Ben Houchen: Unleash the free market to deliver on levelling-up

7 Feb

Ben Houchen is the Mayor of the Tees Valley.

The release of the Government’s Levelling Up White Paper on Wednesday was a very welcome change from Westminster gossip, with serious policy issues leading the news, and the government getting on with the job of delivering for the British people. There is no shortage of serious thinking behind the white paper, and much to be positive about in it.

When Michael Gove was appointed as Secretary of State for Housing, Communities and Local Government, one of his first acts was a visit to Teesside. I took him to see Teesworks, the transformational project that is breathing new life into the former Redcar steelworks and the heart of the Teesside Freeport. While he was on the site I spoke to him at length and in detail about securing jobs, private investment, and growth in my region, and the lessons that could be learnt from Teesside’s experience. Michael has certainly listened, and the strategic direction the white paper outlines has the right priorities – giving back control to local people, ensuring that there is strong local leadership, enabling people to restore local pride, and hugely raising ambitions for communities abandoned to decline.

I’ve always said delivering levelling up was not going to be achieved in just a few years, and the White Paper has the breadth and depth of vision necessary to guide Government policy for years to come. It’s going to be an invaluable blueprint for both this and future governments, as its ideas work through the different departments of state. But whilst the White Paper is strong on getting the shape of government intervention right, there is a lack of clarity when it comes to enabling the real engine of levelling up to take off. Investing in local priorities and fixing skewed research and development funding formulae is important, but what will really restore pride to left-behind areas and create the new opportunities we all want to see is private initiative. The paper’s relative silence on this essential part of the equation is a missed opportunity. A free market focus could have supercharged the White Paper.

Nevertheless, the free market is going to be crucial to the next stage of levelling up: delivery. At the next election, I believe the government will stand or fall on whether people can see visible progress on levelling up. People need to see cranes on the skyline, spades in the ground, and steel going up, as key infrastructure projects are delivered. But as Conservatives, we know that it’s not always about throwing taxpayers’ money around. History shows the State, with its default mindset diktat handed down from upon high, simply can’t do the right things quickly enough. Plans to extend the kind of devolved powers I have to new elected Mayors need to be accelerated. The invention and skill that the Prime Minister has rightly said exists in every part of our country needs to be unleashed. And we need to convince private investors to commit with confidence to places with a proud past and huge potential but a recent history of reliance on state-administered sticking plasters. How do we achieve this?

Firstly, I’d aim for the low-hanging fruit of business rates. Tax devolution may not sound exciting. But I believe devolution of business rates could be as revolutionary as Margaret Thatcher’s “big bang” reforms to the City of London in 1986. If I, as Mayor, had control of business rates, I’d slash business rates across the board, with a special focus on capital and energy intensive businesses which are a huge strategic priority for Teesside, Darlington, and Hartlepool. Overnight this would stimulate massive private sector investment in strategic industries that are critical for UK PLC. This in turn would lead to an explosion of job creation, put more money in people’s pockets, and restore local pride. Different areas could take different approaches – for example, London could focus on its world-class financial services sector. The result would be a spectacular renaissance and an economic boom not seen for generations.

Getting competition into local government would not only get some much-needed downward pressure applied to tax on job-creating British businesses – it would stimulate over-cautious local authorities to shift from micro-management of decline to big thinking about success – something far too few councils do. Cleverly deployed, it could be a crucial tool in incentivising a net zero recovery, putting the UK at the global forefront of net zero technology, securing first-mover advantages in jobs and technology, and showing that green goals are better achieved through the market than through socialist levies.

The reason I’m so keen that the Government moves boldly on hydrogen technology is because we have a once-in-a-lifetime opportunity to become a global centre for a huge growth market. No great opportunity is completely risk-free, but it’s a moment we need to seize or we could be outstripped even by the usually sluggish EU. The hydrogen contracts for different business models need to be released; heating and transport projects need to be accelerated; and we need to incentivise private investment in the sector on a big and immediate scale, or we are going to come late to a German party.

Treasury officials, lacking confidence in the free market and British enterprise, fret that fiscal responsibility requires regulations and taxes – especially business rates – to stay equally high in all fields and across the country. But the example of Corporation Tax is instructive. Gordon Brown left behind a Corporation Tax rate of 28 per cent. Despite howls from the opposition parties, Conservative chancellors have cut this down to 19 per cent. That led to the creation of huge numbers of new jobs and new businesses, whilst the actual tax yield to the Treasury from Corporation Tax grew. Singapore has pursued the same strategy with much more conviction, and their ten per cent Corporation Tax cuts and other business incentives have been rewarded with six per cent growth. If we’re to overcome the cost of living crisis, this is the kind of growth we too should be reaching for.

We need every part of Britain to be firing on all cylinders if we are to win the global competition for investment. Instead, Treasury fixation on the short-term is keeping a tight central rein on growth. The Treasury plans to let the government’s most pro-growth policy, Rishi’s super-deduction, lapse next year. If the super-deduction is indeed allowed to lapse, CPS and Tax Foundation research shows Britain will fall to about 31st in global competitiveness league tables. This simply isn’t good enough. Brexit gives us the opportunity to make bold business incentives happen without needing EU say-so. We need to take that opportunity and make bold moves now.

Levelling up requires not bigger, but smarter government, smarter politics, and smarter tax. The White Paper rightly prioritises the open publication of new levels of data so that the Government can be held to account on delivery. I’m willing to be judged on delivery, and with the strategy set in the White Paper, the time to deliver jobs, investment, and growth is now. Giving Combined Authorities genuinely extensive powers to set Business Rates is only one of many actions we need to take. But all paths to delivering levelling up need Whitehall officials to be led by Conservative ministers to embrace lower taxes, lower regulation, and the power of private enterprise.

Rachael Robathan: You don’t strengthen the weak by weakening the strong

4 Feb

Cllr Rachael Robathan is the Leader of Westminster City Council.

With everything else going on, it is sometimes overlooked that we are facing another set of elections this May – local elections for almost 200 local authorities across the UK, including every London Borough.

These are sometimes viewed as the Cinderella elections of the democratic process – less important and high octane than General Elections – and yet these are the elections which determine the shape of services which affect every person in the UK every single day.

From the moment you walk out of your front door you will come across the impact of local government. Everything, from the cleanliness of our streets, to planning and licensing policies which determine how cities and towns look and operate, to the support which our elderly and vulnerable residents rely on, is the responsibility of local government.

We, as Conservative Councillors, have a strong story to tell. It is these services, against challenging budget constraints, which have been so vital over the last two years. While the nation rightly applauded hospital services and NHS frontline workers, our homecare workers were equally as critical, going into the homes of the most vulnerable every day to provide vital support. And what of our refuse collectors? Without them our streets would have deteriorated rapidly.

In my experience in Westminster – as I’m sure is the case elsewhere – the last two years have served to focus attention on the importance of the services the Council provides.

Alongside our excellent social care support for Adults and Children, in Westminster we also established a volunteer network, with over 3,000 residents signing up to support those who found it more difficult to go outside to collect shopping or run other errands.

We helped over 800 rough sleepers off the streets and into permanent accommodation pathways and jobs, as well as distributing over 5,000 laptops to make sure children could continue to learn from home.

It has also been a matter of considerable pride to me when residents commented that, as they walked around the streets, they noticed how clean and well maintained our public areas are. We take great pride in our City and it shows.

It has also been really important, as the Council right at the heart of the Capital, that we did everything we could to support the business, hospitality and cultural organisations which are so much a part of what makes our City such a wonderful place in which to live and visit. Few areas felt the impact of the pandemic as acutely as the West End.

