the cherry on the top that many will be looking for. Making sure that the Heat and Buildings Strategy ties into the Government’s Levelling Up agenda will be particularly important for political audiences who have seen the offshore wind industry put down roots in the UK and who want to see that model successfully replicated in other parts of the country.

5. Explain how homes not connected to the grid will be heated.

Around 4 million homes are not connected to the mains gas supply, the majority of these being in rural communities that rely on oil or LPG for heating. Electric heat pumps could well be the answer, but some suggest an increased role for biofuels to cut emissions from these households sooner rather than later. Guidance from Government on how rural homes will lock into the transition is keenly anticipated and will likely receive significant scrutiny.

6. Clarity on taxation.

A very contentious area that the Government will have to wrestle with, eventually. There is growing pressure on ministers to re-orientate the tax system to encourage more clean heat as well as demand for green products. Whether the Government decides to entirely remove levies currently applied on electricity generation and place them on gas bills or even general taxation is a big question, or to scrap VAT on things like insulation and heat pumps. The answer is likely to result in a lot of debate and for that reason, we may not see receive a complete one in this strategy. That being said, industry will be looking for some indication of where Government thinking is going. A signal that it may be minded to change tax treatment could be a huge boon for the UK’s embryonic heat pump industry, but could have repercussions for the gas sector’s transition hydrogen – a nascent endeavour that the Government won’t want to knock off course at this stage.

All of this goes to show the careful balancing act that the Government must perform in what it sets out in its strategy. The complexity potentially being part of the reason for the delay in its publication. One thing unites all the different lobby groups in this debate – a desire that the strategy sets out meaningful detail, promotes action, provides confidence, and unlocks investment. A repetition of ambition and targets won’t be enough.

We hope this short overview provides a useful reference point against which the strategy can be judged once published for consultation. To discuss any of the issues raised or how the Heat and Building Strategy could impact your business, please email me at naomiharris@wacomms.co.uk.

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FinTech needs to find its legs

The UK’s FinTech sector is having its time in the sun.

Major players in the sector are growing into serious outfits. Revolut is now the most valuable private tech company of all time, Wise is setting course on its next decade of business, and a suite of smaller firms being eyed up by investors.

Added to this, political figures are keener than ever to discuss the sector’s role in Britain’s economic future. In the wake of Brexit, ministers have set out on a charm offensive to align themselves with FinTech success stories as part of government’s narrative of the UK at the heart of financial and technical innovation. Whether large or small, government has positioned itself as an ally of these businesses and Britain as the place to be to start, grow and succeed.

This trend is set to continue with announcements planned at attracting talent through ‘new tech visas’ and a new fund aimed at investing in tech start-ups by taking a stake in them. A new consultation will also aim to create a more level playing field for new businesses by curtailing the market dominance of the largest foreign tech companies like Google and Apple.

Despite this overall positive picture there are still considerable challenges for the sector.

Many FinTech businesses are disrupting existing markets and making meaningful improvements for consumers. Whilst a set of engaged customers will reap the benefits of this approach, many do not, due to a lack of awareness, or fears of new brands. Though government will not drive uptake, it has yet to engage coherently in the meaningful action it can take, such as greater transparency or setting new consumers standards. This means that businesses are left communicating with often disengaged consumers on technical issues that they have little experience of, where strategic government intervention would drive consumer benefit.

Government is now also giving greater attention to other (more traditional) financial services to deliver its agenda for ‘left behind’ consumers, such as protecting physical cash infrastructure for those who still use it, or relying on banks to deliver home ownership through the 5% deposit scheme. Whilst this could reflect the strong contacts of existing financial services within government, it also shows that many within departments default to engaging traditional financial services instead of looking to new and innovative approaches.

As scrutiny of online economic harms grow and other issues emerge, FinTech needs to be on the front foot if it is to make its current good standing connect with the priorities of the government and result in meaningful change.

FinTech businesses have a clear and compelling story to tell on their success, benefit for consumers, and role in the future of Britain. As they look to expand beyond their current customer base, and take the UK by storm, businesses will need to work with government more closely. Not as a photo opportunity, but a constructive partner to resolve the challenges of the day.

This can be achieved, but it will need clear messaging, strong alliances, and a proposition that government can get behind.

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Fixing a broken market: how to create a thriving housing market

“The housing market isn’t a proper market as we know it. It doesn’t operate like a market. To be blunt, it is a broken market. It is fixable but it’s definitely not operating like a market would”.

These were the words of Ben Everitt MP – leading Conservative backbench voice on housing policy – at our event last week on how to create a thriving housing market that works in the interests of consumers and the industry.

The panel discussion brought together Ben; Melissa Lawford, The Telegraph’s Property Correspondent; Simon Brown, Chief Executive, Landmark Information Group; and Angus Hill, Associate Director at WA who led our recent successful campaign to secure an extension to the Stamp Duty holiday. The webinar can be rewatched by completing the form below.

So how can this ‘broken market’ be fixed and what can the industry do to shape government’s thinking as it tries to drive better outcomes? Here are our four key take-aways:

1. Housing supply remains the primary challenge, but it is politically difficult.

Successive governments have set ambitious targets for new homes, which they have failed to meet. The fundamental challenge remains that the UK needs more homes, but changes – for example to planning policy – intended to speed this up or focus building in particular areas has historically met fierce resistance, especially in the South East. The government’s upcoming Planning Bill is likely to see a repeat of this, with a series of showdowns this Autumn. The crumb of hope for the government is that its new electoral coalition – meaning it’s less reliant on votes in London and the South East – gives it slightly more breathing space.

2. Taxation is a big lever controlled by government that can shape how the market operates.

The success of the recent Stamp Duty holiday has shown that changing property tax policy can significantly impact transaction activity: it has been proven as a mechanism that works, with the reduction creating a more fluid market. The catch is that this is revenue which HM Treasury is highly reluctant to miss out on, and so only wants to use it judiciously and in a targeted way.

3. It is not just the speed at which homes are built that is failing; how homes are bought and sold is broken and needs reform.

It is clear that the current home moving process causes significant stress for movers. The time it takes – on average nearly six months – from wanting to move to completion, and the significant risk of transactions failing, means this isn’t an easy experience for consumers. Whether it’s through government policy reform, or industry innovating and taking the initiative itself, it’s clear that how homes are bought and sold is ripe for reform.

4. Building houses for sale isn’t the only solution; social housing providers have a key role to play.

The government is strongly committed to home ownership. Talking about getting First Time Buyers on to the housing ladder is politically attractive and rewarding. But it’s unlikely to be the best policy solution if the objective is to create more homes that provide better places to live. Social rent homes should be a key part of the mix, but historically have lost out to supply side interventions – such as Help to Buy – designed to get young people onto the housing market.

Two points came through loud and clear in this week’s discussion that shape these priority areas.

Firstly, housing fundamentally isn’t just about stats and targets; it’s primarily about people and their key life moments. It’s about creating safe spaces that allow people to achieve their ambitions and their life plans, whether that’s moving for a new job, finding a bigger house that allows families to grow, or downsizing to give people dignity in retirement. To get cut-through in the policy debate, the industry can’t just talk about numbers and stats, it needs to relate it to people’s real lives.

Secondly, housing is highly political. Policy proposals can be well thought through but need to be able to survive contact with the political reality. In many areas of this debate, there are key political trade-offs: to take just two, reforms to planning policy risk have electoral implications in the Conservative Party’s southern heartlands, and reforming property tax leads to an immediate loss in revenue needed to fund vital public services. Understanding and reflecting the politics around this issue is critical for those wishing to shape this market.

Creating a thriving housing market is possible, but it will not be easy. It will require partnership between industry and government, and a recognition that a holistic vision is required to avoid tweaks in one area inevitably having implications elsewhere.

Please complete the form below to receive a link to the webinar’s recording.

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What next for the housing market

The Conservative Party has always billed itself as the party of home ownership. From Margaret Thatcher’s Right to Buy to George Osborne’s Help to Buy, in government the party has always held that supporting people onto the housing ladder is good policy and good politics.

