Posts Tagged ‘uk politics’

Political Insider: Local Elections

Posted on: May 9th, 2022 by Tomas White

A historic result in Northern Ireland

For the first time in Northern Ireland’s history, the largest party at Stormont is a nationalist and republican one. The turbulence being felt in the aftermath of Sinn Fein’s victory will continue for weeks and months to come; it seems unlikely that the DUP, the second largest party, will enter into the power-sharing Executive anytime soon.

Jeffrey Donaldson, the DUP leader, has said that his party’s re-entry into the Executive is contingent on changes to the Northern Ireland Protocol. While there are noises emerging from Government about pushing for changes to the arrangement, these are unlikely to happen immediately, meaning Northern Ireland will be without devolved government for some months.

Some unionists are clinging on to the fact that there are more unionist than nationalist MLAs as a crumb of comfort, yet the historic significance of this event cannot be downplayed. If Sinn Fein also becomes a party of government in the Republic of Ireland, expect the drumbeat for a referendum on Irish unity to grow even louder.

The key constituency then becomes those who voted for the constitutionally agnostic Alliance Party – they returned their best ever number of MLAs at this election, suggesting Northern Ireland has entered an era of three-party politics.

Groundhog Day in Scotland

The immovable electoral force that is the SNP continues to grind on in Scotland. The party’s 11th election win in a row has heralded predictable calls for another referendum on Scottish independence, with the nationalist administration in Edinburgh set to start rolling out its revised prospectus in the months ahead.

However, the timing of that referendum remains up in the air – Nicola Sturgeon’s public assertion that it can take place by the end of next year is met in private with eyerolling by even some of her own loyal lieutenants.

On the unionist side of the fence, Labour will be buoyed that they have returned to second place and won back seats in their former Glasgow and West of Scotland heartlands. For the Scottish Conservatives, this election was final, firm confirmation that the Ruth Davidson era has been consigned to history – the loss of 63 councillors has only increased the pressure on Douglas Ross, who blamed Partygate for the reversals.

With the figures showing that Scotland remains almost evenly split on independence, with the unionists still only slightly ahead, the national question will continue to be the defining issue in Scottish politics.

Red flag continues to fly in Wales

In Wales, Labour continues to be the dominant political force, gaining a council and winning 66 more seats. Mark Drakeford will no doubt be pleased that his party won seats across the country, with Wales continuing to be Labour’s sturdiest electoral redoubt across the UK.

While Plaid Cymru will be pleased to have won three more councils, it is clear that they still have a long way to travel to shift the focus of Welsh politics onto the constitution in a similar way to Scotland and Northern Ireland.

In keeping with the national trend, the Conservatives had in their own words a “disastrous” election, losing control of Monmouthshire, meaning no Welsh councils are controlled by the party.

Bill Watch: The Health and Care Bill becomes law

Posted on: April 27th, 2022 by Tomas White

And just like that it passed, hurried through the final stages of its 10-month legislative journey along with a range of other laws the Government wanted to clear from its books before the next Queen’s Speech. With final details related to NHS supply chain slavery and reconfiguration of services ironed out, the Health and Care Bill, the Government’s set-piece reform of the health system in England, becomes the Health and Care Act. Its passing cements a whole host of changes to the way healthcare is organised and delivered, from who gets to take part in local healthcare decisions to fluoridation of water supplies.

The entire process, bar a few parliamentary scuffles and an anti-privatisation social media campaign, has passed without much fanfare – certainly in comparison to Lansley reforms of a decade ago.  This was down, in large part, to NHS stakeholders which have long been primed and bought into the main change that this Act delivers – one of greater integration of healthcare-delivering services in large geographical footprints known as Integrated Care Systems (ICSs). The seeds were planted for this shift as far back as 2019’s Long Term Plan, if not before, and many providers have already set up their ICSs. This Act puts a legislative ‘rubber seal’ on all this. Just how successful they are in driving efficiencies and crucially, improving population health outcomes, remains to be seen.