In a City where each day, pre-pandemic, our resident population of some 250,000 increased by four times that amount -. as people came in to work or visit, the impact of restrictions had a massive impact. With almost 3,700 licensed premises – more than any other Council – and as an area which not only accounts for 15 per cent of all London’s jobs but also almost ten per cent of our national business rates, there wasn’t an option to sit on the sidelines while businesses went to the wall.

We introduced al-fresco dining, creating 16,000 additional covers on our streets through temporary measures, enabling thousands of premises to continue trading and survive. These proved so popular that after full consultations these have been made permanent in many areas.

We worked with our theatres, museums, and galleries, to create an Inside Out Festival, showcasing our wonderful cultural and entertainment offer outside on our public spaces to provide access for everyone and also to remind everyone why a visit to Westminster has so much to offer.

So, as we approach these elections what is our message and what are our asks?

First, it is vital that we all make sure everyone understands the importance of these elections and that every single vote matters. As Conservatives, we understand the importance of running our Councils to deliver the best services in a cost-effective way and to work with our residents and businesses to make sure they have the support they need to make the most of their opportunities and live their lives as they wish.

Without this current network of Conservative Councils, not only will those we serve lose out, but it would also make it even more difficult going forward to hold Parliamentary or London Assembly seats, where we don’t have the strength of a Conservative Council working hand in glove with them.

Second, while these elections are emphatically about local government, not national, we do need to be able to demonstrate that our Government is listening to us and recognises the importance of having Conservative administrations running our Councils.

For those of us in London, a key part of that message is that levelling up in the red wall seats in the north does not mean that London with its own acute challenges is overlooked. Without the recovery of areas like the West End and the Business Rates it provides, the Chancellor will struggle to find the funds for these initiatives.

Finally, and most important, is that everyone reinforces the message that it is just as – if not more – important that every Conservative votes in these elections if they want the things which impact their lives every single day to continue to run smoothly.

In Westminster, we fight hard for every vote. Our councillors and candidates are already out campaigning from Paddington to Pimlico. Thanks to our central London location we hope that Conservatives both locally and nationally will follow Jacob Rees-Mogg’s lead by making their New Year’s resolution to campaign more for Westminster Conservatives. You will be very welcome!

Ryan Bourne: For Sunak, cutting the basic rate of income tax shouldn’t be a political priority right now

15 Dec

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

The tax-to-GDP burden might be rising to its highest level since 1950, but Rishi Sunak, the Chancellor, promises tax cuts soon. Reports say he is planning to cut both inheritance tax and VAT ahead of the next general election. The main “retail” ambition his team wants though is to trim the basic rate of income tax from 20 per cent to 19 per cent in 2023 and then to 18 per cent before polling day.

HM Treasury’s bully pulpit really can be used to set the field for spending or tax battles, but Labour evidently fancies its chances on this turf. Rachel Reeves, the Shadow Chancellor, has already called Sunak’s bluff, telling City AM that she “would like to see the chancellor do it” rather than “just talk, talk, talk” about it. Labour might have spent a decade moaning about underfunded public services due to “austerity,” but it senses backbench Tory unease on tax and will seek to exploit that weakness by ramping up this arms race.

But this raises the question: does the political consensus for a basic rate income tax cut represent good policy sense?

I broadly subscribe to Milton Friedman’s dictum to “favour…cutting taxes under any circumstances and for any excuse, for any reason, whenever it’s possible.” There are all sorts of weird asymmetries in the UK discourse that means it’s easier politically to raise spending rather than cut taxes, so small staters should usually grasp what they can. And yet, for both economic and political reasons, cutting the basic rate of income tax wouldn’t be high on my priority list of tax cuts right now.

First, because it’s a tax cut for over 31.6 million people, reducing the basic income tax rate from 20 to 18 per cent is a big chunk of foregone annual revenue: £11.5 billion, according to HMRC’s ready reckoners. That’s a lot of moola to tell the 27 million basic rate payers that their marginal rate will fall by just two percentage points, which not only doesn’t sound a lot but would not substantively change their incentive to work or earn more income.

And there’s a serious, serious opportunity cost here. For an equivalent revenue, the Chancellor could cancel his planned rise in the main rate of corporation tax to 25 per cent, instead keeping it at just 21 per cent. He could slash stamp duty land tax across the board en route to potentially eliminating the tax entirely. Alternatively, the Conservatives could achieve what their 2019 manifesto’s “ultimate ambition”: raising the employee starting threshold for National Insurance contributions to align it with the income tax personal allowance (perhaps as a step towards integrating the two taxes). That would be a tax cut better targeted at low earners, with bigger pro-work incentive effects across low levels of income.

That brings us to the second, more political, reason why a basic rate cut would be a weird priority in this Parliament. Sunak’s recently announced “health and social care levy” – a 1.25 percentage point increase in National Insurance taxes that will eventually become its own earnings tax – would raise very similar sums to that lost from these income tax cuts. Not only would the Government have used the need for better public services as justification to raise taxes substantially only to then cut them by around the same amount. But in doing so, it would fall prey to criticism of generating unfairness given the two different tax bases.

The IFS’s Paul Johnson, for example, has described raising National Insurance to fund the NHS while then cutting the basic rate of income tax as “indefensible.” Why? Well, because the health and social care levy would only squeeze workers, whereas the income tax cut would benefit many other people earning incomes from holding assets, such as landlords or recipients of occupational pensions. That makes the Tories vulnerable to the accusation that, combined, these measures redistribute from poorer labourers to the wealthy.

Now Sunak might not be too bothered by this attack. Polling data regularly shows the more salient income tax second only to inheritance tax in the list of levies the public hate. It’s clear that the creation of the health and social care levy was more about delivering a flowery sounding revenue stream that it would be politically easier to raise in the longer-term anyway. And left-wingers will always call every income tax cut regressive, dreaming up new dodgy statistics to prove it.

But even if the Chancellor is confident on the politics, there’s another reason for caution on the economics. For when you feel you have the political and economic space to actually engage in a major tax cut, you should seek to achieve the biggest bang for your buck. And I’ve always been struck by an old line from a ConHome piece by Matt Sinclair on this, which said “tax cuts without reform is a missed opportunity.”

Britain’s tax code remains a complete mess, with extremely high marginal tax rates littered through the code for income. We have business rates, investment incentives, vehicle taxation, and the VAT system all in need of a complete rethink, or at the very least being rationalised to eliminate absurd anomalies. Add to this the slow economic growth we’ve experienced since the Great Recession and Britain is crying out for meaningful tax reform to improve incentives to work, save, and invest, and to remove tax-induced distortions to economic activity.

With all these challenges, it would seem short-sighted not to use a large tax cut to at least aid the process of some lasting, meaningful pro-growth reform. Big tax cuts of 10s of billions of pounds can play a crucial role in greasing the wheels for controversial tax changes, in fact, because any losers from a revenue-neutral reform can then be bought off through a lower overall burden.

If the Chancellor is really determined to do a large, broad-based pre-election tax cut, his ambitions should therefore not be limited to a simple rate reduction. He might prioritise a big rise in the starting national insurance threshold or to cut the headline VAT rate while phasing out many zero- or reduced ratings. Both would still be large tax cuts for most households, buy they’d bring a double dividend: either substantively improving work incentives for those on very low incomes, or improving the coherence of the code too.

With an ageing population raising demand for government spending, political opportunities for major tax cuts seem to be getting scarcer. That increases the importance of using them prudently. Sunak’s aim should be to use any cuts to improve our lasting economic potential and not just put more cash in pockets before elections.

Harry Fone: Brighton and Hove City Council raked in £1.8 million from just four bus lane cameras in a little over a year

30 Nov

Harry Fone is the Grassroots Campaign Manager for the TaxPayers’ Alliance.

