General Election Results Are in: What to Expect for 2020

The main battle, in England especially, was between the Conservatives and Labour, with the Scottish National Party fighting for more seats in Scotland.

With the Tories wanting to ‘get Brexit done’ and Labour fighting for another referendum, each parties’ manifesto tore voters apart, leaving many more confused and others itching to just, well, get Brexit done.

Nonetheless, 12 December saw the polling stations open and as the opinion and the exit poll predicted, the election resulted in a Conservative win with a landslide majority of 80 seats (their largest majority since 1987), with the party making a net gain of 48 seats and winning 43.6% of the vote (the highest percentage by any party since 1979).^[2] The Labour Party, much to their disappointment, performed poorly, making a net loss of 60 seats while winning 32.1% of the vote.^[

So, the results are in…what next? What are people’s main concern now the decision has been made and what changes should we expect in 2020? Below, we speak to a variety of experts in different industries that outline what could change and what concerns them about the Tories’ manifesto.

First things first: Brexit & Trade

Speaking to Niels Turfboer, Managing Director at Spotcap, he says: “The Conservative majority general election outcome raises expectations for political and economic uncertainty to come to an end. The new government now have what they need to pivot from stalemate to action and move forward with giving the UK some much needed momentum.”

At least some postponed investment decisions in areas where political risk was high (e.g. infrastructure) will now go ahead.

“First in line is the Brexit question, and there are several options on the table: exiting on the existing deal, exiting on no deal or renegotiation in some way. In all scenarios continued support of the business community should be a priority. The UK is one of the best places in the world to start, run and grow a business. This status should be protected as it benefits all through economic growth, job creation and prosperity.”

Touching on trade, Ivan Sedgwick, Investment Director at LGB & Co said that, “The relief rally on the back of the election result may last through to early next year, the test will come when trade talks with the EU restart. We can assume that at least some of the underweight in the UK taken by international funds will reverse, which will create follow through demand. However these decisions don’t happen overnight, but again until the trade situation is resolved they will remain wary, and it won’t be a 180° reversal. At least some postponed investment decisions in areas where political risk was high (e.g. infrastructure) will now go ahead. So overall a positive save for pure foreign currency earners with sterling cost bases.”

We do now need greater clarity from the newly elected Conservative Party on the UK’s immigration policy.

‘Greater clarity on the UK’s immigration policy is now needed’

Boris Johnson’s proposed points-based immigration system has come under considerable scrutiny from business lobby groups for lacking detail and overlooking issues of worker shortage. With many businesses feeling left in the dark, some believe that a new points-based system would probably be met with some contention within UK businesses who do utilise foreign nationals. It is commonly overlooked that the Home Office began reducing the previous Points Based Systems due to its complexity. Sponsors and licence holders had quite an undertaking previously to ensure they complied with the system.

We heard from Jonathan Beech, Managing Director of immigration law firm Migrate UK, when it was confirmed that the Conservative Party has won the UK General Election and what this now means for the UK immigration system.

“We do now need greater clarity from the newly elected Conservative Party on the UK’s immigration policy. Back in September, the Conservative home secretary asked the Migration Advisory Committee (MAC) to review how an Australian-style points-based (PBS) immigration system could be introduced in Britain to strengthen the UK labour market. But we’re still no clearer on how this new system would work in practice in the UK, and how this fits with the MAC’s much anticipated white paper review into minimum salary thresholds.”

There may be a manor of implications for many employers, especially in sectors employing a high portion of EU nationals, such as hospitality, healthcare, food production, retail and construction and that if the migration restrictions are poorly implemented without due understanding of the needs of unskilled or low-skilled industries they could have a negative impact on the country’s economy.

“The new immigration system is also meant to be ‘fairer and more compassionate’, although the Conservative’s election manifesto stated that the immigration health surcharge will increase to as much as £800 per person per year, implying further increases from the £625 previously announced”, says Jonathan.

The proposed changes will have an effect on the working relationship and should be kept in mind by workforce planners and HR strategists.