In the final frantic week of legislative horse-trading known as ‘ping pong’, the Government quietly backed down from its ‘power grab’ which would have handed over greater controls of local NHS decision making to the Secretary of State, a move opposed by the likes of the NHS Confederation. As this was a move which Matt Hancock was a proponent of, his successor Sajid Javid, who was thought to be lukewarm on it, was happy to concede.

NHS workforce planning – a hot topic which is never far from the health (and national) pages – proved a sticking point, with MPs and peers wanting greater rigour in how workforce levels are reported and communicated. Has the perennial challenge of how to adequately recruit, resource and retain a workforce been solved by the Act?  The COVID-19 pandemic has highlighted longstanding systemic issues in the workforce, and the jury is out on whether the Act will be able to resolve these with the urgency that healthcare leaders have long been calling for.

Another serious issue brought into sharp relief by the pandemic – Healthcare Inequalities – has also been accounted for in the Act, including a suite of provisions which will aim to improve outreach and access to health services for ‘people’ (as distinct from ‘patients’), and strengthen data collection and publication on marginalised groups. This dovetails to the Government’s wider ‘levelling up’ agenda.  Again, only time – and robust implementation – will tell whether these will deliver a transformative improvement to the health of the country’s marginalised or deprived communities, or whether we will need to wait for more policy ideas as the Government continues this agenda.

What next?  As the Act is committed to vellum, health policy watchers and practitioners will be poring over the detail to understand how its provisions will change on-the-ground delivery of healthcare. Keep tuned to MHP Mischief for continued analysis as this process plays out over the weeks and months ahead.

Energy Security Strategy: What Can We Expect?

Posted on: April 6th, 2022 by Tomas White

What is it?

The Strategy is focused on making the UK’s domestic energy sector fundamentally more resilient and, in the words of the Prime Minister, “wean the country off its dependency on Russian hydrocarbons”.

While Ministers are agreed on the importance of that objective, there have been clear divisions at Cabinet level on how best to achieve it. Predictably, the Treasury has expressed concerns about the cost of some of the flagship announcements such as more nuclear power stations, while there has been resistance from Nimbyish backbenchers and their allies in Government around more onshore wind farm developments.

All of this has contributed to a series of delays to the Strategy’s publication until it was finally signed off last week.

 

What’s going to be in it?

New nuclear reactors look set to be order of the day after years of inertia; the Prime Minister is an enthusiastic proponent, with BEIS Secretary Kwasi Kwarteng pointing to the example of France as a country which has derived energy independence from its strategic investment in nuclear over several decades. Six or seven new power stations by 2030 have been mooted, while a new company called Great British Nuclear will be established to support the small modular reactor sector. This is despite well-documented Treasury squeamishness about the cost.

Offshore wind is set to be the other big winner, with the Prime Minister keen on appointing a “Kate-Bingham like” figure to lead a substantial expansion of the sector. Solar is another green technology which will play a part, with financial incentives and planning changes to stimulate adoption set for inclusion in the plan.

There may also be a reprieve for the North Sea oil and gas sector, with the Prime Minister repeatedly stressing the importance of increased domestic production. Plans for further exploration would however open another front in Westminster’s ever terse relationship with Holyrood; only recently, the SNP Government – supported by the Scottish Greens – said a new oilfield near Shetland should not proceed.

 

What’s unlikely to feature?

Despite some enthusiastic briefing over recent weeks about a potential renaissance for onshore wind turbines – the bête noire of shire Tories – they seem likely to play a less prominent role based on the indications coming out from Government. A counteroffensive led by some backbenchers and their Cabinet allies, notably the Chief Whip Christ Heaton-Harris, who is a longstanding campaigner against onshore wind, appears to have won the day.