During my time at the TaxPayers’ Alliance we’ve experienced a notable rise in what are commonly referred to as stealth taxes. A number of cities have introduced innocuous-sounding schemes from Clean Air Zones to Workplace Parking Levies. These are sold on the premise that they will improve pollution and congestion but in reality they are nothing more than a desperate tax grab to boost councils’ coffers at the expense of local residents.

Authorities have also become increasingly aggressive at using motorists as cash cows. Last year alone they raked in £1.76 billion in fines and fees, just in England. So with this in mind maybe I shouldn’t have been as shocked as I was to learn that Brighton and Hove City Council managed to rake in £1.8 million from just four bus lane cameras in a little over a year.

What angers me most though, about this particular example is the unsporting tactics employed by the council. Yes, motorists should be fined if they flout traffic and parking regulations. However, councils also have a duty to ensure that any vehicle restrictions are clearly signposted and quickly intelligible. As you’ll gather from this article it’s not hard to see why Brighton council fined 310 cars per day at its peak in October.

It’s not cricket and speaks to a worrying attitude I think we’re seeing more of from councils. Many would rather drum up ways to hoover up cash from already over-taxed motorists rather than putting greater effort into eradicating wasteful spending and operating more efficiently.

Winchester’s woeful welcome

In a similar vein, the Welcome Back Fund continues to irritate me as, yet again, a local authority’s use of the cash is questionable to say the least. Winchester City Council is currently tendering a contract worth between £5,000 to £7,000 for an “artist or design agency to design and install artwork / imagery on the vacant shop window of the former Debenhams building.” According to the council the building has been vacant for some months and an “artistic window wrap” is needed to dress up the high street.

Several questions immediately spring to mind. Who in their right mind approves this nonsense? How did they come up with the value for the contract? And is this really the best use of taxpayers’ cash at a time like this?

Yet again this shows what I believe is the poor mindset of many people in local government and how they deem it appropriate to allocate public money. Fair enough that the council seeks to improve the appearance of the high street, no one likes to see empty dilapidated shops. But why not contact the local university and ask if any art students would be willing to showcase their works or perhaps create something?

I suspect many students would be happy to do it for free to gain experience and for a bit of self-promotion. Consequently, thousands of pounds could be put towards more pressing matters. Perhaps new outdoor seating, cleaning graffiti or helping to attract businesses to take on the shop lease and start paying business rates again?

Simple savings make a big difference

It’s not all bad news though. I can report that at least one council seems to have the right attitude to taxpayers’ money. Test Valley Borough Council in Hampshire has managed to cut its stationery costs by £55,000 over the last five years. Pens and paper may not be the most interesting or glamorous items of spending but it’s a real world example of simple savings that local authorities can make.

In this case, the savings are enough to cover around thirty Band D Council Tax bills. That’s really important to consider when the economy and people’s finances are in dire straits – every penny matters. Like we saw with council printing costs during the pandemic, millions of pounds can be saved.

If every local authority in the United Kingdom made on average £50,000 of stationery savings that would add up to approximately £20 million. This is the mentality that councils need to have – making spending cuts that benefit taxpayers and don’t result in cuts to frontline services.

Interview: Osborne – “Whatever you’re doing in terms of devolution, double it. In terms of local taxation, double it.”

29 Nov

George Osborne urges Boris Johnson, Michael Gove and their colleagues to pursue devolution of powers to metro mayors with indefatigable determination:

“Whatever you’re doing in terms of devolution, double it. Whatever you’re doing in terms of local taxation, double it.”

Osborne recounts how as Chancellor of the Exchequer he launched the Northern Powerhouse, abandoned during Theresa May’s prime ministership but now revived by Johnson as the centrepiece of the present Government’s levelling up agenda.

He looks forward to the forthcoming White Paper about levelling up, on which Gove and Neil O’Brien are at work:

“I’m optimistic about the White Paper because of who’s drafting it, and I would only tell them, not that they need my advice, to trample over anyone who gets in the way.”

In Osborne’s view, the benefits of elected mayors should be spread to the English counties, regardless of any opposition from Conservative councillors:

“The Conservative Party is quite easily led if it’s given a strong direction.”

At the end of the interview, he dismisses as “nonsense” the idea that Johnson needs a new team of advisers, and insists that success lies within the Prime Minister’s grasp.

Osborne describes how, having spent his childhood in London – “I’d grown up I guess with that world view that nothing of any importance happened outside the M25” – he came round, after becoming MP for a northern seat, to the idea of decisive action to revive the cities of the North of England.

He urges the Government to be ambitious:

“I would say…to the current crop of Conservative ministers and to the Prime Minister…you never know how long you’ve got in office, and the wheel turns, and then suddenly you’re out.

“And I can tell you as someone who’s been out of office and out of politics for five years, you look back on the big things you feel you got right, and they’re often the things against which there was the most opposition, the hardest internal arguments in your party, but they’re also the most rewarding things.”

ConHome: “Let’s start with a broad-brush question. How do you think the Government’s doing?”

Osborne: “I think the Government has every opportunity to be a great success, and it has hit what all Governments hit, which is that kind of mid-term moment when people think, you know, is the focus there, is the direction there, are they going to deliver.

“It’s not unique to the Boris Johnson Government. Something quite similar happened to the Cameron Government in 2012, 2013.

“And, you know, we got our act together and won an election. And so it’s perfectly within the capability of Boris Johnson and his team to do the same. But they do need to act.”

ConHome: “How do you assess their chances of winning the next election?”

Osborne: “Well the odds are greatly in favour of the Conservatives winning, because the Labour Party has not yet done enough in my view to make itself electable.

“Though Keir Starmer is a very presentable Leader of the Opposition, he has not distanced himself from the Jeremy Corbyn era enough, apologised to the public for presenting Corbyn to the country as a serious candidate for Prime Minister.

“He has not done internal reform to reduce the influence of the trade unions.

“When I look back at my own career, I spent half my time in Government and half my time in Opposition. Opposition is in many ways harder than Government, because you don’t have the kind of natural agenda that a Government has.

“You certainly don’t have the full weight of the British state carrying you forward. The Leader of the Opposition – the Shadow Chancellor, which I was for five years – if they don’t do something that day, nothing’s going to happen.

“And if you look at the enormous efforts which Gordon Brown and Tony Blair went through in the 1990s – I was at the time a junior staff person in Downing Street and I saw at first hand their efforts to make the Labour Party electable.

“If you think of the huge efforts that David Cameron and myself and the people we worked with went through 15 years ago to make the Conservative Party electable, you just don’t see the hunger, the effort, the appetite in the Labour Party at the moment to do what is required to win back the trust of the British people.

“But the Conservative Party cannot just sit there and rely on their opponents failing to get their act together.

“And if the Labour Party were to get its act together, which is perfectly possible, there are still a couple of years to go until the election, yes, then the Conservative Party could be in real trouble.

“It doesn’t need to be, because it has all the instruments at its disposal to make itself eminently electable and to get itself re-elected.”

ConHome: “So let’s get on to the main subject of the interview, which is the Northern Powerhouse, devolution, elected mayors and all that.

“The Treasury is often viewed as an anti-localism, anti-devolution department. In Opposition, you yourself were a bit of a sceptic about localism.

“When did you become a convert to localism and mayors, and why?”

Osborne: “Yes, my own thinking on this did change over time. I remember early on thinking the Conservative Party had made a mistake in not initially opposing the creation of the Mayor of London.

“And then once we got into office, I think the definition of localism we had was a little bit limited. It was all about giving parish councils a bit more power over planning.

“There were some ideas, actually from the Liberal Democrats, that there had to be a referendum, because at that time there were lots of Liberal Democrat councillors in those cities.