Constituencies with higher home ownership are more likely to support the Conservatives. Steps to increase this will help the Party hold on to newly gained Red Wall seats, whilst opening up further electoral opportunities. It has meant housing policy has taken on a renewed focus under Boris Johnson and Housing Secretary Robert Jenrick even as the pandemic has taken hold.

In the last year alone, the government has acted to quickly reopen the market (prioritising it over other parts of the economy), introduce and then extend the Stamp Duty holiday, and launch a mortgage guarantee scheme to support first time buyers.

So, what else is on the government’s agenda, and what are others calling for?

Reducing the property tax burden

The Stamp Duty holiday and subsequent extension has shown that fiscal policy levers can drive a boom in the housing market: both in terms of activity and prices. There are a number of calls for different reforms to Stamp Duty – from scrapping it entirely to boost transaction levels, to combining it with Council Tax to create a new ‘fairer’ property tax. It is clear that there is momentum growing for reform with influential voices on the centre right – think tank Bright Blue and Conservative MP Kevin Hollinrake amongst them – calling for action. But securing long-lasting change will be an uphill struggle. On the one hand the Treasury is concerned at losing tax revenue, and on the other it is fiercely resistant to anything that could be perceived as a ‘wealth tax’ hitting the Home Counties.

Making moving easier and quicker

One of the biggest challenges in the market is the length of time it can take for transactions to complete. As well as causing stress for movers, it opens them up to problems from gazumping and added costs. Whilst government has consulted on how it can reduce this, minimum progress has been made as government looks to industry and HM Land Registry to lead reform. In the face of increasing transaction lengths, political and sector appetite to achieve this may have grown, but there is still a lack of detailed proposals to endorse or take forward. As such, industry will need to build the case for change and highlight the benefit consumers could see.

Reforming our planning law

Planning reforms have become one of the government’s most contentious policies. Ministers believe it is crucial to cement Conservative success in the Red Wall and reach the elusive 300,000 new homes a-year target. To deliver its proposals, government will have to navigate significant pressure from southern Conservative MPs that fear swathes of new houses will be built in their constituencies. Already, dozens of MPs have voiced their discontent, with some fearing the electoral consequences of wide-reaching developments in the South. It means that when the Bill comes before Parliament in Autumn, the government will face a considerable challenge to secure its preferred solution and risks considerable concessions or animosity from within its own party.

WA is exploring these issues further in an upcoming webinar. Our panel of experts will be looking at what’s next on the government’s agenda and how industry and policymakers can work together to achieve a more vibrant market. Our event will bring together Ben Everitt MP, Conservative Member of the Housing Select Committee; Melissa Lawford, The Telegraph’s Property Correspondent; Simon Brown, Chief Executive, Landmark Information Group; and Angus Hill, Associate Director at WA. We’d love you to join us at 9am on Tuesday 8^th June – to register for the event, please sign up here.

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Telling your Net Zero story: communicating the critical role of the energy sector in the transition

COP26 in Glasgow this November will see the eyes of the world focus on the UK. The UK’s green ambitions – and action – are under significant scrutiny. The regular drumbeat of announcements from across government aimed at supporting the green recovery and the UK’s transition to Net Zero are testament to this.

But it is not just government aiming to set their own narrative ahead of COP26. Businesses – particularly those in the energy sector – also have a need to communicate around the summit and to tell their own story on the contribution they are making to achieve the UK’s legal targets by 2050. Brands need to show consumers and other stakeholders that they are doing the right thing. They need to shape the policy frameworks that government is developing that will achieve these ambitions. They need to explain to investors, employees, and customers what the transition means to them and how they are adapting their businesses to reflect this. While the transition to Net Zero presents many opportunities, it also isn’t without its challenges.

All of this means that for businesses in the energy sector, communicating about Net Zero is not as simple as just sharing good news and showing you are ‘green’. Different audiences all have different needs and priorities. They need to hear nuanced messages in different ways. Understanding these complexities and responding to them through simple communications is not easy.

Here we share our thoughts on how best to engage with these different audiences:

Customers

To date, the transition to Net Zero has been largely theoretical for most people. It has focused on how energy is generated rather than how it is used. Where it has been about usage – for example transport decarbonisation – change is still at a relatively early stage and it has had limited impact on people’s lives. This will inevitably change. Net Zero will become a lot more intrusive in people’s lives very quickly – the decarbonisation of heat is just one example of where business must take the lead in explaining to their customers what is happening, why it is happening, and how it will impact peoples’ lives.

Heat decarbonisation could see the mass installation of hydrogen boilers and/or electric heat pumps with old boilers and hobs eventually replaced with lower carbon alternatives. Consumers will be looking to their energy suppliers and other well-known brands – manufacturers and network operators – to guide them through this period of change and uncertainty. They will be looking to these businesses for clarity on what heat decarbonisation is likely to mean for them and their families, what they need to do, when, and how they will be supported.

Consumers risk losing trust in suppliers and others in the sector if they feel they’re not getting the advice they need. The challenge is that not all of these answers are known yet and there is disagreement within the sector about the best pathway to take. In the interim, businesses in the energy sectors have a role to play in explaining the different options and showing that they are actively championing the needs of consumers.

Policymakers

The key milestones and direction of travel on the transition to Net Zero will be set by government. While business has a critical chance through innovation to shape the approach of the UK to decarbonisation, it will ultimately have to align with the policy and regulatory framework.

Communication to policymakers needs to balance two dynamics: what businesses need – whether that be a supportive tax or regulatory framework – and what they can offer. The offer could be innovation that makes it easier for the UK to meet its Net Zero objectives, or it could be jobs. But critically it needs to go beyond narrow business interests and fit into the government’s political agenda: supporting ‘levelling up’ and promoting Global Britain, for example through exports.

Crucially your approach needs to be about talking to more than just BEIS. The shift of industrial strategy policy from BEIS to the Treasury enhances their existing interest in how innovation supports regional investment, and the policy frameworks required to achieve this. But other departments beyond the Treasury can also play a key role as champions for a supportive policy environment and will be keen to hear what you have to say, be that the Department for International Trade on exports or MHCLG on ‘levelling up’ and investing in communities.

Communities

Net Zero has dovetailed with the government’s ‘levelling up’ agenda. There is a drive to root the transition to a low carbon economy in particular places. The focus on Teesside and the Humber reflects the Conservative Party’s electoral priorities as well as the contribution these areas can make to decarbonisation – in both cases decarbonising industry and as hubs for offshore wind development.

Businesses need to reflect this in their communication. But just suggesting that green innovation will lead to investment in these regions is not enough. It needs to be specific: what will this mean in practice for people living in these places? How many new or higher skilled jobs will be created? How will this investment support local young people – through training – to access high-skilled, long term jobs? How will it upskill existing employees or help them transition from jobs in high carbon sectors to new ‘green’ industries? How will this improve the local communities, high streets and living conditions of people there? People like Ben Houchen, the Metro Mayor for Tees Valley, are important advocates to have in making this case, but ultimately you need to be persuading local people and not just their elected representatives.

Employees

The transition to Net Zero means significant opportunities, but it also means change for some parts of the energy sector. This is likely to lead to uncertainty for those working in these sectors, particularly in oil and gas. By explaining to their employees what the transition is likely to mean for them and how they plan to help them benefit from these opportunities, employers can show empathy and demonstrate they genuinely understand people’s concerns. This may require reskilling or a focus on training. Employers can tell a story to their staff about how the transition will bring value to them not just the planet or the UK economy more broadly. Importantly, employees aren’t just workers but they are also consumers, part of local communities, and possibly even shareholders in the businesses they work for. Your employees can be your greatest advocates.

Shareholders and investors

The rise of the ESG agenda highlights that investors recognise the importance of Net Zero. However, the policy and regulatory developments to drive progress towards these targets will still likely to lead to questions for them. Much of the policy detail in certain areas of energy decarbonisation is still to be defined; in some areas there are still more questions than answers. Businesses in the energy sector are having to manage this ambiguity and are seeking to provide clarity to investors as to what the likely pathways to Net Zero are.