It therefore seems unlikely that the effective ban on new onshore wind farms introduced in 2015 will be scrapped in the Strategy, though a review of planning legislation could take place – Kwasi Kwarteng has been keen to emphasise the importance of “community consent” in shaping the delivery of any new developments included in the Strategy.

The science and safety of fracking, which has been enthusiastically championed by some Tory MPs, is to be reviewed again but is unlikely to emerge from the long grass this time round given the controversy which still surrounds it.

 

What happens next?

The Government have positioned the Strategy as essential for the long-term. However, given the problems posed by the cost-of-living crisis, its benefits may not be immediately clear to those people across the country dealing with spiralling bills.

As with the recent Spring Statement, goodwill is likely to be limited – Keir Starmer has already set out his stall, stating the Strategy needs to go harder and faster on hydrogen, onshore wind and tackling energy inefficient building stock.

However, with the emphasis particularly on nuclear, it does signal a step-change in the UK’s energy approach and presents an opportunity for business which seemed unlikely even a few months ago.

The PA team will provide a full summary of the Strategy, detailing key announcements and reaction, following its publication on Thursday.

Political Insider: Budget and 2021 Spending Review

Posted on: October 27th, 2021 by Tomas White

Listening to Rishi Sunak deliver the Budget and 2021 Spending Review, you would be forgiven for forgetting that the last 18 months have seen some of the most turbulent economic times with the UK’s public finances being left in a pretty precarious state.

In heralding the arrival of “an economy fit for a new age of optimism” the Chancellor seems to have taken close note of the Prime Minister’s boosterish attitude and concluded he wants a piece of the action.

That’s not to say some of his optimism is unfounded. The unexpected speed at which the economy has bounced back from the impact of the Covid-19 pandemic, with the OBR upgrading predicted growth for this year from 4% to 6.5%, provides the Chancellor with some of the flexibility he has used to announce significant spending commitments.

With this additional money burning a hole in his pocket, combined with greater receipts from the rise in Corporation Tax announced earlier this year, there is certainly something reminiscent of the Blair/Brown approach towards tax and spend.

The new spending includes £5.9bn to NHS England to clear the waitlist backlog, £6.9bn for a “local transport revolution”, a £3.8bn prison-building scheme, £5bn to remove cladding from high-risk buildings, £3bn for post-16 education, a £1.8bn regeneration investment to support housebuilding amongst a raft of other spending pledges.

With the economy expected to return to pre-Covid levels by the end of this year, total departmental spending will now increase by £150bn over the remainder of this Parliament, amounting to a significant 3.8% annual increase – certainly no return to austerity.

On the tax side, seeking to demonstrate some Thatcherite credentials and hoping to exploit the “Brexit dividend”, Sunak announced a total of £7bn of tax cuts for businesses, including a new 50% business rates discount for those in hospitality, retail and leisure up to a maximum of £110,000 in 2022, as well as a freeze on fuel duty and reforms to Tonnage Tax, Air Passenger Duty and alcohol duties.

There was a sting in the tail, however, with a three-year delay to the £22bn annual R&D spend target to 2026 and the Chancellor acknowledging that the tax burden is rising to its highest level as a percentage of GDP since the 1950s.

Overall, in doubling down on the Prime Minister’s commitment to make the UK an economy of higher wages, higher skills, and higher productivity the Chancellor has placed his flag firmly in the ground alongside Boris Johnson.

This will worry some of his Conservative colleagues, some who feel the drive towards higher wages will result in a self-perpetuating circle of rising inflation and rises in the cost of living, and others who remain concerned that the Conservatives will no longer be seen as the party of the small state and low taxes.

To that end, the Chancellor also announced new fiscal rules in the form of a new “Charter for Budget Responsibility” which will state that underlying net debt must be falling as a percentage of GDP and, in normal times, borrowing can only be for infrastructure investment, with day-to-day spending being funded only through taxation. Whether this will be enough to placate some of the Chancellor’s colleagues remains to be seen.