“And so the whole agenda basically went nowhere for the first two or three years of the Government I was part of, and I guess around 2012, 2013, essentially the kind of emergency job on the economy was beginning to bear fruit and we were moving out of the financial crisis period, I became very focussed on what we could do with our opportunity of being in Government to tackle the really, really big economic problems the country faced, rather than the very immediate ones of the deficit and the recovery from the financial crisis.

“And I guess because I was a northern MP, you know, I’d grown up in London, educated in London, I’d grown up I guess with that world view that nothing of any importance happened outside the M25, and one of the luckiest and best things that happened to me in my political career was that I got selected for a seat in the North of England.

“It completely changed my perspective on the country, and it changed my perspective on how the rest of the country sees London.

“And for a long time I was one of only a couple of MPs for the Conservative Party who were even remotely close to Manchester. There was basically me and Graham Brady.

“And I’d already begun to get more involved as an Opposition MP in what we could do in Manchester as a party. I supported for example the BBC’s move to Salford.

“All this kind of thinking was evolving in my head, and we got to the middle period of the Government, 2013, and I thought why not take on the biggest domestic challenge of all, which is that the North of England has lagged behind the South – and the greatest political challenge, which was that people thought the Conservative Party had nothing to say about that.

“So it was both an economic and a political challenge, and I threw myself into it, and the Treasury is sceptical of devolution, for the simple reason that it always has to pay up when devolution fails, because people will not let local public services fail, let cities fail, and in the end the Treasury has to step it.

“But the Treasury is also an amazing department, full of incredibly talented and committed people, and if they’re given direction, they have the best chance of anyone in Government of delivering.

“And so with a selection of very talented civil servants, one in particular, John Kingman; my special adviser at the time, Neil O’Brien; with one of my Treasury ministers at the time, Jim O’Neill; we really focussed on would it be possible to reverse a century-old trend in British economic geography.

“High Speed Rail was already there, in fact an idea originally born of the Conservative Opposition, not the Labour Government, so High Speed Rail, High Speed Rail across the Pennines, and devolution and the creation of metro mayors, not just city mayors which had been the original idea in 2010.

“And so a much bigger economic geography than just Manchester city centre, they’ve got all of of Greater Manchester including places like Bolton, Bury and so on, and within Merseyside, South Yorkshire and so on, real devolution, allied with a big commitment to what I would call the social capital of the cities, the teaching hospitals, the universities, the science facilities, the cultural facilities, that would make these cities really attractive places to live and to commute to work in, so that it would also help the surrounding towns.

“And that became known as the Northern Powerhouse because the speech I gave launching it was in the Power Hall of the Manchester Museum of Science and Industry, and right from the start in the front row I had Labour councillors, the Leader of Manchester City Council, Richard Leese, who’s just retiring, the then Leader of Liverpool, and so on.

“So right from the start I thought it was never going to work if it’s not a bipartisan effort, and they’re never going to trust the Conservative Government, these big Labour urban fiefdoms, if they don’t see that there’s a Chancellor who’s prepared to share the credit with them.

“And I always thought the political gain, which was very much a secondary consideration, would flow from that. People would blame the Government when things go wrong, they would give the Government credit if things went right.

“If I have a regret it’s that I’d have either started earlier or had longer in office, to really cement it, because we made enormous progress in those subsequent three or four years, we got metro mayors created in all these places, which people had been trying for decades to set up.

“We got the plans in place for the railways, we created organisations like Transport for the North, so there was enormous progress.

“We then hit unfortunately the buffers of the Theresa May Government. She was not interested in it and basically ditched it.

“And then what excites me genuinely is that the Boris Johnson Government – which calls it levelling up, which is a good slogan – had doubled down on something I thought was very important.

“So all the political stars are aligned. Of course the really hard thing in government is then actually getting the job done.”

ConHome: “Was there ever any element of wanting to push the responsibility for public spending consolidation out and down to local authorities, many of them Labour?”

Osborne: “Well yes, at the time the country was spending too much, whether at national or at local level, so there were reductions in local authority budgets.

“But we gave them more freedom, we removed a lot of the ring fences that dictated how they spent money, something I think we should go much further with.

“If I had my time again, I would have doubled down on that.

“We explicitly said, for example, if they allowed more development in their area then they would keep the proceeds, the extra council tax receipts which would come from having more homes, the extra business rates which would come from having more businesses.

“Until then they didn’t see any benefit from that, so there was zero incentive to consent to planning or to encourage economic growth.

“One of my proudest achievements was that by the time we left office Manchester was the fastest growing city in Europe. And that was certainly not all down to me and I pay a lot of credit to people like the Labour Leader Richard Leese and people who worked for him and around him.

“I should particularly credit by the way Howard Bernstein, who was the Chief Executive of the Council, who was also brilliant.

“And that partnership really delivered Manchester. And we were starting to deliver in Liverpool, in Sheffield, in Leeds, in Newcastle and so on, and I think laid the groundwork for the Conservative revival in Tees Valley as well.

ConHome: “You outlined what you did in terms of allowing councils to keep more of business rates and so on. How far do you think the tax-raising powers should go, and what should the Government do?”

Osborne: “I think you could go quite a lot further. I think you could give local authorities, I wouldn’t do it at an individual council level, I think it has to be at a metro level or a big county level, but I don’t see why you couldn’t give them their own proper business-rate raising powers.

“So it’s a choice an area would make, you could either cut your local taxes to encourage business, or you could raise your taxes and spend on infrastructure.

“I think it’s worth looking at local income taxes as a supplement. I mean after all we have that arrangement in Scotland, I wouldn’t necessarily say you have to go that far in English devolution, but I was one of the architects as Chancellor of giving Scotland more tax-raising powers, and I think as a result, by the way, the SNP is being held much more to account for its own domestic performance, and they can’t keep saying we want more money from Westminster, because everyone goes hold on, you’ve got the power to raise taxes if you want to.

“So the public are not stupid. I think it’s really interesting that when the metro mayors have come up for re-election, the good ones have been re-elected – Andy Street in Birmingham, I was also very involved in creating a West Midlands Mayor.

“I’ll give you a local example where I don’t particularly agree with the approach the Government is taking, in London, where I was for several years editor of The Evening Standard.

“Sadiq Khan is saying Transport for London – we’re having a set-to about a Tube strike – he is the Mayor, he’s the Chairman of Transport for London, and he should have responsibility for running the transport system in London.

“And the freedom to run that system as he sees fit, to raise fares if he is prepared to. And what’s happened instead is the Government has stepped in and is trying to micromanage how he runs Transport for London.

“I would let him take responsibility, because then I think the public would say, ‘Are you doing it well?’

“At the moment you’re giving him a free pass of saying ‘Well, you know, the Government’s not giving me enough money.’

“I suspect it’s not a ministerial failing, it’s just the Whitehall system seeks to take control when it has the opportunity – it’s often the simpler solution to a problem, when, you know, Covid means the Tube’s gone bust.

“But the harder solution, but the better one, is to put the Mayor in charge.

“I think it’s a great shame that Transport for the North has been downgraded – I would upgrade it with more powers, make it more like Transport for London.

“I would give the metro mayors more responsibility. For example, we devolved the NHS in Manchester, which was a really bold thing to do.

“It’s the only place in England where that’s the case. It integrates social care. There’s no reason why the Conservatives should be afraid of this.

“Fundamentally, it should be in the Conservative DNA, if you go back to Edmund Burke etcetera, that they trust local communities.

“I remember at the time, when we started all this, there were some prominent members of the Cabinet who said, ‘We’re just handing power to the Labour Party in Birmingham and Teesside and so on – we’ll never ever have Conservatives elected there.’