In heat decarbonisation for example, government has been careful to date to be seen not to pick technology winners. This could leave shareholders unclear of the implications and therefore at risk of making the wrong choices. It makes it even more important for businesses to paint a picture of the opportunities and risks, and to interpret what policymakers’ choices will mean for them. It’s a circular process: your conversations with investors provide insights to share with policymakers on how best to unlock private capital and investment through a well-designed policy framework.

Concluding thoughts

The best communications on the transition to Net Zero have a clear overarching narrative but also reflect the specific and varying needs of different audiences.
These audiences are not neatly differentiated – there will be overlap. Employees might also be investors or members of the local community. Policymakers will almost certainly also be consumers.
Listening is key. Before saying anything you need to understand the needs and priorities of those you’re speaking to. What do they care about? What is worrying them?
There’s lots of noise; you need to be specific and punchy. Almost every major brand is trying to talk about Net Zero. All audiences, whether that be politicians or consumers, have limited bandwidth. What are you saying that is different? How you can you tell your story creatively to be heard?

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Innovating out of the crisis: What next for transport?

WA was joined by experts from across the transport industry this week to discuss the government’s response to the crisis so far and how, together, the transport sector can help accelerate a recovery fit for the future through innovation.

Panellists included Professor Phil Blythe, Chief Scientific Adviser to the Department for Transport, Emily James, Head of Public Affairs at Abellio Group, and Peter Stephens, UK Head of External and Government Affairs at Nissan.

Below we summarise the key themes that were discussed, including: the key drivers of innovation; those areas where more innovation is needed; and questions over how active or interventionist the government should be.

1. Decarbonisation is the key to unlocking a transport recovery fit for the future.

The single biggest driver of innovation is decarbonisation. Key to this is the Department for Transport’s Decarbonisation Strategy, which will be published in the first quarter of next year.

The first and most obvious port of call when discussing how to decarbonise the transport industry is the need to change the propulsion systems and fuel in our vehicles. Much has been said about the role that hydrogen must play in this, for example on the rail network in our trains, and the work being done by the Hydrogen Advisory Council, chaired by the Business Secretary. Though alternative fuels are being discussed, such as battery-electric technology, none are getting the attention hydrogen is. Hydrogen is the more politically appealing option according to Professor Blythe given the number of jobs it can generate, like the new Hydrogen Hub in Teesside, for example, and the fact much of it can be produced organically in the UK.

Another key mechanism through which the government can achieve decarbonisation is a reformed tax system, in Peter’s view. This will ultimately have to be the case, given the burning platform fuel duty now finds itself on alongside people increasingly switching to electric vehicles ahead of the 2030 target set by the government. What this new tax system looks like is unclear, but whether it’s some form of road/mileage pricing, in any case, Covid-19 has presented a big opportunity to reform the current way of taxing vehicles to be more effective in driving the right behavioural choices.

Area for improvement: ‘desilofication’

Despite the attractiveness of these new technologies/fuels, their success depends in large part on the extent to which they are understood in the context of the wider transport system. As Professor Blythe alluded to, energy systems need to be fully understood and done so alongside further developing innovative transport technologies.

The recent Energy White Paper, for example, may not appear too relevant to transport, but the scale of change required to electrify the rail network, provide national charging infrastructure for electric vehicles, or introduce significant numbers of hydrogen trains or buses will require fundamental changes to our energy generation and distribution sectors. The two cannot and must not be dealt with in siloes, as to do so would only slow down decarbonisation of the transport sector, according to Professor Blythe.

The same is also true of data. The government and industry cannot make informed decisions about how to join up transport modes more if it does not have visibility on key data, as this underpins everything, from an improved consumer experience to safer vehicles. As is the case currently, local authorities hold onto much of this data but are not making the most of it. The government must do more to make this available to third parties in as safe a way as possible to ensure its benefits are being tapped into.

The government’s role in providing the necessary leadership and industry guidance is huge if decarbonisation is to happen. Although full-scale government intervention is sometimes needed, especially when a market fails, Peter believed it more appropriate for the government to be more activist in its realising net-zero by 2050. We’ve been on this ‘decarbonisation journey’ for a long time now and the government must use everything it has at its disposal, including the plethora of alternative technologies and fuels available and the industry at large, to accelerate the journey further still.

2. Consumers no longer want what they used to want

Consumer expectations have changed dramatically throughout Covid-19. Increased working from home, a shift away from shared mobility and physical retail have all impacted our travel requirements and what we deem to be appropriate for our situations.

For example, Emily explained how Abellio is now looking to the future needs of its passengers, having first prioritised passenger and staff safety through more intense cleaning regimes, for example. Rail timetables have changed several times throughout this period whereas, historically, this only happened twice a year. The need to react quickly and be more flexible in approach is therefore critical to meeting these new consumer requirements.

Beyond this, no travel operator wants to have to rely on public subsidies to remain operational, she explained. Though there is an immediate need for it in the rail sector, for example, what is important is that travel operators can entice passengers back to public transport by offering the right products. For example, flexible ticketing reflecting the fact that not everyone will be commuting every day.

Room for improvement: redesigned consumer offer

The upcoming response to the Williams Review is a huge opportunity for this kind of innovative thinking to be applied, focusing first and foremost on new consumer requirements as opposed to anything else.

For the transport industry to adapt and, ultimately, survive, travel operators must invest time in fully understanding these new consumer requirements. Operators must take consumers with them in developing these new products, not only to ensure what they offer is cost-effective for the consumer, but as a way of reconnecting the public with public transport and its role in a more environmentally friendly and joined-up transport system.

3. Increased societal demand for change

Overall, consumers want to help with the government’s decarbonisation and build back better agendas according to our panel. Whether it is assisting with the transition to electric vehicles or the shift back to public transport, there is a renewed sense of societal obligation to help, something we saw lots of during the height of the lockdown. However, that is not to say there will not be trade-offs to be made. The public has had a taste of a better way of travelling which they will no doubt want to keep, such as repurposed road space or exciting new micro-mobility options.

Where possible, this needs to be harnessed and capitalised upon as soon as possible. To do this, a renaissance in transport is needed. For example, public transport needs to become the transport of choice again which will require a more relevant consumer offer. In doing so, we can start to lock down the opportunities that innovations present to us in achieving decarbonisation.

Room for improvement: clarity of message

The demand for change is there but the government must be clear to the public and industry about exactly what it wants to achieve when building back a sustainable transport system fit for the future, and their role within this.

Conclusion

The weeks and months to come will be significant for the transport industry. The need to showcase innovation, not only to adapt to these new consumer requirements but prove to government you have something to offer, will only increase.

WA is well placed to help companies engage with the various consultations and policy initiatives coming down the line and would be happy to discuss what this might look like in practice.

Contact: Marc Woolfson, Head of Public Affairs – marcwoolfson@wacomms.co.uk

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A promising start with more to follow: The Prime Minister’s Ten Point Plan and next steps for business

The Prime Minister’s Ten Point Plan on a ‘green industrial revolution’, published last week, can be read as a statement of intent to accelerate the move to a net zero economy, create green jobs, and spur on the levelling up agenda. It shows government’s thinking on the future of sectors which will play a key role, from energy to transport and housing. But how will this vision be implemented and what does it mean for businesses in these sectors? WA this week hosted a webinar with policymakers and industry experts to explore these questions. Caitlin Fordham shares our key takeaways on the plan and next steps:

It’s in the detail, and the detail is still to come

The Ten Point Plan has been widely welcomed as providing clear policy and regulatory signals to the sector. Having deadlines for roll out will spur innovation, but a more detailed policy framework is now required – and expected – to provide greater clarity on how this vision will be delivered.

From developing the first hydrogen town to bringing forward, by a decade, the ban on the sale of petrol and diesel cars, huge questions remain over how exactly these flagship commitments will be delivered.