The elephant in the room is, of course, the next General Election.

Although not due until 2024 – in theory there are only two more Budgets before that – there is significant pressure to be making progress now, to getting shovels in the ground, so that come next polling day, those first-time voters who delivered the 2019 landslide can see the tangible benefits their vote led to.

The Chancellor and his team will probably be reflecting on a job done, whether it was done well or not remains to be seen and only after the finer detail of the Budget is pored over in the hours and days ahead.

Catch up on our budget analysis breakfast below:


The Labour View

Leader of the Opposition is a thankless job at the best of times. It is at its particular worst on Budget Day when due to the theatre of the event, the Leader of the Opposition is forced to respond to the Budget immediately after hearing it for the first time.

Today was made even more difficult for the Labour Party, and not just because Rachel Reeves, the Shadow Chancellor, had to stand in for self-isolating Keir Starmer at the last minute. No, it was made harder because a lot of Sunak’s Budget was in effect a repudiation of Conservative policy over the past decade – and indeed, it’s not hard to imagine vast swathes of it being delivered by a Labour Chancellor.

As it happens, Reeves made a convincing impromptu debut with a quick-witted opening reference to the Budget as one for ‘the bankers, sipping champagne on their short haul flights’, reflective of her skill as a seasoned Commons orator. Her response also provided a clear indication of where Labour is going to set its economic stall ahead of the next election. The party now recognises that it can’t out-spend a Conservative Party who has suddenly found common kinship with the Magic Money Tree, but it can promise better value spending and better-run public services.

The question which remains is whether this more technocratic argument will be enough to combat Boris Johnson – and now Rishi Sunak’s – boosterism.

The Detail

Current state of economy/OBR forecasts

  • Inflation is likely to rise, estimates suggest by an average of 4% over the next year. Explained by two global forces: (1) global economies reopening has made demand greater than supply; (2) global demand for energy has surged. It will be “months” before these problems can be “eased”
  • National actions to tackle the above: Transport Secretary announcing today new facilities for lorry drivers. Freezing vehicle exercise duty. Extension of HGV levy until 2023
  • OBR expect UK economy recovery to be “quicker” – UK will return to pre-Covid size at the beginning of 2022
  • Economy will grow by 6% in 2022
  • OBR expect unemployment to peak at 5%, original estimate 12%
  • Employment has grown by 3%
  • OBR forecast for business investment has been revised up for the next five years
  • OBR has revised down scarring assumption from 3% to 2%

Strengthening the public finances

  • Establishment of Charter for Budget Responsibility with two new fiscal rules “which will keep this Government on the path of discipline and responsibility”
  • The first rule is that underlying public sector net debt, excluding the impact of the Bank of England, must, as a percentage of GDP, must be falling.
  • The second is that “in normal times” the state should only borrow to invest in our future growth and prosperity.
  • 3% of GDP is on capital investment
  • The four fiscal tests set out by the Chancellor in the last Budget have been met, Sunak says
  • 0.7% of GDP spending on foreign aid will return in 2024/25 due to meeting fiscal tests
  • £150 billion increase in departmental spending budgets due to meeting fiscal tests

Supporting children

  • £300 million towards ‘A Start for Life’, supporting new parents, and £150 million for Early Years training and holiday programmes, on top of the previously announced funding for Family Hubs Funding to create a network of family hubs around the country
  • £200 million in supporting families programme
  • £200 million a year holiday and food programme

Schools

  • £4.7 billion by 2024/25, to restore per pupil funding to 2010 levels
  • Tripling of new school places for children with special needs
  • £2 billion of new funding to schools and college
  • Total education recovery fund at £5 billion

Communities

  • £560 million for youth services
  • £200 million to build or transform 1000 football pitches
  • Allocating first-round of bids from the levelling-up fund.
  • 20,000 new police officers, an extra £2.2 billion for courts and rehab facilities and £3.8 billion for prison-building