“And I would reply, ‘We don’t have Conservatives there at the moment – it’s not as if we’re starting from a position of giving away power.’

“And the election of Conservative metro mayors in the West Midlands and in Teesside essentially proved that point. And I would also say there’s nothing really to be lost.

“The best news at the moment from my point of view is that Michael Gove and Neil O’Brien have been given the opportunity to demonstrate this, because I think they’re two of the smartest and most creative Conservative thinkers we’ve got at the moment.

“And I would just say – well they don’t need my advice, they’re both good friends of mine – just let them get on with it.

“Every time you’re confronted with something which is, you know, ‘Oooh, should we trim a little, this is a little bit too radical, the Treasury’s got a problem with this,’ I would go for the reverse.

“Whatever you’re doing in terms of devolution, double it. Whatever you’re doing in terms of local tax-raising powers, double it. Whatever you’re doing in terms of devolving the NHS, double or triple it.

“That is why we have ministers, and we have political leadership in government: to push the system where it doesn’t want to go. For the Conservatives, this is really the once in a generation opportunity to show the whole country it can deliver.

“And if you just limit yourself to a couple of town-centre funds, which by the way the Cameron Government had, the Blair Government had, they’re not new, that’s not what’s needed.

“What’s needed is proper economic theory about creating big economic clusters in the North, bringing the cities closer together, connecting them to the towns that surround them, connecting them with real transport links that work, and attracting business, which cannot be done by the public sector alone, which is another classic mistake.

“You’ve got to make business feel that these are the places to go to, to create jobs and invest, the wonders of the free market will then work, and in a way that no Government White Paper will ever predict, real activity will happen.

“I’m optimistic about the White Paper because of who’s drafting it, and I would only tell them, not that they need my advice, to trample over anyone who gets in the way.”

ConHome: “This question of doubling everything you’re doing, does that extend to more elected mayors outside cities, in counties with smaller populations?”

Osborne: “Yes, I think it would be great to have elected mayors. I was an MP in Cheshire for 16 years, and I remember the time when we were in Opposition, I was a junior MP, and there was a plan to create unitary authorities in Cheshire.

“Pretty much all the MPs in Cheshire, led by the redoubtable Gwyneth Dunwoody, the Labour MP, and Sir Nicholas Winterton, led the fight against it, and thankfully we were ignored by the Government and unitary authorities were created, and it’s a much more efficient and effective way to run Cheshire.

“No one likes local government reorganisation, and local MPs and councillors have got to resist because it’s your local power base, but on a country-wide scale you could easily have mayors for Cumbria or Cheshire or wherever it happens to be.

“And I think the point about a mayor is it provides a point of accountability, an individual who can’t really pass the buck and is held to blame or indeed applauded for what they do.”

ConHome: “A former Conservative Leader of a big county said, ‘When I was the Leader, I had to oppose having an elected mayor in our area, because of all my Cabinet colleagues – they would all have protested and given me a lot of political trouble if I had come out in favour.

“Now I’ve gone, I’m all in favour of an elected mayor. So that leads to a political question, which is how do you deal with a mass of Conservative Cabinet members, county councillors and district councillors who won’t want any change, at a time when the Government is moving towards an election and you really need their good will.

“You should arguably have done this much earlier. Can you do this politically in the next few years?”

Osborne: “Yes, absolutely. The Conservative Party is quite easily led if it’s given a strong direction. We did succeed in creating these metro mayors in large parts of the country where there were no Conservative councillors.

“Let’s take Manchester. I remember Trafford Council, it was Tory-run, and they were like, why would we want to give power to a metro mayor in the middle of Manchester.

“The truth was the council leader at the time, the Conservative council leader was very courageous and led his group in support.

“And I always thought the best way was never to try to impose these metro mayors – to use the carrot, not the stick – so I would pile up all the advantages that come from having a metro mayor, the additional money, the support for local transport – and that did work. The hardest area was West Yorkshire and Leeds, it was politically contested, but even that now has come into line as they’re seeing the benefits.

“So you can show them the treasure at the end and they will follow the trail.

“In any organisation, it’s quite hard to lead from behind. You have to have a view, and ultimately if people don’t like you, they’ll get rid of you.

“There’s no point just occupying those offices. I always felt [as Chancellor of the Exchequer] there was a ticking clock, I never knew when the axe would fall, and I would try to be as bold as possible.

“I would say the same to the current crop of Conservative ministers and to the Prime Minister, which is you never know how long you’ve got in office, and the wheel turns, and then suddenly you’re out.

“And I can tell you as someone who’s been out of office and out of politics for five years, you look back on the big things you feel you got right, and they’re often the things against which there was the most opposition, the hardest internal arguments in your party, but they’re also the most rewarding things.”

ConHome: “So far, hasn’t levelling up really been a bit of a mess? You’re right to say that Michael Gove is a great executive politician – Neil O’Brien a huge brain, did a column for us – they will instil some order and political shape to it.

“But so far, hasn’t it been a bit incoherent? And has it had the strategic grasp the Northern Powerhouse had, in terms of a very clear plan to link up the cities, make them bigger, establish an economic counterweight to London?

“Hasn’t levelling up by contrast been a bit of a shambles?”

Osborne: “Well I am a glass half full person. I would say it was moribund for several years after I left office, as an agenda, and obviously there were enormous distractions, Brexit and then more recently Covid.

“But I think Boris Johnson deserves full marks for picking this up as the big domestic agenda. That’s what a Prime Minister does. A Prime Minister says ‘My Government’s going to be defined by a few things’, and he has decided levelling up is one of them. So I strongly applaud him for that.

“I also applaud him for now having the right people in place to deliver it. I wish he had stuck with, and I think he will end up recommitting to, elements like the High Speed line in Yorkshire, the Eastern Leg, and the Trans-Pennine route, because those are long-term infrastructure projects which you don’t want to throw away and start again on some other project that’ll never get off the ground.

“So I’m quite optimistic about it all. What it needs is proper intellectual underpinning. If you think it’s all just about planting some civic flowerbeds in northern towns then the Tories will be out on their ear.

“It’s got to have proper, serious economic thinking about it, which Jim O’Neill, a world-class economist, provided me with on this, and others like Neil O’Brian and Rupert Harrison.

“There are around the world great city clusters. They are where the action is. The towns around them benefit as well, but a bit more slowly.

“And you have to do the things that make those cities work, so you have to make them exciting places that attract professional people, you need the buzz of universities and cultural institutions, you need excellent transport links between the cities and commuter links into the cities, and you need to empower the city leadership.

“If you’d said to me 30 or 40 years ago that Manchester would be the fastest growing city in Europe I would have thought it was an impossible ambition, because the Manchester area was on its knees.

“You have to think big, you have to be ambitious, and you have to realise that Government puts the kind of instruments in place, but then it’s the private sector and the business community, and not just the big corporates but every little small business, every entrepreneur that decides actually I’m not going to move out of Manchester, I’m going set my new web design business in Manchester rather than move to London. That is how progress is made.

“I think the Johnson Government can do it. It’s got the majority, they’ve made this its central domestic agenda, and if it sticks with it it can work.

“One of the things I find annoying, having been a political secretary in Downing Street in the distant past, is all this ‘Boris Johnson needs a new team in Downing Street. He needs grey hairs around him. He needs as Deputy Prime Minister a Willie Whitelaw-type character.’

“All of that is such nonsense. Actually in my view the Downing Street team is pretty talented at the moment, and they are a good team.

“And there are some real issues the Government’s got – it’s got a difficult economic backdrop, falling real incomes, it’s got to repair the relationship with Europe, which is absolutely critical to Britain’s economy, its immigration policy, its security policy.