Before the end of 2021, we expect a string of strategy papers and consultations – from the Energy White Paper and Net Zero Strategy to the Transport Decarbonisation Plan – which will go some way to answering these questions. However, not every question will be answered right away.

In responding to these, businesses can shape what comes next and the direction of travel that the UK’s policy framework takes. This means laying the groundwork now and thinking about what you’ll need to do at each stage to get the outcome you need. It is about making consultations work for you and using them as a platform to set out a wider narrative beyond engaging on technical specifics.

Who pays for it and where does the money come from?

Tackling climate change will require significant government investment at a time when the pandemic response has taken its toll on public finances. The IPPR has estimated the government will need to spend £33 billion a year to reach its net zero target, but this package amounts to just over a third of that figure at £12 billion. The plan represents the start of a battle between Number 10 and Treasury on how the green industrial revolution is funded.

While Number 10 wants to be bold on climate and environment, and sees this as a political priority, the Treasury is cautious about committing to significant public funding at a time when finances are stretched. The government is betting on regulatory and policy signals – such as bringing forward the 2030 ban on the sale of petrol and diesel cars – to open-up significant private sector financing in support of its ambitions. By providing some kickstarter funding in specific areas alongside setting targets and creating new market frameworks for heat networks, for example, the government will hope it can provide consumers, businesses and investors with confidence and spur innovation.

In the context of this week’s Spending Review, the Treasury will need to consider how much more public money can be pumped in to top up this plan and which regions and sectors should benefit. It will also need to consider ultimately where this public money comes from. Road pricing or an end to the fuel duty freeze are options to free up cash to spend on developing EV charging infrastructure. The Net Zero Review – expected next year – will analyse the range of choices for funding the transition and set out greater clarity on the balance between taxpayers and bill payers. Businesses should keep this front of mind and consider what is realistic to ask for and how your proposition can create value for government.

Return to the levelling up agenda

You cannot read this plan without having the government’s commitment to ‘levelling up’ at the front of your mind. The plan places at its heart regions and communities which the government has promised to level up, including the North East, Yorkshire and the Humber, Scotland, and Wales. By delivering for these communities the Prime Minister will hope his party can retain non-traditional seats won at the last election.

Place is critical for the government’s wider agenda and you can see that reflected in the plan. The plan roots policy promises in terms of outcomes for communities across the UK, from coastal towns to industrial heartlands.

This is evident through the focus on creating high-skilled, green jobs in areas like the Humber and Teeside. To get there, we will need to see a comprehensive strategy on skills and reskilling, which will likely form another ‘reset’ announcement. Government will need businesses’ buy-in as part of this. It will not just be enough for the energy sector to show how it is achieving net zero; it also needs to communicate how their plans support government on jobs and wealth creation in these areas.

What does this mean for business and what should you do about it?

• This is just the start and there is a long road ahead which will involve a flurry of activity and detailed policy processes. Plans are not yet set in stone but what we have seen are statements of intent which now need policy and regulatory frameworks to bring them to life. Now is the time to start developing your narrative and building relationships with key stakeholders. Policy does not write itself and there are a series of milestones before decisions are made. You will need to engage across these milestones, from informal meetings to formal consultation responses, to ensure outcomes support your objectives.

• You need to show government how you can solve problems. You need technical detail and data to support your arguments, but you also need to tell a positive story about your business and frame your asks as wins for government based on its various agendas, from levelling up to net zero. Look at offshore wind – one of the biggest winners in this plan. This is a direct result of the industry’s ability to showcase how they not only help decarbonisation but also support jobs and UK export.

• You should build alliances now that will support you in developing support across government. Net zero and decarbonisation do not simply sit in one department. For example, you may need final sign off from Number 10, funds from Treasury, and to brief officials in teams across different departments. You may also need to bring industry and consumer groups along with you. To be successful in this, you need to make sure you’re talking to the people that will be shaping decisions that impact you and start the groundwork now.

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Educating through change: what are the opportunities and challenges facing the education sector?

Earlier this week we were delighted to host a high-level seminar with Robert Halfon MP and leaders from the education sector, where we discussed the priorities of the Education Select Committee and the challenges facing the education sector more broadly.

After what has been a turbulent few months, we at WA have also been reflecting on the education agenda and the opportunities and challenges facing education providers as we head into a new year.

The government is ramping up its focus on education and skills

At the outset, one of this government’s key priorities has been on tackling regional inequalities through its levelling up agenda. Investment in education and skills must underpin this as the government seeks to widen opportunity, improve social mobility and meet people’s aspirations for better lives. And indeed, this was the rationale behind the creation of the National Skills Fund.

Over the last few months the coronavirus pandemic has heightened the need to invest in training and skills around the country. With unemployment rates rising and the nature of work changing, more needs to be done to upskill the country’s workforce and set the economy on its path to recovery.

The government recognises this and the Chancellor set out his Plan for Jobs in the summer, which included a £2 billion Kickstart Scheme to help open up new jobs for 16-24-year-olds who are at risk of long-term unemployment, as well as measures to provide bonuses for employees who hire trainees and apprentices. Skills and retraining will also be a key focus of the Spending Review later this month too.

Investment is going into closing the inequality gap

Another consequence of the pandemic is that it thrust education to the top of the political agenda in a way that had not been anticipated, as education settings closed their doors for all but the children of key workers and the most vulnerable learners for several months. Parents suddenly had to make emergency childcare provisions and young people faced uncertainty about their future learning opportunities.

This laid bare the inequalities that exist around the country, which have a serious impact on the educational attainment of children from disadvantaged backgrounds. Marcus Rashford’s free school meals campaign highlighted this well, and led to a high-profile government U-turn, while ministers also introduced a £1 billion Covid-19 catch up premium to support children in making up for lost learning.

Where are the opportunities for education providers?

The government will need to work closely with providers – private, charitable, and public – in driving forwards this agenda. What are the opportunities for them?

First, the government’s focus on upskilling presents several opportunities for skills, training and apprenticeship providers to help the workforce to meet the country’s skills needs. Notably, there is funding available for providers through the National Skills Fund, Kickstart Scheme and Lifetime Skills Guarantee initiative, alongside the anticipated boost for further and technical education that is likely to be announced in the forthcoming FE White Paper and government response to the Augar Review.

Next, the £1 billion Covid-19 catch up premium package will allow organisations sector to partner with schools to deliver real support for pupils. The official guidance on how to spend the funding was left deliberately vague to give schools flexibility on how best to focus the support in their own settings, and as a result there are opportunities for a wide range of educational providers. This includes providers able to deliver targeted tuition, intervention programmes, summer support programmes, access to technology, and support for parents and carers.

Lastly, the increased focus on young people’s mental health, from school children through to university students, presents an opportunity for mental health services, providers and charities to work with education settings to make a difference to young people’s wellbeing.

What this means for the education providers and what they should do about it

Those providers that want to secure funding must demonstrate their value to the government and the outcomes that their services will provide. This government is data-driven, and so approaches that are underpinned by clear evidence and set out the anticipated return on investment for the government are likely to be more successful.
There is a narrowing window of opportunity for influence and so providers must build a strong case for funding as quickly as possible. Much of this funding has already been announced and, in the case of the catch-up premium, has started to be distributed. Relationships with Ministers, SpAds and officials at the Department for Education will be key here, as will building up influential parliamentary allies to advocate to the government on your behalf.
Providers could also leverage their constituency links to build a coalition of advocates from their locality or region to make the case for specific funding, in specific areas. In the case of skills, some regions are in clear need of targeted investment, while those providers that already work closely with local education settings will be in a good position to bid for funding for mental health support and from the catch-up premium.
As with all organisations that receive public funding, there are reputational risks attached to failing to deliver services that achieve their promised outcomes. Therefore providers must ensure that they clearly meet the criteria set out by the government for service delivery, as well as set realistic targets. Having informal discussions with officials in advance of any bidding will be beneficial here.

