Jeremy's Blog 12th July 2024: A New Government Takes Over

This article by Jeremy Moody first appeared in the CAAV e-Briefing of 10th July 2024

We have crossed a threshold, now no longer in an election campaign nor the long shadow cast ahead of it. A large majority is taking office and beginning to find the difficulties of government. We welcome Steve Reed and Daniel Zeichner to their new roles in DEFRA and wish them well.

Although Labour won describing the last government in terms of chaos, it is a moment to note some of what was put in place that now forms the inheritance from which Labour will work.

England's Agricultural Transition away from the legacy CAP is now substantially in place while other parts of the UK have largely still to start. It looks as though the new ministers will carry this process forward in way that any new minister of either party might – “change” looks like continuity.

Expect a stronger focus on carbon and on assessing whether an outcomes-based policy is achieving outcomes – a question the Treasury might anyway ask. We wait to see if this autumn's spending review carries forward the present money (also relevant to the devolveds). If so, then England has the other half of the run-off delinked payment to use on top of SFI 2024. Decisions await on Higher Tier and the where the first round of Landscape Recovery agreements now go.

The legacy of environmental legislation is of economy-wide significance. We have the net zero target set in 2019. The Environment Act 2021 provided for environmental targets, now set and demanding, the Environmental Improvement Plan 2023 with its further expectations including for SSSIs, biodiversity net gain and tackling storm discharges. The Levelling Up Act adds to the pressure on water company discharges. Labour inherits this framework (as well as the nutrient neutrality it kept in September's House of Lords vote).

For Labour, “environment” seems to boil down to answering climate change, decarbonising the economy and so the drive for fully non-fossil fuel system with its infrastructure by 2030.

Planning could be where “change” could indeed be change, for housing and infrastructure. The last government was fundamentally frustrated by its backbenchers, destroying the 2020 White Paper and then housing targets, but bypassed resistance with much widened permitted development rights. The new Government has manifesto commitments, even taking the taboo of the green belt unscathed.

With the declared object of reviving economic growth, Labour's key tools are to drive investment and development. We already have initial statements on development policy and then expect a new NPPF, revived housing targets, a new Bill, a group to identify new town sites, and more. Nonetheless, with reduced development activity, the deep and committed resistance to development (whether pylons or housing), limited construction capacity and a failed planning system, Labour might not yet realise how much harder this is than it could look. Will they hit this as hard and as early as is needed to create real change? Even then, real growth may be more for the next Parliament.

While correctly focusing on planning as an obstacle to growth and necessary infrastructure, nothing stops Labour pouring other grit into the economy. That might be its employment law changes. With Tuesday's meeting with regional mayors, it could be the emphasis on devolving economic power where, whatever the theory, there seems little evidence of this being successful. It could be the creation of a growing number of new bodies with good intentions. For housing, it could be downward pressure on development values. It could simply be all the pressure from backbenchers as this Parliament goes on for one campaign after another.

There are so many other issues from the Autumn Budget and taxation to residential lettings after s.21 is removed. Growth is the only answer to the essential constraint of public finances, under pressure from defence in an unstable world, an aging population and other issues. Growth will take time to achieve and requires a shift in national attitude to accept risk. The question is whether the government understands the need to unlock an entrepreneurial and dynamic spirit in which small businesses as well as corporations can thrive – and how to do that.

That will be as true for farming and rural enterprise as much as anywhere else, cracking our own productivity problem. The challenges are enormous and the five years of a Parliament will be all too short but, without taking the scale of action needed to break the pattern since the 2008 financial crisis, we will only get poorer, more indebted and less happy.