“These are the big tasks alongside levelling up. But the idea it’s all going to be solved with some reshuffle of the kitchen cabinet or indeed the Cabinet is in my view nonsense.”

ConHome: “You’re really saying the problem with Boris Johnson isn’t his team, the problem with Boris Johnson is Boris Johnson.”

Osborne: “No I’m not actually, because I think Boris Johnson has the kind of charisma and leadership to deliver a lot of what he’s set out to do.

“But governments in the mid-term, they have to kind of refocus, and the glittering prize is there if they just reach out and grab it.”

Gove’s backing for street votes is very welcome. Lets get a pilot scheme going.

12 Nov

Michael Gove, Secretary of State for Levelling Up, Housing and Communities, gave evidence this week to the Housing, Communities and Local Government Select Committee. A thoroughly depressing session it was too.

A range of subjects was covered. But the deliberations had a certain rhythm. “Would the Secretary of State agree that the answer to the problem of x is more public spending/more regulation/another layer of Government?” “Absolutely,” the Secretary of State would reply. Clive Betts, the Labour MP for Sheffield South East and the Committee’s Chairman, presided with a bewildered grin. He couldn’t believe his luck. The Labour Party had been trounced at the last General Election. The country is no longer shackled by the EU. Yet Government policy is more socialist than ever. All that was left for Betts to do was occasionally murmur: “Thank you for that reassurance, Secretary of State.” Or: “That’s helpful, Secretary of State.”

One issue that cropped up was where the revenue from Business Rates should go. The approach had been to move towards Business Rates “retention”. This would mean that a local authority keeps the money it raises. This would give it a motive to encourage economic growth. Poorer areas would have an incentive to become centres of enterprise. For instance, by selling surplus municipal land and buildings to enable development. Or making planning and licensing process quicker, simpler, and less onerous, and thus less of a barrier to new firms. Then, with the extra revenue from Business Rates there would be an incentive to spend it effectively, in a way that would attract more entrepreneurs – improving the roads and smartening up the environment. A clear illustration of levelling up.

Gove seemed keen to shelve all that. (“It is important that we ca’ canny.”) The focus was more on redistribution of wealth, a zero sum game. Not on wealth creation. The successful will be punished with money taken from them. The poor areas will remain supplicants. The council bureaucrats will be secure in their six figure salaries – on the strict understanding that the communities they are responsible for remain poor. Gove calls this way of treating Business Rates revenue “redistributing money to those who need it most.” Another way of describing it would be levelling down. Levelling up would mean pressing ahead with Business Rates retention and also dealing with some of the other perverse council funding arrangements which penalise towns with ambition.

But tarry a while. The session was not entirely devoted to dirigiste gushing. Relief from the gloom came in the form of a query from Matt Vickers, the Conservative MP for Stockton South:

“What is your view on the role of street votes in any future planning Bill?”

Gove responded:

“I love the idea.”

Very welcome. So often localism is defined as giving power to local authorities. But a far better application is taking power from local authorities and passing it down to local communities.

Create Streets proposed that allowing mansard roofs would be a reasonable issue for street votes. There could be certain safeguards – that a clear majority is required, that conditions on design and materials must be met to ensure that the beauty of the street is enhanced rather than diminished. But the increase in the housing supply could be significant – whether easing overcrowding for families or allowing landlords to rent out an extra room. Another point is that adapting, extending or converting an existing building has a much lower carbon footprint than building something new. So it is an eco-friendly means to provide more housing.

So why have the local authorities not got on with it? A lot of them have passed motions declaring a “climate emergency.” Yet I do not know of a single one that has eased planning restrictions in ways that would provide a practical benefit.

Why do councils feel they must wait to be forced to do it? They could allow a street vote and then issue a permitted development order honouring the result.

The timidity is a shame. But Gove could always give them a nudge in advance of the legislation. A pilot scheme could be announced. Some funding to help local authorities with promotion and legal technicalties. Then when the legislation is brought in, the benefit of such experience could allow for better drafting.

 

Victoria Vyvyan: The Government has no ambition for the rural economy

31 Oct

Victoria Vyvyan is Vice President of the CLA, which represents 28,000 rural businesses.

The 2021 Budget shows that Government has no plan to create prosperity in rural areas. The Chancellor said his Budget was ‘fit for a new age of optimism’, but for those of us living in the countryside there was little new to get excited about.

All too often, when Government talks about the countryside it does so in the context of keeping it the same. There is never a focus on what the countryside could be – a vibrant part of the economy that creates jobs and encourages entrepreneurship, all the while building affordable homes and strong communities.

The rural economy is 18 per cent less productive than the national average, largely due to poor infrastructure, poor skills provision and an outdated planning regime.

Often house prices are beyond the reach of local people, many of whom up sticks and move to the city, taking their talents and potential with them. As a consequence, underemployment and deprivation take root – while schools, pubs, churches and shops close down to the detriment of village, and perhaps national life.

But if Government brought its ‘levelling up’ agenda to the countryside and focused on reducing the productivity gap, up to £43 billion could be added to the economy. In turn, hundreds of thousands of good jobs could be created, affordable homes could be built and our often-forgotten rural communities could quickly be restored.

There were some subtle causes for hope – changes to business rates and annual investment allowances will give rural business owners some room for manoeuvre. Yet if Government gave with one hand, it took away with the other.

Changes to the Shared Prosperity Fund represent a massive cut to funding in deprived areas compared to previous funding mechanisms, making it difficult to see how many communities can survive at all, let alone be levelled up.

Meanwhile many tourism businesses had expected the temporary VAT cut to 12.5 per cent to be made permanent. No such announcement was made, and now hotels and holiday sites look set to return to a 20 per cent rate, far higher than any other major tourism economy in Europe.

The Chancellor’s announcement to build more homes on brownfield sites might make sense, but given less than 10 per cent of available sites are in rural areas it will do nothing to ease the rural housing crisis.

Nobody wants to concrete over the countryside, least of all us, but instead of treating rural communities as museums, government should support small scale developments – adding small numbers of homes to a large number of villages, helping to provide good housing for local people whilst also boosting the economy.

Earlier this year Government announced its Rural Proofing plan to ensure government policies meet the needs of rural communities, but there is little evidence it is being enforced.  Whilst a good idea in principle, the current approach to ‘rural proofing’ does nothing to address the actual problem – that government departments don’t talk to one another.

The health of rural life is as much governed by the Treasury, Department of Levelling Up and Department for Business as it is DEFRA. Yet speak to officials and Ministers across Whitehall about their plans to support rural business and they will simply assume it is someone else’s responsibility.

As a result, good ideas and significant opportunities fall through the cracks. Put simply, without a cross-government rural strategy, the opportunities the Chancellor spoke of in his Budget speech will not be available to the millions of us in the countryside.

The frustration rural businesses feel is palpable – not least because so many of them buy into the belief that there is tremendous opportunity ahead.

An ambitious government strategy for the countryside would complete long promised infrastructure projects on digital and electrical connectivity. It would provide a tax and business rates system that actively supports rural businesses and encourages diversification, and would maintain an internationally competitive VAT rate that would support the development of the UK tourism sector.

But we should be able to go further still – committing to planning reforms that allow disused farm buildings to be converted quickly and easily into homes and office space, investing in electric vehicle chargepoints in rural areas and kick starting exciting new environmental markets with seed funding and a meaningful regulatory regime.

The message to government has to be clear. The Chancellor’s optimism needs to be matched with serious and ambitious strategic thinking. Levelling up is the right concept but means nothing if it doesn’t apply to the countryside.

Caroline Ansell: English language schools are crucial to our tourism industry. But their survival is at stake.

1 Aug

Caroline Ansell is Conservative MP for Eastbourne.

