Jeremys' Blog 20th December 2024: Government Inaction and Action

This article by Jeremy Moody first appeared in the CAAV e-Briefing of 19th December 2024

The depressing fallout from the Budget is rippling across the economy. The BPR campaign presented the concerns of private business and farming to the press at the Palladium with a report showing how the cost of the tax would displace economic activity. The financial press reports deteriorating business confidence, private sector employment and recruitment, and a now static economy.

The policy retreat from growth continues. The new “milestone” for the economy in this Parliament is “raising living standards” as measured by disposable income and per capita GDP to 2029, a long way short of the mission to have the fastest growth in the G7. The Resolution Foundation described this as “the absolute bare minimum for a functioning government”. With the tyranny of low expectations, this does not drive the embrace of change needed for future prosperity and public services.

However, a very active pre-Christmas flurry of further policy statements has come from the two parts of this government, planning and energy, that appear to have an organised and interlinked programme for action. From its July election, the government has promoted real change for planning, housing, infrastructure and energy within its tight timescales and with more to come.

The new NPPF with the final increased housing targets, now more based on affordability, was issued in the promised month as the framework for development. The Energy Department issued its Clean Power 2030 Action Plan pulling many threads of its work into one document. Both pave the way for the measures in the prospective Planning and Infrastructure Bill to accelerate development from taking councillors out of many planning decisions to changing the legal processes for challenging decisions. More major applications and appeals are being called in for often positive decisions.

The reorganisation of local government with sub-regional “strategic” mayors – often based many miles from rural communities - may yet prove more of a distraction and delay than a delivery mechanism. Reshaping councils has rarely been a popular enthusiasm. It is reported that some 2025 council elections may be cancelled in preparation for abolition. While proposing that mayors have strategic power, they may simply have responsibility, caught between their electorates and the government. This could focus resentment as much as break logjams.

We can now see where the government is going on nutrient neutrality and allied environmental issues, apparently including bats and newts with the experience of district licensing. From voting as the Opposition against change to nutrient neutrality in September 2023, the Government now proposes to replace site-specific answers with a levy on relevant development to fund larger scale nature projects, very probably requiring reworking of the legacy EU Habitats Regulations. Once enacted and directly funding projects by environmental organisations, this may displace some developing markets. National Parks and National Landscapes (AONBs) are being given a stronger status for nature and access.

Planning policy changes have been thought through while energy has the momentum of a missionary Secretary of State. We have not yet seen the solar project that Ed Miliband would turn down. The 2030 clean energy target has been refined to include a 5 per cent share for gas as part of managing the variability of renewables. The government’s seriousness may be indicated by the report of it indemnifying the development of a Teesside gas plant with carbon capture against legal challenge, with a risk said to be up to ￡6bn.

The constraints for housing and energy may not be the will but reality. With these targets anyway seen as challenging, the clock ticks and we are short of construction capacity, small builders, skilled tradesmen and other basic needs. Even accelerated processes take time. Much progress may be made on renewable energy generation and transmission but the housing programme might more realistically be seen as paving the way for strong building in the 2030s than really producing 1.5m houses in this Parliament.

Outside these policy areas, agriculture is clearly not a priority. The nearest part of the industrial strategy is life sciences. Environmental issues are mainly tackled to ease development. The Land Use Framework is now to follow, not precede, a consultation. The blind spot of private, small and family businesses, with their role in the rural economy, continues. Bloomberg shows these businesses to be far more burdened by the Budget than the large corporates with which the Government talks.

The tax commentators whose earlier proposals foreshadowed the Budget on APR and BPR have been moving their positions as they have learnt more of the real issues. However, if the Government remains obdurate, reliant on data that does not describe the situation, we will have an enormous amount to do in the coming months, not just in valuations after April 2026 but, more immediately, in professional advice to help clients find their answers in a different tax and business world.