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The government’s roadmap to transport decarbonisation: What can industry expect?

Covid 19 has had a dramatic impact on how we have been able to travel in recent months. All forms of transport fell dramatically in the first lockdown and the ‘new normal’ is posing major challenges to the traditional model of public transport in particular.

However, the longer-term transport challenge for government remains decarbonisation. Significant questions remain unanswered, namely, how it will achieve full scale decarbonisation across every area of the transport network and by when.

The next few months are expected to see several set piece policy initiatives emerge from government, intended to answer these questions. We have looked at what industry can expect and the implications for engagement with government.

Transport Decarbonisation Strategy

When is it due?

Officials are hopeful this will be published by the end of this year but there is potential for it to slip to early 2021.

Issues and implications for transport

Billed as the Department for Transport’s roadmap for how to decarbonise the transport sector. It will look across all modes of transport and set out the government’s strategic priorities. Decarbonisation of rail and road, being the easiest to act upon, will be a major focus of the Strategy.

On Rail, much of the groundwork has been done by Network Rail’s recent Traction Decarbonisation Network Strategy (TDNS). This details that much of the rail network will need to be electrified, with new low carbon rolling stock being vital for some lines. The Strategy concludes that over 11,000 standard track kilometres of electrification will be needed, supplemented by a significant role for zero carbon traction, including hydrogen and battery technology.

This area is seen as in the ‘easier’ category by DfT officials and it is likely that the DfT Strategy will be closely aligned with Network Rail’s recommendations. However, there is likely to be more work to do scoping out how to implement these changes under the new Emergency Recovery Measure Agreements and whatever follows them.

In the more challenging category is driving the transition to electric vehicles. In response to the Committee for Climate Change’s call for the government to bring forward a ban on petrol and diesel vehicles to 2032, the government said it recognised “the need to go further than the existing regulatory regime” and is considering more stringent measures in the Transport Decarbonisation Strategy.

Specifically, the government is understood to be considering a new ‘zero-emission mandate’ scheme which will see manufacturers forced to sell their models even if demand is lower than other fuel types. Briefings to the media have implied that this would reduce the need for fiscal incentives to encourage such purchases. If that is the case, it would indicate the government is minded to reach for the stick rather than the carrot. However, this risks alienating parts of the industry that they will need to take along with them in order to meet such ambitious timelines, especially if they accelerate the target date to 2030.

The other part of the picture for electric vehicles is how to fast-track the deployment of a national charging infrastructure ahead of consumer demand. Again, government will need industry onside to supply the necessary infrastructure ahead of its inevitable demand. However, charging operators will also need a clear steer from government to provide an environment in which to invest.

National Infrastructure Strategy

When?

The Chancellor has said it will be published this autumn.

Issues and implications for transport

Major infrastructure projects can provide a significant boost for jobs and economic growth and this strategy will now therefore be viewed through the lens of recovery. It will also have a major focus on decarbonisation.

While the National Infrastructure Strategy will have a broader focus than just transport, it will be a good yardstick of how joined up the government’s approach is by how well it aligns with and facilitates what will be included in the DfT’s own Decarbonisation Strategy. Most likely it will simply echo what the various parts of government are doing but in order to make progress, more will be required. On rail decarbonisation for example, significant investment will be required. The big question is whether the National Infrastructure Strategy can be a vehicle to confirm this investment or not.

This question has only become sharper with the news that the Spending Review will now only cover one year. The caveat that multi-year settlements will be given to some ‘priority’ infrastructure projects will leave several sectors waiting to see if their programmes fall into that category.

Energy White Paper

When is it due?

Currently due to be published at the end of this month but further delay is likely.

Issues and implications for transport

The Energy White Paper may not appear too relevant to transport policy at first glance, but the scale of change required to electrify the rail network, provide national charging infrastructure for electric vehicles or introduce significant numbers of hydrogen trains or buses will require fundamental changes to our energy generation and distribution sectors.

The White Paper itself is likely to support a wide range of different technologies as opposed to prioritising one over another. This has implications for transport because, while the government may not want to close down its options, sectors that need to introduce major changes will need a steer that the government is actively backing them. The introduction of hydrogen trains on the scale envisaged by Network Rail for instance would require the introduction of a new hydrogen generation and distribution industry. This is only possible with clear government backing.

Again, the challenge is the extent to which the Treasury feels able to make significant commitments as this time of great economic uncertainty and how detailed the White Paper is in setting out next steps.

What this all means for the transport sector and what you should do about it

Publication of these strategies and white papers isn’t necessarily set in stone. They are visions and statements of intent, not detailed policy programmes. The opportunity to shape future policy remains plentiful and so what isn’t included in publication can still be pushed up the agenda elsewhere.
You will need to build a strong political and industry-wide support base as quickly as possible. This shouldn’t just include those in transport, but in the energy space too, for example, to show a unified front. Where possible, you want to avoid doing this at a time when you should be mobilising that base to act.
Your reputation should be at the forefront. The reception you receive to the points that you make will be formed largely by the experience people have had of you and what they see, hear and feel about your reputation. For example, an electric vehicle charging operator who has a credible track record in helping electric vehicle users charge their vehicles will have a stronger starting point to work from when it comes to conversations on measures to support decarbonisation of the road network than an organisation that does not.
Implementation of the above documents will be long and complicated, covering many different issues. There will also be considerable cross over. Associated legislation and even additional sub consultations will likely still be working their way through Parliament well into next year. Ensure your campaign has durability and be ready to be flexible, always.

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What to expect and how to plan for the Energy White Paper

The last Energy White Paper was published over a decade ago. It is long overdue a refresh, but what can we expect and how should business plan for the next steps that will follow?

The (truncated) background

There’s been a lot of industry chatter about the continued delay of the Energy White Paper. Due to be published in summer 2019, it was first delayed so that officials in BEIS could recalibrate the plan to net zero legislation. Understandable.

Then there was the small matter of the general election; and without warning Covid struck. Every time officials and ministers thought they had a few quiet weeks to dot the ‘Is’ and cross the ‘Ts’ something has happened to knock them off course.

Knowing that a White Paper like this can only be delayed for so long, Alok Sharma told the BEIS Select Committee in July that he ‘very much’ hoped it would be published with the Heat Strategy and the Building Strategy alongside the Autumn Budget.

Coordination of big-ticket policy announcement – made sense. Waiting until autumn – that was ok.

Two months later and the Chancellor cancelled the Autumn Budget.

What we do know

We don’t know exactly when the Energy White Paper will be published. The Government’s public line on ‘autumn’ has been repeated since the Budget was cancelled, but publication could easily drift into the first quarter of next year.

Timing aside, we know that the White Paper’s central aim is to put the UK on the path towards the decarbonisation of the entire energy system. Its scope is huge.

Importantly, unlike previous Energy White Papers which have been largely left to ministerial and civil service teams, pored over by policy professionals, and written about by energy journalists, this edition is being teed up to support a broader political agenda – namely economic recovery.

The Government wants to be seen, through this White Paper, to support green infrastructure, green jobs and green consumerism. Balanced against this is the need to keep consumer costs down – households for electoral reasons, and commercials for global competitiveness reasons.

In an attempt to make this balance, the Energy White Paper won’t be bursting with huge sums of money. Instead it will seek to catalyse investment into generation, smart grids, battery technology, carbon capture and storage in addition to supporting the decarbonisation of transport and heat. It will also seek to support new and embryonic markets for innovative products and services whether that is hydrogen fuel or renewable heat.

Part of this will be funding allocations, but arguably more important will be the adjustments made to criteria for accessing financial mechanisms, changes to codes covering electricity and gas, the evolution of Ofgem as a regulator, and modifications to the regulatory regime itself.

Generators, suppliers, network operators, system operators, manufacturers, aggregators, brokers and investors – all will be impacted to varying degrees by the Energy White Paper. Beyond them there will be consequences for all modes of transport.