Culture and heritage

  • £800 million to protect museums, libraries, local culture
  • 100 regional museums to receive renovation funding
  • Review of museum freedoms to protect freedoms and culture
  • “More generous creative tax reliefs”
  • Tax reliefs for culture will be doubled until 2023

Infrastructure

  • “This government chooses to invest”.
  • £21 billion on roads, £46 billion on railways
  • £5.7 billion for London-style transport settlements in Manchester, Liverpool, West and South Yorkshire, the West of England
  • £2.6 billion for long-term pipeline of 50 local road upgrades
  • Bus funding of £5 billion pounds
  • Spending on cycling infrastructure of more than £5 billion, the same funds will also be spent on local minor roads

Innovation

  • R&D investment will be £22 billion by 26/27. £20 billion investment by end of this Parliament, which is in addition to R&D tax reliefs already announced
  • £107 million investment by National Investment Bank for offshore wind site in Teesside

Business

  • Announcement of consulting on further changes to regulatory charge cap for pension schemes
  • £1.4 billion Global Britain Investment Fund
  • British Business Bank regional financing programme increase in funding of £1.6 billion
  • Scale-up visa criteria confirmed
  • Expansion of R&D tax reliefs to cloud computing and data costs (modernised R&D tax regime)

Education system “for all”

  • Skills spending increase by £3.8 billion, an increase of 42%
  • New UK wide numeracy programme for adults – ‘Multiply’ – £560m investment.

Taxation

  • Shipping: Reform of tonnage tax regime. Regime will reward hoisting of the UK Merchant Shipping flag – the Red Ensign.
  • Air Passenger Duty: Domestic flights from April 2023 will be subject to a new, lower rate of air passenger duty. 9 million passengers will be see a 50% reduction in tax.
  • Extending support for English airports for a further 6 months.
  • £1 million annual investment allowance will not end in December, will be extended to March 2023
  • Bank surcharge in corporation tax: UK government will retain surcharge of 3%
  • Annual allowance will be £100 million to help challenger banks
  • Chancellor asks: “Do we want to live in a country where the response to every question is what is the Government going to do about it?”. He adds that the Government “should have limits”, and as a result, his goal is to reduce taxes by the end of this Parliament

Rates

  • More frequent evaluations – every three years – for business rates
  • Introducing new investment relief to encourage businesses to adopt green technology
  • Introducing a new Business Rates Improvement Relief. From 2023, every business will be able to make property improvements with no additional business rates for a period of 12 months.
  • Investment incentives total £750 million
  • 2022’s planned increase in the Multiplier will be cancelled
  • 50% business rates discount in the retail, hospitality and leisure sectors. Business tax cut worth over £100 billion
  • Today’s Budget cuts rates by £7 billion

Alcohol duties

  • “Most radical simplification of alcohol duties in 100 years” in five steps:
  • Step One: Slashing number of main duty rates from 15 to 6
  • Step Two: New small producer tax relief
  • Step Three: End duty premium on sparkling wines and fruit cider
  • Step Four: Draft relief announced of 5% – new lower rate of duty on draft beer and cider
  • Planned increase on duty on spirits, wine, whisky will all from 28 October cancelled. A tax cut of £3 million

Cost-of-living

  • Planned rise in fuel duty will be cancelled – a saving of £8 billion
  • National Living Wage increase to £9.50/hr, a full-time pay increase of £1,000 per year

Benefits

  • Sunak confirms that he will cut the universal credit taper rate from 63% to 55%. The Chancellor says it will be introduced by no later than 1 December

The Union

  • Scottish Government funding up by £4.6 billion, Welsh Government funding by £2.5 billion, and £1.6 billion for the Northern Ireland Executive, via the Barnett formula

Housing

  • £24 billion is earmarked for housing: £11.5 billion to build up to 180,000 affordable homes, with brownfield sites targeted for development; £5 billion for the removal of unsafe cladding for the highest risk buildings