UK General Election 2019: What Next?

The General Election of 12 December 2019 gave the Conservative party a comfortable majority, meaning that the Government will likely find it easy to introduce the legislation and changes to public spending that they wish. Here, we review what we know so far about the pledges the Government made before the election, and the effect they are likely to have for business with the public sector.

As the situation continues to develop, the BiP Solutions news page will bring you the latest updates, and what they mean for public procurement.

Spending pledges

Incumbent Chancellor Sajid Javid has proposed revision of the rules concerning government borrowing, to allow borrowing so long as debt does not exceed 3% of GDP, rather than 2%. This allows for potentially dramatically greater spending. The Conservatives’ election manifesto pledges were costed at an increase in spending of £2.9bn a year by 2022. The NHS has also been a major source of discussion, with a proposed bill enshrining an increase in funding for the NHS, alongside the pledge to recruit thousands more nurses. Similarly, the Conservatives have pledged to recruit more police officers. Such recruitment would mean, for example, a greater requirement for uniforms, catering, facilities management, payroll and HR solutions and other services. Investment into people usually requires investment into infrastructure – for example new buildings or the renovation and re-fit of existing premises – which in turn drives a fresh cycle of investment into furniture, IT equipment and other goods.

Infrastructure is another potential major source of investment, with the Conservative manifesto allowing for up to £100bn in additional capital spending over the next five years. Of this amount, £22bn has been designated for specific projects, such as £2bn on fixing potholes and £2.2bn on a public sector carbon reduction scheme. £78bn of the infrastructure fund remains to be allocated. You can read more about the outcome of the election and what it means for the construction industry at Construction Online.

On tax, the Conservative manifesto pledges to raise the national insurance threshold to £9500 from next year, and that there will be no rises in rates of income tax, national insurance or VAT. There is also a reaffirmation of the party’s pledge to make the UK a carbon-neutral country by 2050, with the attendant spending on renewable energy and associated technology. More speculatively, there have also been discussions of reforming central government departments such as the Department for International Development and the Ministry of Defence. To read more about the outcomes of the election for the MoD and the defence industry, visit Defence Online.

To read more about key trends for public procurement in the wake of the general election, download our recent report, ‘The Public Sector Market in 2020 and Beyond.’ Published ahead of the election, this report includes detailed breakdown of data relating to public sector notices before and after election periods, and describes the major themes that will shape public procurement in 2020.

Brexit confirmed?

The Conservatives’ election victory also appears to reduce some of the uncertainty around Brexit. The Government will seek to implement the Withdrawal Agreement that Prime Minister Boris Johnson has previously negotiated with the EU, ahead of 31 January. The Conservative party has previously stated that the terms of a trade deal with the EU will be negotiated in 2020, with the aim that the UK trades outside of the EU single market and any form of customs union. The Cabinet Office has suggested a divergence of procurement rules from EU standards post-Brexit, with the aim of making it simpler for smaller firms to bid for local government contracts. Such changes may be dependent, however, on the terms of the future trading relationship with the EU, and the required alignment of terms.

During the transition period, the UK will remain aligned with EU rules. The Conservative party have previously stated that there will be no extension to the transition period beyond the end of 2020, and the Prime Minister will potentially modify the Withdrawal Agreement Bill to enshrine this in law. The date of the end of the transition period is significant as, in spite of the most recent Brexit extension up to 31 January 2020, trade regulations effectively replicating a ‘no-deal Brexit’ will remain the legal default unless a trade agreement superseding this is ratified by both the EU and the UK Parliament. This remains the case in spite of the Withdrawal Agreement previously negotiated with the EU.

For all the latest news, guidance and information relating to Brexit and public procurement, visit BiP Solutions’ dedicated Brexit resources page. Alongside guidance on how businesses can best prepare for a ‘no-deal Brexit’, our recent report ‘Brexit: Challenges and Opportunities for Public Sector Buyers’ is also available. Based on a detailed survey of public sector procurement leaders, this research report reveals what the public sector really thinks of Brexit, and how prepared the public sector is – including for a ‘no-deal’ outcome.

New research report: ‘Brexit: Challenges and Opportunities for Public Sector Buyers’

Against the backdrop of a further Brexit extension, and a general election which could have a significant impact on the form Brexit takes, we are excited to reveal the results of the latest research survey from iGov Survey in partnership with BiP Solutions and Delta eSourcing, ‘Brexit: Challenges and Opportunities for Public Sector Buyers.’

Cover of new report 'Brexit: Challenges and Opportunities for Public Sector Buyers'

With UK government public procurement spend totalling around £284 bn per year, public sector buyers account for around 13% of UK GDP. It’s therefore essential to consider the potential impact of Brexit on various possible scenarios, such as a ‘no-deal Brexit’, on public procurement – as well as highlighting potential areas of opportunity. It is important to note that a ‘no-deal’ outcome is possible at the end of the transition period at the end of 2020, even if a Withdrawal Agreement is ratified, meaning that it is still important to consider the implications of a ‘no-deal Brexit.’

Capturing the opinions of procurement leaders allows for developing a real picture of the level of knowledge and aspirations of the public sector, in addition to what is already known about the legal position of procurement in relation to Brexit. This research project surveyed procurement leaders from throughout the public sector – from local and central government and the NHS to higher education and housing associations – for their predictions, concerns and aspirations around what effects Brexit will have on UK public procurement. The survey explores areas such as:

  • The key aspects of procurement on which Brexit may have an impact
  • Areas where the expectation of Brexit has already had an impact
  • The level of impact that different Brexit scenarios, including a ‘no-deal Brexit’, might have
  • The level of preparation procurement leaders have undertaken for various Brexit scenarios

Over 80 organisations from across the UK participated, and the new survey report includes a full breakdown of the results, including analysis of how responses differed by sector and where correlations and contradictions appear. Key findings include:

  • There is a perceived lack of clarity as to the extent of Brexit’s impact on procurement.
  • A majority of procurement leaders have not undertaken preparations for Brexit.
  • Cost is viewed as the area where the impact of Brexit will be felt most keenly.
  • There is concern about the potential for disruption to supply chains, but a lack of clarity as to what the practical effect will be.
  • However, in some areas of procurement, Brexit is predicted to have little effect.

