Day one at the Tory conference: Industry cries out for stability – but U-turns and uncertainty continue

Is levelling-up still government policy? This was the question being asked by many in Birmingham yesterday on the first day of this year’s Conservative Party conference.

Even with this morning’s remarkable U-turn over plans to cut the 45p tax rate for the most affluent, there is little sign from Liz Truss that levelling up remains a core part of government policy and it is hard to dispel the sense that the tide has turned against a Johnsonian redistributive approach. This appears to be a new era of libertarian trickle-down economics.

Yesterday in Birmingham had started with Truss acknowledging that she could have done a better job of “laying the ground” for Kwasi Kwarteng’s shock fiscal statement on  September 23. The chancellor’s pledge to borrow more in order to cut taxes mainly for the wealthiest had spooked markets, undermined the pound and sent mortgage interest rates soaring.

Michael Gove, the former secretary of state for the Department of Levelling Up, Housing and Communities (DLUHC) then attacked the proposed £45bn of unfunded tax cuts for high earners, claiming they were “not Conservative” and appearing to threaten to vote against them in parliament.

As one of the key Tory ideologues behind levelling-up, Gove’s opposition would appear to underline the extent of the break we are now witnessing with recent government policy. And it surely played a significant part in prompting this morning’s dramatic U-turn. 

But despite this – and whether it was a case of wishful thinking or not was unclear – the rebuttals from government ministers came thick and fast. When asked whether the levelling-up agenda was “dead in the water”, Dehenna Davison, the recently appointed minister for levelling-up, could only respond by saying, “I hope not… There’s no way I’d take on the role if I didn’t think this was at the core what this government is going to do.”

Like Davison, Robert Buckland, the secretary of state for Wales, was adamant that levelling-up was still a government priority. “It has started,” he said, “and remains at the core of the government.”

When I asked him whether the £4.8bn released in the first round of levelling up funding was sufficient for the task of redressing decades of structural imbalance, he responded by telling me that “you’ve got to start somewhere”.

Investment zones and deregulation

Following a week of turmoil, the government had sought to take back the political agenda on Sunday morning with the announcement that it was encouraging formal applications from local authorities to set up new investment zones. These zones will seek to stimulate investment through tax incentives, and by removing “ineffective EU requirements, lengthy consultations with statutory bodies and onerous national and local policy rules”.

Seeking to hark back to happier times for the Tories, Buckland compared these to the enterprise zones which the Thatcher government had set up in the docklands of London, Liverpool and Cardiff in the 1980s, with varying degrees of success.

“I view investment zones as part of the levelling up agenda,” he said, before going on to argue that – far from representing a tilt towards libertarianism – the new initiative was a continuation of Boris Johnson’s interventionist approach.

“We make interventions where appropriate,” he said. “The idea that the government has come to preach trickle-down economics is for the birds.”

But elsewhere at the conference there were clear signs of concern about the wider implications of the investment zones. Former cabinet minister Theresa Villiers expressed concern about the “erosion of local decision-making in planning” and suggested that deregulation within investment zones could be “rolled out more broadly”.

David Thomas, CEO of Barratt Homes, said he did not want to see “investment zones being used to short-circuit environmental regulation”. Paul Brocklehurst, chair of the Land Promoters and Developers Federation, told me that he suspected the zones would see commitments to good design in the Levelling-up and Regeneration Bill cast aside in order to fast track development. “I expect design codes are going to go in investment zones,” he said.

Planning backlog

The government has declared that it is committed to a growth strategy. In recent years planning departments have seen an average of 43% cuts in resourcing. Given that developers and architects are constantly bemoaning the financial implications of massively delayed planning decisions, you might have thought this would have included a commitment to unlock the backlog in the wider planning system.

When I asked the new housing minister Lee Rowley what his plans were to address the under-resourcing of local authority planning departments, he could offer no more than a commitment that he would “look into” the matter and address it “as and when”. It seems architects should not hold their breath for any swift solution to this on-going problem.

Uncertainty

Elsewhere, there were murmurings of discontent from the big housebuilders. Thomas, the Barratt Homes chief, repeatedly mentioned the lack of clarity and consistency in government policy as a cause of concern for industry. “We don’t care if targets are set nationally or locally, we just want a system that works,” he said.

The churn in built environment ministers was underlined by the presence of Rowley. He was much in demand, sitting on several panel discussions, but preceded his comments at each event he attended with an acknowledgement that, with only two and a half weeks in the job, he was not yet fully “on top of the brief”.

Given that he is the fourth housing minister of 2022, and the seventh in four years, he could perhaps be forgiven for his lack of insight, but it does rather underline James Wates’s concern that construction has for too long suffered due to a lack of attention from a heavy-hitting senior minister.

Devolution and local planning

There were mixed messages on devolution. While acknowledging that the relationship between Westminster, local government and grassroots communities had bedevilled attempts at levelling up for decades, Buckland argued that now was not the time for a radical overhaul of existing arrangements.

But elsewhere at the conference Davison and Paul Scully, the minister for local government and for London, were making the case for more local devolution deals, prioritising the introduction of directly elected mayors.

The tensions around centrally-set housing targets, Robert Jenrick’s failed allocation algorithm and the vestiges of David Cameron’s “localism” agenda are still being played out within the party. Rowley, stated that “the ultimate decision-maker on beauty and design is the locality”.

Nowhere at the conference though was there a clear solution to the challenge of delivering the millions of new homes that Britain needs, in the face of widespread opposition to building from many rural and urban communities.

Samuel Hughes, who was until recently head of research at the Office for Place, made the case for “gentle density” and “suburban densification”. He also argued that the only way to deliver large quantities of new housing in a politically sustainable way was in a way that “has the support of local communities and restores the environment”.

“We can’t smash our way through local communities,” he said, before advocating for clear-cut design codes over vaguer design guidance.

More confusion to come

Industry may not be happy but the one thing that this government seems most likely to deliver is disruption and uncertainty. Kwarteng’s U-turn this morning only emphasises  that point.

Whether this is by design or by accident is perhaps not important. It clearly reflects the increasing instability of the British political and economic systems over recent years.

Our one-party system – the primary benefit of which we have always been told was strong government – has given us four prime ministers in eight years. Anyone looking for greater clarity around regulatory and planning reform, or clear targets for housing, will have to wait. The merry-go-round of government ministers and policy changes seems certain to continue for the foreseeable future.

Although there were ministers yesterday making the case that the Truss government remains committed to levelling up, it is hard to see this latest regime as representing anything other than a full takeover of the Tory party by the libertarian right. Some government ministers may be labouring under the delusion that some kind of One Nation agenda survives, but the thrust of economic and regulatory policy appears to be moving ever further in the direction of hard-line ideological libertarianism.

Unquestionably, Truss and Kwarteng are shifting the UK determinedly towards an Ayn Rand-ian model, in which wealth is generated and accumulated by a select few.