In my constituency, nearly one job in three depends on tourism. That’s why I have been relentlessly lobbying both in Parliament and behind the scenes to support this sector through the pandemic.

You might think that the ending of restrictions means life will return to normal on the pier and in our amusement arcades, shops and cafes, but that’s not the full tourism story for our town and many others.

For now, staycationers have taken the place of the town’s usual tourists, enjoying everything we have to offer, but as international travel reopens for fully-vaccinated British people many may instead choose the guaranteed sunshine of southern Europe.

If that does happen, quarantine regulations will mean a large gap remains in the economy of Eastbourne and many other British towns and cities, a gap usually filled by international students.

It’s a little-known fact that students learning English in the UK are the bedrock of Eastbourne’s tourist economy and many other towns and cities on the South coast and all over the UK. In Eastbourne alone, we have six English language teaching (ELT) centres. Our international students are a vital part of the visitor landscape, whereby each summer the town’s population swells and its average age plummets.

Our international schools are local employers. They provide business for local transport and tourist venues, and pump-prime retail and food outlets. Likewise, importantly, there is secondary income support for the several hundred host families for whom the time in the summer hosting students makes the difference. All of these secondary businesses, and these families, are missing the annual 500,000 students who stopped booking and arriving in March 2020, with little or no prospect of their return while two weeks of quarantine is compulsory.

Sixty per cent of ELT students are teenagers from Europe who come for a week or two: they’re unlikely to come if they’ll spend longer quarantining than on their course. And ELT is a seasonal industry: if our schools – predominantly SMEs – miss summer and Easter peaks, that’s most of their income lost.

That’s exactly what has happened – no significant income since summer 2019, and no prospect of any until well into 2022. Figures from the trade association English UK found a £590m loss for last year, for a sector which normally puts £1.4bn into our economy.

Though Eastbourne’s ELT schools are financially on the ropes, they’ve had more help than many of their colleagues around the UK. Their local authority is one of a small minority which has granted expanded retail discount – basically wiping out business rates – for both last financial year and this one.

They and I am very grateful to Eastbourne District Council for this concession. It makes it slightly more likely that we can preserve UK ELT’s global reputation and expertise, which meant that pre-Covid we taught English to more international students than any of our competitors.

But this industry’s survival is still not guaranteed, which is why with other backbench colleagues I am continuing to campaign for more targeted government help for English language schools and tourism. Our first ask has been for the Government to ensure that all English language schools automatically get business rates relief. While furlough continues, rates are the largest outgoing for many centres: I know of one London school which has received a summons for £137,000 unpaid council tax.

It’s not a mansion, but like most ELT schools needs plenty of space for classrooms and common rooms, and to be in a safe and central location.

Simply extending the business rates relief concession to all language schools would help many to survive until the spring, when we hope students will be booking and arriving once more. Industry estimates are that this would cost just £17m.

But the end of furlough will create new problems as it is likely to be months before bookings begin to flow once more: how many trained and experienced English teachers and other staff will be lost to the industry in the intervening months? How would that affect our ability to attract students from all over the world, as we step into a new future?

It is hugely important that we look at the wraparound to this sector. Anything and everything that could present a barrier or an obstacle, or make us less competitive in the world, we should look at and address to make sure that we are match-fit for the future.

Why is this so important? ELT has been a hugely important export for us, both in its own right and as a crucial part of our £20bn international education jigsaw. This is made clear in our International Education Strategy, which commits to increase our capacity to meet the global demand for ELT, and forge closer partnerships with other sectors in our export drive.

The teenagers who come to Eastbourne, or Bournemouth, or a summer camp in an independent school, are more likely to build a lifetime’s affinity with the UK. They are more likely to aspire to do degrees in the UK, for instance, and research shows 80 per cent of those who have studied here will return for business or leisure. Visit Britain research shows that ELT students stay longer and spend much more than other tourists.

If we wish to retain those benefits of social and cultural enrichment, of inward investment and soft power, I believe the specific calls of the sector need to be debated, just as its deep value to the UK needs to be celebrated.

And when Eastbourne pier is once more thronged with French teenagers, we can heave a sigh of relief.

Alex Morton: We need to boost our brownfield developments. But that doesn’t mean a zero greenfield approach.

21 Jul

Alex Morton is Head of Policy at the Centre for Policy Studies, and is a former Number Ten Policy Unit Member.

You don’t need to live in a town or city to know that Covid has had a shattering impact on their commercial spaces. Offices and shopping centres that once buzzed with activity have been shut down for months on end. Even once we are past the pandemic and pingdemic, it is still not clear how much activity will return.

This represents a profound challenge to the Government’s plan to build back better. Even before the pandemic, many of our high streets had started to look like ghost towns. And the problem is worst in those areas that are most electorally important to the Conservatives: as I point out in a new report for the Centre for Policy Studies think tank, there was a clear correlation between higher rates of retail vacancy and the number of new seats the Tories won in each region in 2019.

If the Government is to revive high streets, a clear and bold approach is necessary – and if that revival is to be in full swing by the next election, it needs to start now.

The Government has already made it significantly easier to convert unused commercial space to residential. This would not only bring new life to commercial spaces, but help tackle the housing crisis. Our new report, Reshaping Spaces, calculates that even before Covid-19 there was space for at least 500,000 homes from recycling surplus retail space into homes and flats.

This is a likely underestimate, since in the wake of the pandemic there will be an opportunity to regenerate entire commercial centres (often at higher density), and since as home working and hybrid working increase, there may be surplus office space that can also be converted (although it is too soon to know if this is true).

Reshaping Spaces makes a series of recommendations to make it easier to regenerate commercial centres. For example, we argue that business rates are no longer fit for purpose and are damaging commercial centres. At the very least, Government should reform the incentives to hold onto vacant commercial space: currently the business rates retention system penalises councils for recycling buildings more than keeping them vacant.

But arguably the most important recommendation is that, as the first step in the new local plans, all councils should put a commercial needs assessment in place by 2022, assessing levels and location of commercial space. Councils should receive additional funding to pay for this, and see a small incentive payment made when this is completed. Where the local council does not do this, Government should step in and complete it, working with local employers and landlords to create such a plan.

Thus by the time of the next election, probably in 2023, every area would have a plan for its commercial centres – the high streets and business districts, the retail parks and out of town office hubs. People could see that there was a plan and action underway following on from it. But, crucially, councils would be able to use this assessment as the foundation of the wider local plan: in essence, the first step would be to reassess the level of brownfield land available, before moving on to the green.

The political advantages of this approach are obvious. There is nothing more frustrating than brownfield sites remaining unused with no plan of action in place, whilst new homes on greenfield are pushed through on appeal. This is partly why the CPS has called for planning permissions to be turned into delivery contracts, so that permissions are actually built out (see here) – something many SME house builders have welcomed.

But there is also a political danger. One of the more seductive myths in the housing debate is that there is enough brownfield land available to satisfy our housing needs.

It is true that there are things that can and should be done to reduce the amount of greenfield development that is needed and to boost home ownership without building more.

As we have pointed out at the Centre for Policy Studies, it is a scandal that, in the decade after the financial crisis, buy-to-let landlords essentially snapped up all of the extra housing stock that was built. Rebalancing the housing stock in favour of owner-occupation should be a crucial priority for Government – hence our proposal for long-term fixed rate mortgages for first-time buyers (see this excellent report), which was taken up in the 2019 Conservative manifesto. The Government could still go further, perhaps by introducing a CGT cut for landlords who sell up.

We also recently published a briefing note that showed how net immigration has a significant impact on the level of new homes needed, particularly in London and the surrounding area. The South and London see high levels of international immigration, indeed without international immigration London’s population would have fallen by 700,000 in the past decade, which in turn would start to relieve pressure on the wider south as fewer people are pushed out by London’s high housing costs. (see here and here).

