The honeymooners

Well what a last ten days it’s been folks; the first Labour Government for fourteen years, accompanied by a sizeable majority, with England in the final of the Euros. I’ve had worse.

The palpable sense of relief of an apparent return to ‘grown up politics’ has been matched with a pretty impressive start by the new incumbents of 10 Downing Street.

This report assesses this start, whilst also considering what else looms in 2024. It ends with a clarion call to industry to actively participate in the Government’s call for ‘a decade of renewal’, in particular the financing and delivery of sovereign capabilities and the ongoing constructive challenge of Government efforts - something sorely lacking in the past five years.

A promising start, reflecting months of detailed preparation….

It’s natural (and predictable) to draw comparisons with Tony Blair’s first administration that arrived with significant fanfare in May 1997; it’s worth reading a contemporaneous first 100 days review here to show the relative breakneck speed of this optimistic period. So what has been achieved in the first ten days?

SENSIBLE MINISTERIAL APPOINTMENTS

Part of this is driven by the number of sensible, experienced ministerial appointments made in its first few days - suggesting, as in 1997, that they were a Government in waiting backed by a number of months of pain-staking planning. Of key note:

• A number of appointees have spent years as Shadow ministers, thus giving them a huge leg-up on the job. This includes undoubted rising star Matt Pennycook as Housing Minister, who has firmly grasped the planning nettle over the past few months and is part of the team charged with making a number of overdue changes (as shown below).

• Others already have significant ministerial experience from their time on the front benches pre-May 2010. These include the likes of Yvette Cooper, a returning Douglas Alexander and one name we certainly didn’t expect in Jacqui Smith. In total, 22 members of Starmer’s new government – one-fifth of all ministers – have previous ministerial experience, including eight members of the new cabinet, shown within this excellent article.

• Most eye-catching of all however is the use of appointees to the Lords that are genuine subject matter experts in their field. Pleasingly, these include Patrick Vallance as Minister for Science, Research and Innovation, with an early call that his appointment “marks a reset in how the UK collaborates with the rest of the world, with humility and shared endeavour.” Spot on.

• The appointment of fellow Cheshire Gent James Timpson as Minister for Prisons is another bold move that suggests genuinely progressive justice reform is on the way, explored in detail here.

ENDING POLICY MADNESS

The new Government has also ended three bits of policy madness that caused us rather a lot of consternation in recent years.

We are universally recognised as Europe’s best location for wind power - yet a ‘de facto’ ban on new onshore projects, introduced by David Cameron’s government that blocked them being given permission if a single objection was received, has been in place for the best part of a decade. Labour has righted this particular wrong by committing to doubling onshore wind energy by 2030 and removing the two offending paragraphs of the National Planning Policy Framework, effective immediately. Their policy statement on onshore wind can be found here.

Onshore wind at Todmorden, West Yorkshire

The previous Government’s mind-boggling plan to send immigrants to Rwanda - spending over £300 million in the process, showing the same financial daftness of touch as for PPE spending - is now dead and buried and not before time. We genuinely cannot see the Government recovering any money from their opposite numbers however, despite what is claimed here….. (Instead, the Prime Minister is on the front foot with his foreign counterparts, with Politico’s write up of his recent trip to see President Biden here).

Finally, the phrase “levelling up”, hated in Bellona towers, is no more, with new Minister Jim McMahon referring to the need to return to grown-up politics here. We always believed that the phrase, and its funding line, was a fig leaf to cover the continued decimation of local authority funding. We’re also interested to see what the Government does with ‘Round 3’ levelling up funding, previously awaiting Ministerial sign-off under the Tories, given its clear spending challenge (see below…..)

PLANNING IS FRONT & CENTRE - BUT DO NOT EXPECT A QUICK FIX

Ahoy planning reform! One of Bellona’s favourite topics is firmly on the menu under ‘dish of the day’, with new Chancellor Rachel Reeves making it a centrepiece of her first speech as my good friend Simon Ricketts writes here.

Others frankly write about this better than I do, with Zack Simons following up a marvellous Radio 4 interview with this superb summation here. He makes it abundantly clear that what has been suggested so far are ‘reasonably modest tweaks to the system we already have’, with bigger items - including New Towns and the longed-for reintroduction of strategic planning - to come further down the line.

This is not a quick fix ladies and gentlemen; any changes to the planning system now will only really have a genuine effect on local plans, and the subsequent delivery of land, two to three years hence. The emitted signal however is a relief to landowners and housebuilders, who have frankly been mucked around for a number of years through previous Government inaction and backbench pandering as we considered here.

There’s also nothing as yet on how the party intends to whip or educate errant members, something we’ve long called for at national and local level. One of the party’s new MP’s has already runaground on this less than a week into their new job, as shown here - and we’re intrigued as to how this publicly plays out.

REGIONAL DEVOLUTION

We fundamentally agree with the maxim that Whitehall doesn’t always know best and it was heartening to see messrs Starmer and Rayner bringing together regional Mayors of all colours to a recent Downing Street roundtable to emphasise the Government’s continued support for regional devolution to elected Mayors. As emphasised within this official release:

Leaders will come together to discuss a new partnership approach and agree early actions needed to scale up devolution and empower regions to deliver change for their communities, helping to unlock economic growth and tackle regional inequality…..the Deputy Prime Minister…..will also use the meeting to mark the beginning of the process of establishing Local Growth Plans across the country. She will call on mayors to identify local specialisms, and contribute to work on a national industrial strategy.