He expands by explaining how EU nationals’ access to benefits and housing will also be limited in line with non-EU migrants, while there has been much criticism of the new EU Settlement Scheme which was ignored by the Conservative Party’s election manifesto.  The settlement application system will turn legally residing EU citizens into “illegal immigrants” if they do not apply successfully by the 31^st December 2020 deadline.

“The new Conservative Government should look to introduce a declaratory registration system through an Act of Parliament which would confer automatic rights to EU citizens currently residing in the UK to continue to live and work in the UK after Brexit. Hopefully this is something the Conservative Party will now consider so we don’t see scenarios similar to those with the Windrush scandal.”

A spokesperson at Excello Law stated that as a “transitional measure “people from “low-risk countries” in Europe and further afield will be able to come to the UK, without a job offer, and seek work for up to a year. But will the government’s introduction of migration restrictions negatively impact employers seeking lower-skilled migrants, as they will no longer be able to come to the UK and settle permanently? This is concerning some, as the UK labour market is already tight and facing challenges with its ageing population.

What’s next for Employers, Employees and Workers after the General Election Result?

Whilst not as “radical” as the Labour manifesto, there were plenty of promises contained within the Conservative Manifesto. The proposed changes will have an effect on the working relationship and should be kept in mind by workforce planners and HR strategists. Speaking to David Bradley, Chairman and Head of Employment Law at Ramsdens Solicitors, he lists out a range of points which may impact employers:

• Immigration – as we touched on above, the introduction of a points-based system is likely to cause anxiety for any employer seeking to recruit. There is a general view that the market may tighten but we will have to wait and see.
• IR35 – there is a promise to review the status of self-employed people with a desire to close further what many see as a loophole in the tax system. A general move towards recognisable employment will go on arguably bringing greater stability to work relationship but more importantly for government more predictable tax receipts.
• The right for employees to request a more predictable contract – this is an extension of the Good Work review and clearly aimed at the gig economy – it will be interesting to see how this manifests itself and how the law will deal with competing interests where some workers enjoy flexibility and how those seeking greater predictability will be protected particularly when compared to the more “flexible” grouping particularly when it comes to recruitment choices.
• Promises of greater flexibility in working patterns and time off in particular situations. There is a suggestion that flexible working may be set as a default right in certain circumstances. This is likely to stretch those with resourcing and workforce planning but as with every progressive introduction on the flexibility agenda employers will cope. There is more than a hint that employees working fewer hours are more productive in those reduced hours generating cost savings for employers.
• The creation of a single enforcement body in relation to the enforcement of employment and worker related rights – this would be welcomed by many. Our current system with jurisdiction spanning Employment Tribunals, County Court, High Court and the Central Arbitration Committee can be confusing and on occasions multiplies the number of contested actions. It will be interesting to see the scope of this.
• Some restriction on Industrial action – as part of the transport policy it is promised that during Strikes there will be a minimum service requirement on the railways bringing this sector closer to the rules relating to emergency services. Expect some tension and contested court cases in this area.

“There is more change that one might have expected and as ever it will be the detail that will have to be examined to assess the impact”, warns David.

The destination countries that saw the biggest increase in job searches between Friday the 6th and Friday the 13th were: Canada (111%), Ireland (44%), Italy (32%), Germany (28%), Australia (20%) and Poland (20%).

Searches for jobs abroad surge 25% after general election

The election results had a more direct impact on employment too. Searches for foreign jobs surged 25% immediately after the exit poll was published, according to job site, Indeed.

On Friday, 13th December, as jobseekers digested the final election results, searches for jobs outside the UK were 25% higher than on the prior Friday, calculated as a share of all searches by Indeed users with a UK IP address.

The destination countries that saw the biggest increase in job searches between Friday the 6th and Friday the 13th were: Canada (111%), Ireland (44%), Italy (32%), Germany (28%), Australia (20%) and Poland (20%). Searches for jobs abroad peaked at approximately 4am when the Conservatives were on course to secure their overall majority.