However, even if immigration falls, there will still need to be greenfield development in England. Even in the South, only 40 per cent of household growth is due to net immigration.

As the planning debates return later this year, there will once again be those who argue that we can do without greenfield development, that high housing costs (particularly in the South) are just caused by low interest rates. They will argue supply has no impact because this is convenient politically.

One of the key misunderstandings is when people argue because there are 23 million households, whether you build an extra 100,000 or 300,000 homes a year makes no difference to overall housing costs – in either case it is just one per cent of the total housing stock and so a negligible increase in supply.

But it is not just total households that matter in terms of house prices. It is the total number of transactions in terms of homes bought and sold. So you should not measure new build homes against total households but against annual transactions. In recent years, transactions ran at around one million to 1.2 million a year (see link).

Assuming a market of one million sales, the difference between 100,000 homes a year and 300,000 homes a year, or 200,000 homes, is an increase in supply of 20 per cent relative to the same demand. Even 1.2 million sales give an increase of around 16 per cent in supply. So an increase in new builds does help to hold down house prices, all other things being equal, and will have a reasonable impact on prices. This is why supply matters and planning reform matters.

A “brownfield first” approach is very different from a “zero greenfield” approach. It is about actually developing on brownfield rather than just rejecting greenfield development. People will accept some greenfield development if measures to minimise it are in place, not if greenfield is seen as the first call.

Government needs to listen on planning reform – yes. It needs to be flexible – yes. The Housing Minister and No 10 are doing their best to do so. But neither Conservative MPs nor conservatives or liberals more widely should fool themselves – a brownfield first policy is both feasible and desirable. But a “zero greenfield” policy is not.

Rachel Wolf: Tests for the delivery of levelling up, and levers with which to deliver it

10 May

Rachel Wolf is a partner in Public First. She had co-charge of the 2019 Conservative Manifesto. She was an education and innovation adviser at Number 10 during David Cameron’s premiership and was founding director of the New Schools Network.

The Conservatives have won more stunning victories. Why?

First, the approach that drove the 2019 victory continues to deliver.  Second, vaccines and furlough have rewarded sitting governments: they have demonstrated competence, agility, and a willingness to spend.

The next great test won’t come for a while. Boris Johnson is Merrie England: he is the perfect leader for our summer of freedom. The economy will temporarily boom. Furlough won’t be withdrawn until September. Provided it stops raining, everyone should feel good.

But the Government will be acutely conscious that the next six months is also the last window for policies that can deliver by 2024. They will also know that, by Christmas, any lingering effects of what my partner and ConservativeHome columnist James calls ‘furlough morphine’ will have worn off. Some economic scarring is likely.

In other words, ‘levelling up’ now needs to get real. This is clearly the plan in the next few months, starting with the Queen’s Speech tomorrow, and then leading to the Levelling Up paper.

Truth be told, levelling up is a poor slogan. It has never done very well in our focus groups – people find it confusing and then, when it’s explained to them, mildly irritating. They don’t think they’re ‘levelled down’, they think they’re ignored. Equally, they find the idea that in four years they’re suddenly going to become London and the South East bizarre – it’s not what they want, and they don’t think it’s credible.

But the danger of ‘levelling up’ is not that it confuses voters, but that it confuses policy. Too many seem to equate it with transforming regional productivity, affecting every town in provincial England and Wales, within a Parliament. Obviously if that’s what voters wanted, they would be disappointed.

Of course regional productivity and innovation are vital, and longer term work should begin. But there are also shorter-term gains. Here are some important ones, some obvious levers, and ways to measure progress.

The high street test.

People care deeply about where they live. They ‘measure’ decline by their town or city centre. Here’s what you hear time and time again: shops boarded up; graffiti on the cenotaph; drug addicts; no monthly market; no decent playground.

In other words, it’s depressing to be in, feels mildly unsafe, and there’s nothing to do.

  • Levers: Business rates; soft infrastructure (local museums, libraries, playgrounds); events including markets and protecting green spaces; incentives for lower margin, often civic enterprises from soft play to youth clubs to sports. Decent bus services. Core public services in the town centre.

It is crucial that ‘economic investments’ (many of dubious effectiveness) do not trump these. Yes, it becomes easier to sustain this kind of infrastructure when people are wealthier. But it is worth remembering that many of these things existed when people were much, much poorer.

  • Tests: vacancy rates. Footfall. Number of events. And, of course, what people tell you about their town.

The safety test

Under-reporting of crime is a big problem, and there is reason to believe it disproportionately affects the Red Wall. Burglary, shoplifting and vandalism are particular problems.

Fraud, too, is a national problem with unequal consequences. Pensioners in Red Wall seats who may own their own homes but have very modest savings and no private income are particularly exposed to losing their life savings. Meanwhile, specific estates suffer from low police presence, and deprived coastal communities and small towns are the targets of County Lines.

In other words, crime is a particular issue in particular ways in these places.

  • Levers: the extra police will help. We also need to change the way in which Home Office funding is allocated and put more emphasis on localised funds like the Safer Streets Funds (which pays for things people want like CCTV). We need a massive, revived focus on fraud – it is getting insufficient airtime and attention.
  • Tests: the obvious source is surveyed crime, but the government also needs better ways to measure crime than annual face to face interviews,

The Opportunity Test 1: Skills and Jobs. 

Training and apprenticeships are a huge priority for working class people. They want local training opportunities – ideally leading to local jobs. We know there’s huge untapped demand for technical level skills in the labour market, and that many adults want to retrain. It remains one of the great challenges of our system.

  • Levers: the Queen’s Speech will create a proper lifetime learning entitlement. Now it needs more funding and less bureaucracy (which is already blighting other skills entitlements and apprenticeships).

On jobs, big changes will be long-term. As well as incentives for private sector investment, the public sector is an opportunity. People want trained people to stay or return home. A start – and one of the most popular things universities can support – would be incentivising public sector graduates (like teachers, nurses, and doctors) to stay in areas where recruitment is a challenge.

  • Tests: number of adults in retraining. Reduction in skills shortages in ‘technical’ roles. I’d include reduced reliance on foreign skilled labour in specific areas (such as parts of construction, who are presumably going to see investment, and therefore job opportunities through net zero and transport).

The Opportunity Test 2: Schools

Schools perform less well in many Conservative target areas. In the past, I would have said this was a moral imperative, but not an electoral one – school quality wasn’t a big vote winner. But I think there’s now greater desire from parents (and we’ll be publishing a report with the Centre for Policy Studies on this in the near future). They are more aware of how their children are doing, how far behind some of them are, and how differently schools responded to the pandemic.

  • Levers: incentives for teachers to go to underperforming areas. Renewed focus on academies and free schools. Ofsted inspections with a focus on standards. Continuing the drive on behaviour. There should also be new focus on the most gifted through programmes in schools and more academically selective sixth forms.
  • Test: Ofsted ratings (including number of failing schools); percentage getting five good GCSEs in core subjects (called the EBACC).

Finally, an overall measure: retention of people and inward migration – in other words, do people want to stay and move to the towns of England? It is implausible that this will transform in a few years, but you might start to see a little movement towards the end of the Parliament (and post-Covid home working will accelerate this effect if places are nice to live in).

You will no doubt have issue with many (if not all) of these levers and measures. There are some omissions (most obviously health). But my point is that it is possible to generate and measure progress within a few years. The job won’t be done, but people will see the path. That shouldn’t diminish the importance of the longer-term, even harder job of thinking through regional growth and productivity. But if you don’t get these areas right, Johnson and the Conservatives won’t be given permission to carry on.