How you should plan

Here are four points to bear in mind when preparing for the Energy White Paper’s publication:

Remember that publication is not codification. This is a White Paper – a statement of the Government’s intent for future policy proposals. It is not a detailed programme of every single action that the Government will take but rather the start of further consultation on the detail. Do not despair if what you would like to see in the White Paper is not there as you may be able to use another proposal as a vehicle.
Start building alliances now. A chorus of support for your campaign is always helpful but all too often businesses start the process of coalition building in the time they should be using to mobilise their champions. Think laterally about who your allies could be and don’t forget the consumer.
Consider your reputation. The reception you receive to the points that you make will be formed, in considerable part, by the experience people have had of you – directly or indirectly. For example, a District Network Operator who has a credible track record helping vulnerable customers will have a stronger starting point to work from when it comes to conversations on measures to support with the cost of living than an organisation that does not. Be prepared to act now in improving or strengthening that relationship with stakeholders.
Prepare for a marathon, not a sprint. The last true Energy White Paper was published in 2007. It was 344 pages long and covered everything from international diplomacy to subsidy regime changes. The legislation and regulation that spun off it were still working their way through Parliament well into the second Conservative administration. Design a campaign that factors in durability and that utilises every opportunity that the legislative timetable will offer.

To book a discussion with our dedicated energy team, please email naomiharris@wacomms.co.uk

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Far enough on Further Education?

On the back of the Prime Minister’s announcement to create a Lifetime Skills Guarantee, Cameron Wall considers what this tells us about the Government’s strategic plans for Further Education and how the sector could respond.

Words into action

A cornerstone of the Prime Minister’s ‘levelling-up’ agenda, has been one of bold commitments on further education and skills. Covid and rising unemployment is putting even more pressure on Number 10 to ensure the UK’s workforce is equipped with the skills our economy needs to recover.

In his speech on Tuesday, the Prime Minister set out more detail on the government’s plans, signalling how the Government intends to grapple with this inevitable unemployment crisis and begin to fulfil the ‘levelling up’ promises.

The PM set out how he plans to end a “bogus distinction between FE and HE”, introducing a series of changes aimed at making practical study more attractive

Front and centre was his announcement to create a new ‘Lifetime Skills Guarantee’ offering free Level 3 courses to adults without equivalent qualifications. This will be paid for from the National Skills Fund, announced in the Conservative election manifesto. To date there has been no other real detail about how the fund will work or what it will cover. Eligible courses will be announced in due course, meaning there is still time for providers to ensure that their courses are covered while also making sure that any further action on the National Skills Fund is aligned with their offer.

Reforms to the apprenticeship system will enable businesses to use unspent levy funds to support apprentices within non-levy paying SMEs, and apprenticeships will become “portable”, so they can easily be moved between companies. This has long been called for by many in the sector, but questions still remain about whether this will be sufficient to fully fund non-levy apprenticeships.

The PM also committed to taking forward a key recommendation on further education from the Augar Review, opening up the main student finance mechanism to students undertaking higher technical qualifications. This is a positive step, but without adequate maintenance support, potential learners may question how they can support themselves to study such a course without an income.

Building on this, the Lifetime Skills Guarantee will over time progress into a system where all students can access a lifelong loan entitlement to four years of post-18 education, as part of cementing efforts to bridge the gap between Higher and Further Education. This ambition sits at the heart of the Government’s education agenda.

A signal of future system overhaul?

Reform has long been on the agenda, and a Further Education system that meets the economy’s skills needs has been a key aspiration for governments going back over decades.

The reforms announced by the Prime Minister cast some light on the potential foundations of the imminent Further Education White Paper which is expected to begin that process of better aligning Further and Higher Education and ensure the value of Further Education is recognised by learners and employers. However, a lot more needs to happen to deliver the Education Secretary’s vision to create a “world-class, German-style further education system”, which would “level up skills and opportunities” and “give FE the investment it deserves”.

Covid has, of course, posed some significant short-term challenges for the Further Education sector, but the White Paper must also settle a number of long-term questions regarding the future of Further Education. Whilst there is agreement the system needs reform, there is a lack of consensus over what this reform looks like.

Clearly Number 10 and the Department for Education are keen to show they are responding to challenges on the horizon with bursts of good news. But, as officials hash out the details of reforms behind the scenes, there is now a clear opportunity to influence what Further Education reform looks like on the ground, and government will be no doubt be looking to the sector for guidance.

Aligning business priorities with government aspirations

Foremost is the question of, in practice, how much the Education Secretary’s vision for a German-style Further Education system actually borrows from Germany. In Williamson’s speech announcing the White Paper, he only made two references to Germany. Instead his tone focused on the value that the UK attaches to Further Education, and how it falls far short of our European neighbour.

Like Germany, Williamson wants our Further Education system to put employers at its heart. He sees colleges acting as hubs within regions, linking vocational training with employers and helping meet the skills needs of the local economy. Now is the time for providers who hold strong local business links and play a role in supporting the local skills needs to make a case to government for regional control. Otherwise, the question government will be asking is, can their desired vision to bridge the gap between Higher and Further Education be achieved without national, centralised oversight?

It is also still to be seen whether the Further Education White Paper will come alongside the long-awaited review of the Apprenticeship Levy, first announced by then Chancellor Philip Hammond in 2018. This also reappeared in the Conservative’s election manifesto, which promised to improve the workings of the levy.

Whilst concerns that expensive apprenticeships are sapping up levy funds have been temporarily supressed by the pandemic, this issue will undoubtedly return in the long-term. Providers should use this opportunity to push for system changes they want to see which have been exposed by how the levy has been used to date. In any case, training providers and employers drawing on these funds will need to justify the contribution to the economy their programmes deliver.

Whilst Williamson may have a clear vision in his head, officials at the Department for Education – under the watchful eye of Number 10 – will now be in listening mode to help flesh out the details of Further Education reform as we approach the White Paper’s launch – and as they begin implementing policy reform on the ground.

To speak to Cameron about this article please email cameronwall@wacomms.co.uk

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What is the government’s plan for state aid?

Two of the Margaret Thatcher’s most steadfast beliefs were the benefits of European economic integration and the folly of governments providing financial aid to support particular businesses and industries, both of which she said contributed to the UK being labelled the ‘sick man of Europe.’ Ahead of the UK joining the European single market in 1992, Margaret Thatcher addressed businesses and encouraged them to think about the opportunities access to the single market would create. She said: “Just think for a moment what a prospect that is. A single market without barriers – visible and invisible – giving you direct and unhindered access to the purchasing power of over 300 million of the world’s wealthiest and most prosperous people.”

How times change. The current Conservative government, in its negotiations with the EU, is willing to sacrifice access to the single market so that it can offer state aid to British businesses. This about-turn raises a fundamental question: why is this government so keen to be able to financially support businesses, and what does it hope to achieve?

What are the rules on state aid?

State aid, broadly speaking, is any advantage granted by the government on a selective basis to businesses, and it can come in many forms: direct cash transfers, preferential tax treatment and financial guarantees offered by the state. Under EU rules, there is not a blanket ban on state aid. State aid can be provided if it is approved by the European Commission, it is of a small sum or if it is covered by the General Block Exemption Rule. The General Block Exemption Rule allows state aid to promote new activities that would not otherwise have taken place and promotes economic development without distorting competition. State aid that falls outside of these parameters and is viewed to distort competition by offering an advantage to a particular business or industry is illegal under EU law.

The UK and the EU are currently at loggerheads over state aid and a future free trade deal. The EU is demanding that in return for a free trade deal, the British government should commit to ‘dynamic alignment’ with the EU’s state aid rules – the so-called ‘level playing field’ commitments. The UK government, however, wants to have its own ‘separate and independent’ policy on state subsidies. The EU’s fear is that if it gives British firms free trade access to the single market without assurances on state aid, the government in the UK could subsidise green technology, for example, and undercut European made products, undermining the principles of the single market. The EU’s objections are quite reasonable – if you want to be a member of a club, you need to play by the rules. If there can be no agreement between the two sides, the UK will leave the EU on 1 January 2021 without a deal, an outcome that is looking increasingly likely (and even desirable to some within Downing St).

