Just when we thought things couldn’t get any stranger…
Friday’s heavily trailed fiscal event contained few surprises for anyone following the news. But it was no less mind-bending for that.
Here was a ‘small-state’ government setting out its most statist programme for borrowing and spending yet. Their supporters would ridicule Labour opponents for suggesting an intervention this big.
At the same time, they unveiled the largest tax cutting programme in 50 years – bigger than Nigel Lawson’s 1988 budget that many still speak about.
The £60bn measures to fix energy prices for homes and businesses had to happen, it’s true.
Other details in the government’s Growth Plan – tax cuts making up £45bn of a £234bn debt financing requirement – sharpen one’s focus on the cost. That’s if you can stop your eyes watering at the size of the numbers.
Meanwhile, markets watched askance as the pound fell to $1.08 against the dollar.
Many commentators pointed to the regressive nature of the tax cuts, which unquestionably favour wealthy people. Others have made this point already, and I’ll touch on it later in this post.
Having followed many statements on growth and helped to promote them when working for a government body, I’m struck by the ‘throw everything at it’ spirit of this one. The pace of change it sets is extraordinary.
The Resolution Foundation’s Torsten Bell explained how unusual this approach is yesterday.
As always, there is much to debate, and people will pour over the detail. Having read the plan, here are five points I thought would interest those striving for better businesses and places.
Five Growth Plan points
#1 Will businesses show government the way to good growth?
Businesses will welcome the focus on achieving growth of 2.5% a year. They are also charged with helping the government to achieve this ambition.
Corporation Tax changes aim to unlock investment and boost productivity to achieve this growth. The changes only take us back to the levels we had during the period of ‘stagnant’ growth that the government wishes to leave behind. Widespread investment is not a given, considering flat-lining levels of business confidence though.
There is a wider point, that’s bugged me about the Growth Plan’s focus. The thrust of it mischaracterises many businesses’ intentions when it comes to growth. An increasing number of employers focus on environmental and social outcomes, as well as financial ones. Look to the B-Corp movement for the most vivid example of this. These businesses aren’t advocating growth at any cost.
The environment is the one thing on which all growth depends. Without it, we face ruin. Yet the Growth Plan doesn’t give much prominence to this. Where it mentions its plans to achieve Net Zero, it is only to announce a review into how it will help to deliver growth.
While Ministers obsess about staff returning to offices, businesses are thinking differently. They are looking at creating better workplaces and benefitting the environment and communities.
I’ve said before that there are better ways to measure and demonstrate progress than focusing on pounds and pence (as important as that is). It’s up to good businesses to show ministers how it’s done.
#2 Boosting housing demand
Reforming Stamp Duty in England and Northern Ireland aims to help more people onto the housing ladder.
With house prices across the country continuing to rocket, Stamp Duty blocks many from moving or buying their first home.
But changing it won’t fix the housing market on its own, as anyone who works in the sector knows. We also need funding and support for house-building to stop prices from shooting up even further as demand rises.
Measures to reform planning and speed up development in some areas could help with this. But how long will these measures take? And will they be enough?
#3 Investment Zones to boost growth
The government wants 38 councils and combined authorities to set up Investment Zones in England, to attract businesses and create jobs.
Offering tax breaks and faster planning, these take Enterprise Zones to another level. Incentives include relief for capital investment, buildings, National Insurance and Stamp Duty in addition to business rates exemptions that Enterprise Zones offer.
I’m pleased to see Gravity in Somerset amongst the early sites which could receive Investment Zone status, alongside schemes in Plymouth and Cornwall. Having supported Gravity through a major engagement project last year, I know it will make a huge difference to the South West’s economy. With its focus on sustainability and well paid jobs, this project shows what good growth looks like.
I’ve also seen how Enterprise Zones like Bristol Temple Quarter (where my company is) can create thousands of decent jobs.
Some Enterprise Zones could become Investment Zones too and take advantage of the extra benefits. Whatever happens, picking the right places, with partners and communities who support Investment Zones will be crucial to their success.
Interested parties can expect to know about the bidding process from the Levelling Up Department soon.
#4 Message for infrastructure: build, build, build!
The Growth Plan lists 138 projects that the government wants to see progress quickly.
The list focuses on road schemes, alongside rail, energy, free ports and the Levelling Up Home Building Fund. It was great to see our clients’ projects included in this list. This points to a strong desire to ‘get things done’ before the next election.
But it also highlights how difficult it has proved for promoters and developers to do that. Some projects listed have been on the stacks for years. The Growth Plan acknowledges that some infrastructure projects listed take too long to move through planning. The Economist wrote scathingly recently about this, asking: ‘Why can’t Britain build?’
The Government will hope to change the narrative around complexity and delay if it’s to see the growth it’s looking for.
#5 Faster planning (again)
The hamster-wheel of planning reform continues to feature in the drive to speed up development. Investment Zones are the plan’s most prominent example of this.
Streamlining processes won’t build support for these changes on their own though. We will continue to see emotive and high-profile campaigns opposing major development.
Decent engagement and clear communications will be more important than ever for these projects. If engagement starts early and works well, it delivers schemes that better reflect what places need. It also builds trust in infrastructure and levelling up, which benefits everyone.
Focusing on delivery alone won’t achieve this. We need to step away from the spreadsheets and delivery plans.
And this sort of takes us back to where we started at point 1.
The right growth in the right places
Liz Truss stressed her focus on ‘delivery’ after winning the party leadership bid on 5 September. The Growth Plan sets out what that delivery could look like. She has precious little time to make this happen.
Growth is welcome. We need it. But it’s disheartening to hear of questions in government around any policy that doesn’t deliver growth. That’s myopic and depressing if it’s true.
In focusing so closely on the numbers, I fear that we miss a big part of what many people yearn for. How do we make better, healthier, sustainable, inclusive places?
People I’m working with are looking to address these questions. It’s an honour to support them.
It’s also up to them and organisations like them to lead the way.