Articles by Tom Smith on the GC Blog and GC analysis
Capita’s profit warning is yet another sign of the growing fragility of the large, generalist outsourcing sector in the UK. That no bail-out was forthcoming for Carillion showed that such firms are not too big to fail. Indeed, the question seems to be whether they are too big to survive. This should imply significant opportunities for smaller, specialist firms, and therefore for investors, considering the raft of non-core asset sales the big outsourcers will undoubtedly be rushing into this year. There are, however, some considerations to be taken into account before jumping into the world of outsourced public services.
The latest sale process for Thomas International, a psychometric and aptitude assessment provider, is well timed to coincide with the UK government’s publication this month of its long-awaited careers strategy, which looks to rejuvenate a previously neglected area of education policy and could be a platform for growth in much-hyped ‘edtech’ provision.
The publication this week of a review into the UK’s high-cost credit market is just the latest demonstration of the UK’s financial services regulator, the Financial Conduct Authority (FCA) regaining its mojo for activist policymaking. The FCA has always held a formal objective of protecting consumers, but this has often had to be balanced against the economic and political interests of the financial services sector. The weakness of the current government therefore gives the FCA an opportunity to return to a proactive approach, although maybe not the “shoot first and ask questions later” attitude of its first CEO, Martin Wheatley.
With the UK Parliament likely to dissolve on the 2-3 May, ahead of the 8 June election, there will now be a frantic scramble for the UK government to complete the passage of legislation currently in train. This process, known as the wash-up, was thought to be relatively obsolete with the introduction of fixed-term parliaments. Revived now it will be controversial, as the normal process of parliamentary scrutiny is substantially truncated.
Regional UK city Lincoln’s hospital’s Accident & Emergency Department was at risk of being closed this week. This was not due to a deluge of patients or a lack of funding but rather the result of a recent tweak to the UK’s tax rules and could have far reaching ramifications for the UK-wide review of self-employment practices, currently underway.
It would appear that Macquarie’s status as preferred bidder for the Green Investment Bank, a UK government owned renewable energy investor, is under threat. While the sale was supposed to have been finalised at the end of 2016, Climate Change Minister Nick Hurd confirmed on Wednesday that the government has not taken a final decision on the structure of the sale or whether Macquarie’s bid satisfies the criteria initially set out when the sale was announced. The sale is now being pulled into the UK’s renewed industrial strategy debate.
UK Prime Minister Theresa May has all but ruled out maintaining freedom of movement between the UK and EU post-Brexit. This implies a new migration system, providing recruitment challenges for a range of sectors from social care to agriculture. Businesses should now plan to adapt, but policy flux is not all bad news, with some distinct opportunities arising, especially should the government seek to integrate its approach to migration with industrial policy. Here we look at what will shape the impact.
UK immigration minister Robert Goodwill’s comments were very rapidly dismissed by his prime minister this week when he floated the idea of extending the proposed £1,000 a year charge on skilled migrant workers to workers from the European Union after the UK has left the EU. Aside from the now familiar sight of ministers being put back in their boxes after speculating on life after Brexit, this usefully drew attention to the big question of what a UK government might be tempted to do to reduce pressure on migration.
In the 12 months before the EU referendum, migration to the UK remained at historically high levels, with a record 284,000 new settlers from the EU contributing to a net intake of 335,000. While this reflects the buoyancy of the British economy compared to the rest of the continent, it will create a headache for Theresa May in trying to balance implementing a referendum result implicitly predicated on public displeasure with high levels of migration with the demands of an economy increasingly driven by the availability of migrant labour. Crucially, the headline figures conceal evidence that migration from the EU has now peaked. The rate of national insurance number registrations by EU nationals has flattened off after seven years of steady growth, with only an uptick in registrants from Romania and Bulgaria preventing the beginning of a decline. NI registration data has been published covering the period up to the end of September, so the immediate impact of Brexit can now begin to be analysed.