What’s the plan?

Should the UK leave without a deal, the government will not be able to splash the cash wherever it wants, as it will still be bound by World Trade Organisation (WTO) rules on state aid. One crucial difference though is that the WTO state aid restrictions only cover goods, while the EU’s rules cover both goods and services. This opens the door to the UK being able to financially support a range of industries in the service sector, an area where the UK already has a competitive advantage, especially in financial and professional services.

Dominic Cummings recently told civil servants in the Department for Digital, Culture, Media and Sport that he was working on a plan to help the UK build ‘$1 trillion tech companies.’ Cummings views a no-deal Brexit and the removal of EU state aid restrictions as an opportunity for the government to support British start-ups to become genuine players on the world stage, having historically lagged behind the United States and China.

Looser rules on state aid would also help the UK be more flexible in times of emergency. At the height of the Covid-19 pandemic, HM Treasury was restricted in its ability to offer CLBILS loans to private equity-backed firms due to the EU’s rules on ‘businesses in difficulty.’ Due to the leveraged financial structure of these firms, under EU rules, they were not eligible for government financial support. Outside of the EU’s legal framework on state aid, the government would be free to financially aid whichever businesses it chose to, an option that will only become more appealing as the reality of increasing unemployment kicks in.

Will it work?

The idea of a British tech giant is an appealing one for the government. Foreign technology firms are difficult to tax, and it would make the government’s life a lot easier if it had a homegrown firm it could draw revenue from. The creation of high quality, well-paying jobs would also be a bonus.

There are some problems with Cummings’ plan, though. Historically, the British government has a chequered record of success in ‘picking winners.’ When compared to the private sector, governments lack the knowledge, expertise and market discipline to sustain and grow companies. This means risk is often not weighed effectively, leading to either over or under-investment. There is also the risk that business decisions get made not for sound commercial reasons but to fulfil some other government priority.

The interaction between the state aid tech giant plan and the government’s levelling up agenda also throws up some inconsistencies between its wider priorities. Tech firms tend to thrive in big cities and those that are home to elite universities. These are precisely not the areas the government wants to ‘level up’: post-industrial towns in the north and midlands. The price of state support for the tech sector would be the government trading off the UK’s remaining manufacturing base in the north and midlands by removing tariff-free access to its biggest market.

State aid is an appealing idea, but to be implemented well it requires a government to have patience, skill and good judgement. It will also involve the government having to make an unappealing sacrifice that will undermine its levelling up agenda. The deeper message of the government’s interest in state aid is that it is no longer ideologically wedded to the ideas of the past and it is more than willing to deviate from them if it is politically expedient to do so.

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Brexit explainer – what is the Internal Market Bill and why does it matter?

For avid Brexit-watchers, the headlines from the past week may seem like the country has been transported back to October 2019. With restless backbenchers, strongly worded statements from EU Chief Brexit negotiator Michel Barnier, and journalists running to the nearest legal expert, Westminster is suffering from a collective case of déjà vu. For those just tuning back into the Brexit negotiations, here’s what you need to know.

What is the Internal Market Bill?

The Internal Market Bill is intended to create a framework for trade to operate across the four UK nations post-Brexit. The Bill attempts to ensure the whole UK operates as its own single market. It would establish two legal principles – mutual recognition and non-discrimination – to ensure there are no new barriers for businesses trading across the UK, allowing a good or service to be sold anywhere in the UK without any internal standards blocking the movement of goods.

Why is the Bill so controversial?

The principal issue is that the Bill would reverse the Northern Ireland protocol contained in the Withdrawal Agreement, which was signed by Boris Johnson and passed by the current Parliament on 24 January 2020. The protocol settled the issue of post-Brexit trade across the Irish border by applying some EU customs regulation to goods travelling between the rest of the UK and Northern Ireland to avoid checks at the Irish border. The Bill would contravene the Agreement in three ways:

It gives ministers powers to not to apply EU standards on paperwork for goods leaving Northern Ireland going to the rest of the UK.
It gives ministers the power to disapply or modify state aid rules in Northern Ireland, which the Withdrawal Agreement stated would continue to be governed by EU state aid rules. Those powers also allow the UK Government to ignore decisions of the European Court of Justice and EU legislation on state aid.
It would prevent individuals from enforcing the provisions of the Withdrawal Agreement in UK courts by stating the measures in the Bill are ‘not to be regarded as unlawful on the grounds of any incompatibility or inconsistency with relevant international or domestic law’.

The second issue with the Bill is the decision to apply mutual recognition to the devolved nations without their consultation. Mutual recognition means goods lawfully produced in England according to English standards can be sold in Scotland, even if Scotland has higher (and thus more expensive) standards. This means the devolved nations are not allowed to exclude goods from other UK nations made to lower standards, undermining their ability to set their own regulations.

What has the reaction been?

Reaction has been strong from both sides of the Brexit debate, fuelled by Northern Ireland Secretary Brandon Lewis admitting in the Commons that the Bill ‘does break international law in a specific and limited way’. Domestic opponents of the Bill suggest that it will damage the UK’s international reputation, preventing it from being taken seriously when addressing illegal acts conducted by other nations and making trade talks harder.

Scottish First Minister Nicola Sturgeon has described the Bill as an “assault on devolution”, an accusation that is unlikely to hurt the SNP’s standing going into the Scottish Parliamentary elections next year. Sturgeon has now pledged to campaign to demand a new independence referendum as “the only way to protect the Scottish parliament from being undermined and its powers eroded”.

The European Commission has threatened the UK with legal action and trade sanctions if it does not withdraw the controversial clauses in the Internal Market Bill by the end of September. Irish Taoiseach Micheál Martin has also personally criticised the Bill, stating that he is now pessimistic about the chances of agreeing a trade deal with the UK. Despite this, the EU has no intention of immediately shutting down its talks on the UK/EU future-relationship, saying it would amount to falling into a trap set by the UK.

Across the Atlantic, US Speaker Nancy Pelosi has warned that there is “no chance” of the US signing a trade deal under a Biden presidency if the UK goes ahead with the Internal Market Bill in its current form because it undermines the Northern Irish peace process.

Why has the government done this?

The government has stated that the Bill is merely its way of tidying up “loose ends” in the Withdrawal Agreement that it says were caused by passing the Agreement “at speed”. The policy is described as a ‘safety net’ by ministers, to protect Northern Ireland’s position if a deal on future relations with the EU cannot be reached.

The UK has also claimed Michel Barnier has threatened not to include the UK on the list of “third countries” on food standards, which would effectively make it illegal to move food from Great Britain to Northern Ireland.

This defence has been met with scepticism by political commentators, the EU and some UK politicians, who believe the UK Government is either trying to force more concessions from the EU, attempting to force the EU to walk away from negotiations or simply did not realise the implications of the Withdrawal Agreement during the negotiations.

Of course, more than one of these reasons can be true at the same time, and it is entirely possible the UK Government feels it is a necessary action to take to protect trade with Northern Ireland, while also using the Bill as a way of shaking up, or perhaps deliberately destabilising, the trade talks.

What happens now?

The government has told the EU it doesn’t intend to withdraw the Bill, meaning it will be debated in Parliament. Conservative MP Bob Neill has tabled an amendment that would give parliament a veto on any decision to breach the Withdrawal Agreement. A significant number of other amendments are also expected. The passage of any amendment would require a significant Conservative rebellion, as well as the support of Labour, the SNP and the smaller opposition parties.

The Bill must also pass in the House of Lords, where it has been widely condemned, including from Conservative peers. The Lords are highly unlikely to block the Bill but may introduce amendments to force the Bill back to the Commons. It is almost certain to back any amendments passed in the Commons designed to water down the Bill. The Bill can’t pass into law until both Houses pass the same version of the Bill in full.

What happens if the Bill passes?