The findings suggest jobseeker behaviour can be quickly influenced by political events. A previous study by Indeed showed UK-based jobseekers immediately looked for work abroad after the EU referendum result in 2016. Searches from the UK to the rest of the world were 73% higher at their peak on 24 June – the day after the vote – than the average in the days before the results were announced.

Pawel Adrjan, an economist at global job site Indeed, said: “It seems UK-based jobseekers were paying close attention to the election result not just for news about their local candidates but to help inform career choices, too.

While the UK was defined by a year of political and economic instability due to Brexit, the hiring market performed better than anticipated.

“The surge in searches for jobs abroad is a significant one and follows a pattern of jumps in jobseeker interest in working abroad after political events. Our data also showed elevated searches for jobs abroad following the referendum result, triggering Article 50 and now seemingly edging closer to leaving the European Union.

“Interestingly, the countries that saw the biggest increases were Canada and Ireland, English-speaking countries with strong ties to the UK. However, there were also large rises in searches for jobs in other European countries which suggests foreign workers in the UK could be looking to work on the continent or could be returning home.

“These non-UK citizens could also be concerned about their immigration status after the Brexit transition period due to end in December 2020. Overall, these trends are concerning for public and private-sector employers struggling to find hires in today’s tight labour market.”

Job vacancies on the rise as business confidence returns

Chris Hickey, UK CEO at Robert Walters summarised and commented on all that occurred in 2019:

“While the UK was defined by a year of political and economic instability due to Brexit, the hiring market performed better than anticipated.

“There were pockets of hiring activity within sectors that received notable VC funding such as technology and FinTech. Other areas of positive recruitment in 2019 were property, professional services and specific areas within banking such as hedge funds performed better than anticipated.”

According to Robert Walters data, professional job vacancies increased by 17% in 2019 when compared with the previous year – with the most notable hiring activity taking place in Birmingham (+26%), Belfast (25%), Manchester (+24%), Glasgow (+23%), and Nottingham (+23%).

What the data in the Robert Walters salary survey highlights is that the UK will continue to be a global hub for professional services

In most cases, regions outside of London had almost double the job growth than the capital.

Chris comments: “The nearshoring of roles – in particular back-office and operations – to other regions in the UK (namely the Midlands and North West) is something that has been on the agenda for some time and in fact, is not Brexit related, but is a decision based on cost-saving. From a London perspective, nearshoring has had more of a significant impact on hiring activity than Brexit.

“What the data in the Robert Walters salary survey highlights is that the UK will continue to be a global hub for professional services – from legal, HR, accounting, marketing, tech and business support – the UK continues to have some of the best-skilled talent in the world.”

Professional Job Vacancy Growth by City (% change from 2018 – 2019)
1	Birmingham	26.19%
2	Belfast	25.20%
3	Manchester	24.26%
4	Glasgow	23.24%
5	Nottingham	22.68%
6	Sheffield	22.13%
7	Cambridge	20.73%
8	Cardiff	18.84%
9	Edinburgh	18.56%
10	Liverpool	18.47%
11	Reading	17.80%
12	Leicester	16.08%
13	Bristol	14.99%
14	London	14.49%
15	Southampton	13.75%
16	Oxford	13.73%
17	Milton Keynes	12.73%
18	Brighton	12.43%
19	Leeds	11.70%
20	Newcastle upon Tyne	11.36%
21	Swindon	1.73%
22	Coventry	0.00%

 

 

Professional Job Vacancy Growth by Industry (% change from 2018 – 2019)
HR	19.39%
Legal	18.79%
Accounting and Finance	16.37%
IT	15.83%
Marketing	15.73%
Sec and support	11.93%
Procurement/Supply Chain	7.62%
Banking & Financial Services	-14.63%

 

On the future of Banking & Financial Services in London, Chris comments:

“The big banks notably had some hiring freezes in 2018 through to 2019. Whilst Brexit and job relocation no doubt played its part in the decline in job vacancies, the impact of restructuring and technical automation should be taken into account when building a true picture of the UK as the leading contender as the global financial services hub.