Download your copy of the full report here. Visit BiP Solutions’ dedicated Brexit resources page to keep up-to-date with all the latest information and guidance around Brexit, as the situation continues to develop.

General Election 2019: The Manifestos

As the political parties’ campaigns for the UK General Election of 12 December continue, here we look at some of the major announcements from the parties’ manifestos, and what they mean for doing business with the public sector. All of the major parties have pledged a rise in public spending, meaning there will be an impact on business opportunities in areas with increased spending.

To learn more about what the parties’ manifesto pledges could mean for the public sector and UK business, how elections affect the number of public sector opportunities, and more about the major sources of opportunity for suppliers as we look ahead to 2020, download the latest edition of our report, ‘The Public Sector Market in 2020 and Beyond: Opportunities for Smart Suppliers to Get Ahead‘ (updated 28.11.2019). This document will continue to be updated with the latest intelligence as the situation develops.

The Conservative Party

The Conservative manifesto’s pledges are costed at an increase of £2.9bn a year by 2022. Alongside the pledge to recruit thousands more nurses for the NHS and more police officers, other policies include a £2bn fund for fixing potholes in roads. The pre-manifesto pledge to allow more borrowing for infrastructure projects has also been confirmed, with capital spend rising from £3.2bn next year to £8bn by the end of the next parliamentary session, including an aim to increase spend to make social housing more energy efficient.

The Labour Party

Labour have costed their manifesto pledges at £82.9bn. Labour have proposed a redefinition of the rules around government borrowing – considering overall ‘public sector net worth’, i.e. the value of the UK’s assets, instead of the national debt – to allow for this increased spend. For public sector workers, Labour have pledged year-on-year above-inflation pay rises, beginning with a 5% increase. Healthcare has come into focus, with the proposal of creating a new ‘National Care Service.’  Energy infrastructure and efficiency are a key area of focus, given the aim for net-zero carbon emissions by the 2030s, managed through a £250bn ‘green transformation fund.’ Labour have also announced intentions to invest in infrastructure more widely, with plans to build 150,000 social homes by the end of parliament, along with a commitment to the HS2 network, including extending it to Scotland.

The Liberal Democrats

The Liberal Democrats have also pledged a rise in public spending, costing their proposals at £63bn. Major announcements include a 1% rise in income tax, aiming to raise £7bn for the NHS and social care. The party have also announced a £130bn investment in public transport infrastructure, including a commitment to HS2, and the building of 300,000 new homes per year by 2024. Of particular interest to smaller businesses is the Liberal Democrats’ plan to replace business rates with a commercial landowner levy, applying to the overall land value of a commercial site rather than a calculation based on the buildings themselves. In addition to the previously announced ‘Skills Wallet’ of £10,000 per person for adult learning and skills training, skills shortages in the defence sector would be tackled by giving graduates in STEM (science, technology, engineering and maths) subjects one-off payments of £10,000 to become Armed Forces engineers.

Other parties

The positions of the UK’s other political parties could become particularly important if no party can form a majority government. Many flagship policies revolve around sustainability and energy efficiency. The Green Party aim to reduce the UK to ‘net zero’ carbon emissions by 2030, based on £100bn of public spending into infrastructure, technology and associated jobs. Plaid Cymru have announced £15bn for a ‘Welsh Green Jobs Revolution’, while The Brexit Party have proposed that the UK no longer export any waste abroad, which would necessitate an investment in waste processing plants and associated jobs.

At the time of writing, the Scottish National Party and the Democratic Unionist Party are yet to publish their manifestos. This post will be updated as the situation develops.

But what about Brexit?

The political parties’ differing stances on the way in which the UK should leave the European Union – if at all – is not only a major policy in itself, but is claimed by several of the parties as the basis of their other spending plans.  The Conservative Party would seek to implement the Withdrawal Agreement that Prime Minister Boris Johnson has previously negotiated with the EU. The party has stated that the terms of a trade deal with the EU will be negotiated in 2020, with the aim that the UK trades outside of the EU single market and any form of customs union. The Conservatives have also stated that there will be no extension to the transition period, during which time the UK remains aligned with EU rules, beyond the end of 2020.

Labour meanwhile have stated they would negotiate a new Withdrawal Agreement with the EU within three months of coming to power, then put this Agreement to a legally binding public referendum, with remaining in the EU as an alternative option. Labour’s Agreement would aim for alignment with the EU single market and a UK-wide customs agreement with the EU. The Liberal Democrats favour revoking Article 50 unilaterally, meaning the UK would remain in the EU under the same terms as previously, which the party claims would provide a £50bn ‘remain bonus.’

Read the updated edition of our latest report, ‘The Public Sector Market in 2020 and Beyond: Opportunities for Smart Suppliers to Get Ahead’, for more detail on how the parties’ election pledges will affect business with the UK public sector. The report also includes detailed data on how elections since 2015 have affected the number of public sector opportunities, the major trends that will shape public procurement in 2020 and beyond, and how smart suppliers can get ahead of their competitors over the coming months. Download your copy here.

BiP Solutions Limited is a company registered in Scotland with Company Number SC086146 and VAT number 383030966 and having its registered office at Medius, 60 Pacific Quay, Glasgow, G51 1DZ.

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