The passage of the Bill in its current form is likely to cause a serious impasse between the UK and the EU. European Parliament leaders, representing a majority of MEPs, have issued a statement declaring they will block the EU-UK trade deal if there is any breach of the Withdrawal Agreement. This marks a line in the sand from which neither side is backing down and makes the possibility of leaving the transition period without a trade deal significantly higher.

While it is highly unlikely the Bill will be voted down, it may be passed with amendments that either remove or significantly waters down the current provisions. The government is considering implementing sanctions, including a ‘nuclear option’ of withdrawing the whip from rebel Conservative MPs.

The Bill also has implications for the union. The Scottish and Welsh Governments have set out strong opposition to the Bill and with Scottish Parliamentary elections on the horizon in 2021, the Bill is set to further provoke anti-Westminster sentiment among Scottish nationalists. Polls have consistently shown a majority in favour of Scottish independence since the onset of the coronavirus pandemic, and this Bill is likely to cement opposition to the current Westminster Government in Scotland.

The matter may well be settled in the courts. Although the UK Supreme Court is unlikely to have jurisdiction over the issue due to parliamentary sovereignty, the EU may choose to take the case to the European Court of Justice which has jurisdiction over the interpretation and implementation of the Withdrawal Agreement.

Whatever happens over the next week, the UK Government has chosen a provocative approach that will have significant implications for the outcome of the UK-EU trade negotiations, its relationship with its own MPs, the strength of the union and its international reputation.

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The Future of UK Digital Policy

“Covid-19 has impacted all areas of digital policy, but it has mostly accelerated a lot of trends that were well established”, according to former chair of the Digital, Culture, Media and Sport Select Committee Damian Collins MP. Speaking at WA’s recent event “The Future Of Digital Policy: In Conversation with Damian Collins MP”, Collins set out his take on the challenges, opportunities and ideas that lay ahead as part of the UK’s digital policy landscape.

A short overview of the most interesting points arising from the discussion is captured below, but if you would like to watch the event in full you can register for the link below, or to speak with us about any of the points raised, please do get in touch.

Priorities for the Prime Minister and DCMS

The Prime Minister made connectivity a key feature of his leadership campaign and since then, this has of course become a much bigger issue. The Covid-19 pandemic has accelerated a number of trends in digital policy that were well underway; the pre-existing drive for gigabit connectivity has been accelerated by the increased demand and use of streaming services, video conferencing and online communication. As such we should be prepared for the Department for Digital, Culture, Media and Sport to become much more of a delivery driven department, compared to how it functioned in the past.

In addition to its necessary focus on digital infrastructure, DCMS has a number of live debates on its hands which will all need addressing in the coming months and years and it will have to consider the disruption of all new service models. These include;

The future of Public Service Broadcasting and the role of the BBC,
The impact of Covid-19 on print media and the role of online advertising,
Regulation of social media platforms and online harms,
The future and funding of the arts and creative industries,
The fusion of the digital and traditional tax economy.

Digital Infrastructure

While the increased demand on digital connectivity has doubled down the government’s determination to deliver gigabit capable broadband by 2025, the last few months have also shown that the parliamentary party and Conservative backbench are more concerned about “doing it right, rather than doing it quickly.”

This is good news for the competitive market, as regardless of a company’s (like Huawei) ability to deliver the infrastructure at pace, the Conservative backbench do not want to be in a position where the UK is vulnerable and dependent on a single infrastructure delivery company. In the eyes of the government, competition therefore remains necessary for both the delivery of digital infrastructure and a competitive market for retail network access afterwards.

There are options the government may consider, including adopting a similar model to that of Spain, where the networks have been opened up to competition and built by a number of different firms. Or the possibility of creating a tech version of Airbus, where there is a consortium of trusted companies across the UK and USA and other countries working together to deliver the infrastructure at scale and pace. Ultimately however, the government is aware that protecting the competitive market with “use it or lose it rights” for shovel ready firms, has delivered results internationally and the government needs a solution quickly.

Public Service Broadcasting and Online Advertising

The issue of Public Service Broadcasting (PSB) is one at the top of DCMS’s list of urgent priorities to address.

No longer does the premium of being a PSB cover the cost of funding needed, and questions are being asked in government about what PSB’s should look like and whether or not there is a space for them in the future.

The real funding gap faced by the BBC, ITV, Channel 4 and others poses an existential threat to the traditional form of media and news media. The live debate around the funding of the BBC, and their decision to reduce budgets for their local news service is being challenged by Ofcom, as it brings into question what purpose the BBC and PSB’s truly serve in a modern Britain. These are major considerations being made by the government, and greater scrutiny of ring fenced funding is to be expected from both government and regulators.

The founding of PSBs is a bellwether for a whole host of issues as the UK shifts towards a more digital economy, and one thing the pandemic has brought into question is the need for greater alignment of the tax system. Considerations are being made in government about how best to raise revenue without introducing hefty tax increases, and we can expect the Treasury to look to tech firms and online platforms as a source of such income.

Online Harms

The UK had the opportunity to be a world leader in online content regulation, however, over the last couple of years the government has stalled.

Alongside the long overdue outcome of the online harms white paper, the regulation of online content has been drawn to the forefront of government’s attention by the increased public awareness of misinformation, particularly throughout the Covid-19 pandemic.

There are areas of responsibility the government will be looking at over the coming months, particularly in the role of social media firms in combating online harms and promoting misinformation. Social media platforms can expect to face scrutiny of the tools and algorithms they use to promote certain content. Where public pressure begins to mount on the government, such as has happened in Australia, the government may consider the need for an “online audit”, from an independent source, where a firm’s algorithms and internal mechanism are reviewed, ensuring it is operating responsibly, fairly and cooperatively.

The Role of Ofcom

Ofcom’s remit, just as that of DCMS, has consistently come under criticism for the scope of areas it is intended to regulate. As we see a reconfiguration of the Public Service Broadcasting service model, the increased prominence in online audio-visual content and the ever growing demand for greater digital connectivity, the role of Ofcom will become increasingly important. As such there are legitimate concerns and questions to be had around the regulators remit. Do they actually have the expertise and bandwidth to regulate this uncharted policy territory?

Possible options for the regulator may include dividing it in two, so that there is a regulator for infrastructure and a regulator for content. Solutions like this may be devised as part of a much broader review of the role and work of DCMS and its related regulators.

Conclusion

The future of the UK Digital Policy remains an ambitious landscape with incredible opportunities and challenges ahead. Our conversation with Damian Collins MP highlighted one thing in particular, which is that the Department for Digital, Culture, Media and Sports has a whole myriad of complex and convoluted challenges on its hands. These challenges alongside this government’s affinity for data and technology, means that we should watch this space for the creation of a new Digital Department claiming overall responsibility for driving digital policy across Whitehall.

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Archive for the ‘WA Public Affairs’ Category

Jack Powell reflects on his week of work experience in the world of public affairs

We are extremely proud of WA’s Natasha Egan-Sjodin for winning the Mark of Excellence award in the Outstanding Young Communicator of the Year category, at last night’s CIPR 2022 awards ceremony.

1.Plug the hole left by the Green Homes Grant.

2. Answer how we will have enough skilled tradespeople to carry out the scale of work required.

3. Detail how the remaining £6 billion committed to energy efficiency in the 2019 manifesto will be spent.

4. Support new supply chains.

5. Explain how homes not connected to the grid will be heated.

6. Clarity on taxation.

The UK’s FinTech sector is having its time in the sun.

1. Housing supply remains the primary challenge, but it is politically difficult.

2. Taxation is a big lever controlled by government that can shape how the market operates.

3. It is not just the speed at which homes are built that is failing; how homes are bought and sold is broken and needs reform.

4. Building houses for sale isn’t the only solution; social housing providers have a key role to play.

Two points came through loud and clear in this week’s discussion that shape these priority areas.

Reducing the property tax burden

Making moving easier and quicker

Reforming our planning law

Words into action

A signal of future system overhaul?

Aligning business priorities with government aspirations

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