“London represented over a third (37%) of job vacancies in the banking sector for the first half of 2019 – the highest in Europe above Warsaw (22%), Zurich (19%), Paris (12%), Dublin (5%), and Frankfurt (4%).

“Futureproofing is key and nowhere is this more apparent than in the UK financial services sector where technology is now the fastest growing function – in fact job growth in IT banking roles has increased by 150% in the last five years.”

Industries to watch in 2020

With the outcome of the General Election now declared and Brexit at the centre of plans for 2020, we anticipate that there will be greater opportunities amongst emerging industries, disruptors and SMEs. Those sectors receiving notable VC funding will be ones to watch.

“It’s businesses in these categories that will drive the hiring agenda by recruiting agile, tech-proficient and commercially savvy professionals who have their finger on the pulse of developing markets”, explains Chris.

A number of startups in the UK have emerged at the forefront of agricultural technology – with the industry accounting for £14.3 billion in turnover and more than half a million jobs in the UK right now.

1. EdTech

Education technology – EdTech – is one of the UK’s fastest growing sectors, growing at 22% year-on-year and worth an estimated £170 million to the UK economy in exports alone.

The UK EdTech market is expected to reach £3.4bn by 2021 (out of a total of £100bn UK education market) and is home to more than 1,200 EdTech companies – approximately a quarter of the total number in Europe.

With spending and funding rife, the industry shows no signs of slowing down. In the UK alone schools are spending close to £900 million on EdTech each year to leverage learning, and the education secretary has pledged a further £10million to support innovation. Coupled with this, the UK ranks number one in EdTech venture capital funding in Europe – receiving more than a third (34%) of total investment to the continent.

Tom Chambers, Senior Manager – Technology at Robert Walters comments: “For the last few years the FinTech sector has been making significant noise in the recruitment market – with a 61% increase in job creation in 2019. What’s interesting is that EdTech has now reached the same number of digital companies as financial technology (FinTech) and so I will expect to see a lot of competition between companies for top talent in 2020, which will naturally boost salaries and workplace benefits for anyone working in these sectors.”

2. Agritech

A number of startups in the UK have emerged at the forefront of agricultural technology – with the industry accounting for £14.3 billion in turnover and more than half a million jobs in the UK right now.

The value is not surprising given over 70% of land in the UK is used for agriculture – representing over 7% of Europe’s total agriculture market.

The UK government has placed an emphasis on the development and adoption of agriculture technologies to increase the productivity of agriculture globally against a backdrop of decreasing land availability and available labour. At the centre of the government’s Agri-Tech strategy is a £90m investment into four Agri-Tech centres in the UK.

Even though Boris Johnson will now push on with his plans to ‘get Brexit done’, the Government’s proposed ‘Green Brexit’ is an aspect Ward Hadaway’s planning team is advising developers to start preparing for.

Tom states: “The UK is no stranger to Agritech and is home to many farmers who already integrate technology into their work with excellent results.

“Therefore it is not surprising to see the UK fast becoming a destination for tech companies to establish their businesses, not least because of our history of being a world leader in plant and animal science and being home to some of the most established agricultural research institutions in the world – 20% of the UK workforce is in science and so talent is not an issue.

“Secondly, the UK proves an ideal environment for start-ups with access to one of the world’s leading venture capital industries and a major global financial centre. Venture capital investment in the UK is booming, with British tech firms attracting more venture capital funding than any other European country.”

3.FinTech

According to the Robert Waters report: The UK FinTech Revolution – in 2020 London will be home to just as many FinTech ‘unicorns’ (companies worth more than $1bn) as current global leader San Francisco. Of the 29 FinTech unicorns worldwide – nine are in San Francisco, while seven are housed in the UK.

E-money firms (as defined by the FCA) grew by 51% last year, and it is predicted that by 2020 over half of payment service providers in the UK will be digital-only.