This is inherently sensible - but with a number of Mayoral Combined Authorities having only just come into being, are they ready to meet the call? We believe this is where industry needs to play a greater role in emphasising ‘local asset’ and R&D driven growth backed by a clear understanding of public infrastructure upgrades and a commensurate growth in new housing, as per our last section.

GETTING STUCK IN: MANUFACTURING AND ENERGY

Finally, the Government is getting stuck into attempting to solve some major industrial problems in the national interest. Jonathan Reynolds has a tough gig as Business Secretary so it’s good to see that he’s rolled his sleeves up here, in particular what to do about a problem like Tata in South Wales. Despite its national importance, Tata has already begun the voluntary redundancy process and so any Government action really has to be concluded by the autumn at the very latest….

Ed Miliband has also shown his mettle as Energy Secretary by pushing through consent for three major solar farms in England in the face of some significant local opposition. His biggest battle though - the Government’s position on North Sea oil and gas in the context of ‘Great British Energy’, the planned green energy investor - awaits…..

All of this together is a sign of boring, sober, competent Government - and I am absolutely delighted about it.

I’m not getting ahead of myself however. This Government has major long-term challenges to overcome in respect of the rising gap between rich and poor, flagging productivity, a continued reliance on imported skills and goods and its tax base; is it ready? And are we ready?

…but beware the big challenges lying round the corner

I trust Paul Johnson’s view of the economy - and the IFS’ chief has already published a fabulous paper on the challenge that awaits the Government here. He begins by being characteristically blunt about why we are where we are:

Broadly speaking, we know, we really do know, what it is that we need to do to give ourselves our best shot at growing the economy. And, broadly speaking, we have chosen not to do those things. That’s because they are often difficult. They come with trade-offs and for too long we have been on the wrong side of those trade-offs.

Whilst illustrating that a ‘closer trading relationship with the EU’ is not necessarily in the Government’s gift given the mandate it secured, tax most certainly is - and as he summarises:

Again we know broadly what to do: get rid of stamp duty, sort out capital gains tax, stop penalising income from employment relative to other forms of income, get rid of the absurd marginal rate structures in income tax, do a better job of full expensing in corporation tax and much more.

We believe a trade-off is coming: further tax rises, but with a commitment for visible, competent delivery. This is politically very risky territory, as at some stage this burden has to be borne by the ‘average voter’. Mr Johnson again:

The broader barrier is that, as the overall tax burden has risen, governments have moved heaven and earth to protect average earners and have piled more and more on to companies, high earners, anyone other than the median voter. That, eventually, could come with an economic cost, including to the median voter.

Similarly, what about the other side of the coin - how does the Government encourage others to spend on things that they cannot do, particularly on growth? The delivery of a National Wealth Fund is one proposed method, though no detail yet exists on its mandate or its geographic focus. One of the key issues to resolve is how this overlaps with the demand for ‘Local Growth Plans….and a new national Industrial Strategy’ as emphasised at the devolution roundtable. Here’s how it looks as of today:

Under the Government’s new plans, the National Wealth Fund will bring together key institutions and a compelling proposition for investors. This will mobilise billions more in private investment and generate a return for taxpayers.

£7.3bn of additional funding will be allocated through the UK Infrastructure Bank so investments can start being made immediately, focusing on further priority sectors and catalysing private investment at an even greater scale. This funding is in addition to existing UKIB funding.

The Barnet graph of doom, reimagined by the journal of the Institute of Historic Building Conservation

All the while, there are major social infrastructure issues bubbling under. The elimination of the Revenue Support Grant for local authorities over the past fourteen years, matched with a surge in demand for what would traditionally be known as ‘social services’, has led to the local government sector taking on additional borrowing of £50bn over the last decade – and 25 authorities now have more than £1bn of borrowing, as shown here. You cannot have strong local growth whilst not properly supporting these institutions - and with 20 authorities also pitching a plea to be supported to deliver new Council Housing as part of the Government’s desire to build 1.5m homes this Parliament, something has to give.

The other big issues at the centre of the Government’s challenge rest on energy and manufacturing security. Whilst Ed Miliband has touched on the former here, the need for manufacturing sovereignty - particularly as a source of regional growth and to reduce the dependence on defence and energy imports - is essential. As Richard Jones points out, this comes at a time when more and more of our growth companies are falling into foreign hands; how do we develop the national ecosystem whereby great companies are financially supported by UK institutions to grow to become bona fide market leaders?

So, a frankly herculean task awaits. And we should all contribute to making the change.

We all need to be participants

The other characteristic of the past ten days has been the huge amount of lobbying that the new Government has had to contend with, with every lobby group under the sun (and advisors like this one, lest not forget) imploring the Government to do this or that.

Ultimately - as after every honeymoon period - there will be disappointment; the Government simply cannot fund or prioritise everything. If it does half of the things listed above during its first term, it will be doing extremely well.

Do you want to make things work? Then the response is simple - contribute to making the UK a better place to live and work; and constructively challenge where it is needed, offering solutions whilst you go. In all seriousness, this is no time to be passive.

Bellona Advisors will be continuing the charge with its client work in four key respects:

• Promoting major new developments that people will genuinely enjoy living and working in whilst supporting wider environmental and social objectives;

• Working on economic programmes that support the national interests, in particular growing regional capabilities in sectors such as advanced manufacturing and materials;

• Continuing our work on decarbonisation and energy security; and

• Most ambitiously of all, attempting to use the results of all three to promote a renewed sense of civic renewal through the UK producing more, whilst more readily seeing the fruits of its labours. This is a big ask - and I may be entirely wrong. It won’t stop me attempting it though.

Get in touch here if you want to discuss any part of this report in further detail.