Over a third (39%) of European venture capital funding goes to London FinTechs – almost double any other city in Europe; Berlin (21%), Paris (18%), Stockholm (5%), Barcelona (4%), Amsterdam (4%), Zurich (3%), Copenhagen (2%) and Dublin (2%).

Chris adds: “When spotlighting the UK’s leading FinTech unicorns, the income growth they have achieved over the past twelve months is phenomenal – increasing from a combined £77.1m to £177.6m revenue. That’s a revenue growth of 130% in just one year.”

Such is the growth of the industry, that in 2019 job creation within the FinTech space increased by 61% – making it the fastest growing sector in the London economy.

And the benefits were not just felt in the capital, last year the FinTech boom created an 18% uplift in job creation in regions outside of London.  To download a copy of the Robert Walters UK Salary Survey 2020 click here.

Developers advised to prepare for Green Brexit

Like Brexit, there is a still a lot of uncertainty and until more legislation is available, we are unsure exactly how this will unfold but developers, landowners and local authorities can’t ignore these proposals.

Even though Boris Johnson will now push on with his plans to ‘get Brexit done’, the Government’s proposed ‘Green Brexit’ is an aspect Ward Hadaway’s planning team is advising developers to start preparing for.

Although the Environment Bill is still a while off becoming law, developers up and down the country should already be thinking about the implications the proposed mandatory Biodiversity Net Gain (BNG) of 10% will have on future developments.

That’s the advice given to clients of Ward Hadaway after the Government announced plans that it will make BNG mandatory for every site and currently, every type of planning permission to incentivise the enhancement of habitats on-site or locally.

Although the proposals require a 10% BNG, the Government has talked about introducing some exemptions for permitted developments and householder applications as well as an exemption for certain brownfield and small sites, but those exemptions will be included in the secondary legislation that is not yet available. The Government has been clear that BNG will not apply in the same way to nationally significant infrastructure projects although other proposals for net gain are being explored.

Long-term protection of habitats is encouraged as any works a developer proposes to undertake to increase the biodiversity value may only be taken into account if maintenance for a minimum of 30 years has been secured. If 10% of BNG can’t be achieved by on-site improvements, there are opportunities for off-site improvements through financial contributions in a section 106 Agreement or the purchasing of ‘biodiversity credits.’

As is currently the position, changes to biodiversity are to be measured by The Defra Biodiversity Metric which considers habitat type, condition and size of habitat, strategic significance and connectivity and is translated by the metric into a number of biodiversity units. Interpretation of the updated Biodiversity Metric is likely to require the involvement of a specialist ecologist.

For most, the concept of BNG will not be new, however, its application has generally been confined to sites with high biodiversity value. The revised approach may be seen by developers and landowners as another constraint to development and there may be concerns within the industry that these plans may further delay the start of projects on site.

The implications for developers are more so for those sites with marginal viability while the impact for landowners may be greater as they are likely to receive a diminished land value due to increased planning/section 106 costs.

There are also resource implications for local planning authorities as Section 88 and schedule 15 of the draft Bill states that ‘development may not begin unless’, the developer has submitted a biodiversity gain plan and the local planning authority has approved the plan.

Melissa Flynn, an associate in Ward Hadaway’s Built Environment team, said: “There is expected to be a two-year transition period before the mandatory BNG comes into effect but we are already advising our developer clients to start factoring in the potential impact and costs of the biodiversity net gain moving forward, particularly where long term options are being negotiated.

“Consultation earlier this year also stated that although 10% will be mandatory, the Government encourages developers to voluntarily, wherever possible, go further to meet the needs of local planning policies.

“Like Brexit, there is a still a lot of uncertainty and until more legislation is available, we are unsure exactly how this will unfold but developers, landowners and local authorities can’t ignore these proposals.”

It seems there is a lot we are anticipating for in 2020 and Boris Johnson has a lot to be working on. What the Government will change in the next year and throughout the five years of Boris’ reign as Prime Minister, is something we can only sit and wait for.