DISCLAIMER
For this first time since Thursday, this update is being written with some genuine confirmed knowledge as opposed to speculation, which should make it useful – if perhaps a little more dull. However, not being a fortune teller I’m still not sure we can be predict the moves of the new ‘Liberal Conservative’ Government (I still prefer ConDem but in the spirit of hope I’ll switch to LibCon).
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Yesterday, the day dawned with a new coalition government and unprecedented times for the United Kingdom. As the Cameron & Clegg show got into full swing with a lunchtime press conference in the sunny gardens of No.10, reality seemed to dawn on the pack of journalists gathered there that this seemingly bizarre partnership really is here to stay – it was somewhat reminiscent of the sketches with Morecambe & Wise in their pyjamas in bed having a cosy night-time chat. The partnership put a lot of effort into stressing the point that this is a coalition to last, signifying a new form of government and not intended to be a short-fix until the Conservatives feel they can call another election or until it falls under a No Confidence Vote.
To a large extent, this is essential for the markets which need some indication of stability. The FTSE closed up 49 points last night perhaps indicating a little more confidence and has continued on a tentative upward trend today.. This was no doubt helped by a slight improvement shown in economic figures and the statement by the Governor of the Bank of England endorsing the plans to deal with the economic deficit.
By the afternoon, there were already headlines announcing ‘bad news’ for Cameron with unemployment figures rising – surely even the harshest of critics couldn’t blame David Cameron for the rise in unemployment after just one day in the job?
So, now that we have got down to business and have seen the big announcements of who is in the Cabinet – which changed a lot over the course of the day yesterday as speculation was rife in all camps – what does this potentially mean to our own industry? First of all, our ministerial teams:
- Secretary of State for DCLG - Eric Pickles
- Secretary of State for DEFRA - Caroline Spelman
- Secretary of State for DECC - Chris Huhne
- Secretary of State for Transport - Phillip Hammond
The replacement of Caroline Spelman by Eric Pickles in DCLG is not a surprise and many in the industry will be pleased to see Pickles at the helm as one of the few Cabinet members with genuine experience of having been in Government. Pickles has held local government and transport portfolios before and understands the territory more than many others. He is also key in terms of the move towards devolution of decisions to the local level and many of the proposed planning reforms. An unconfirmed announcement has been made that Grant Shapps will be installed as Housing Minister, and Conservative, Greg Clark, as junior Minister responsible for Decentralisation within DCLG (implementing that radical devolution programme no doubt). We are also waiting to see whether Sarah Teather will make an appearance in the department for the Lib Dems. However, it would look likely that the new team will seek to press forward with their agenda for planning reform, albeit possibly not immediately.
Phillip Hammond has previously been regarded as extremely competent when a shadow at the Treasury and has been prominent in discussions on REITs, the Professional Private Rented Sector and TIFs. In this respect he will be regarded as competent in delivering some of the major infrastructure projects likely to come forward (although not a new runway at Heathrow).
The official coalition agreement has some interesting points, there is no reference to property and development per se but there is a clear commitment to the localism agenda with the statement that ‘the parties will promote the radical devolution of power and greater financial autonomy to local government and community groups. This will include a full review of local government finance.’ Note the use of the word ‘radical’ in this. The Conservatives and the Liberal Democrats did agree on the principles of the localism agenda and there was some level of agreement on the principle of ring-fencing council tax and/or providing community incentives. It may be that the new Government seeks to introduce a Bill on this quickly as a means of bringing change in areas of mutual agreement which will be simpler to progress and will demonstrate the successful working arrangements of the partnership.
The ever vilified HIPS are to be scrapped – the tears of those dedicated HIPs inspectors may be unnecessary as they can probably retrain as inspectors for Energy Performance Certificates or some of the other new measures being introduced to encourage eco-friendly lifestyles in the home.
On wider issues, the new Government announced yesterday that it was scrapping plans for a new runway at Heathrow and will refuse additional runways at Gatwick and Stansted. Although, as the aviation industry seems to be destroying itself from the inside out and outside in through strikes and ash clouds and with the new Air Passenger Duty coming in, we may all be priced out of the air anyway in a few years time – anyone for a summer holiday at Pontin’s? The new Government will continue with HS2 (route to be determined), will encourage anaerobic digestion as a means of dealing with waste and will establish a series of low-carbon and eco-friendly measures.
Many of the low carbon measures will have a significant impact on the property industry as ever more stringent codes are embedded into policy. Should there be a Planning Act any time soon, sustainability is likely to form a significant chunk of it along with localism. Already, Peter Luff MP has written to Eric Pickles urging him to tear up the Regional Plans…There remains the view within the industry that many of the policies, if implemented, will simply mean that development ceases. However, the process of implementation is unlikely to be quick and there remains many areas for discussion and debate between policy-makers and the industry. We already know that localism will be formally increased in the future, the smart operators are already responding to this, particularly on large schemes which could get caught between policy regimes over the longer-term.
Many involved in the energy sector will have viewed with concern the installation of Liberal Democrat MP, Chris Huhne to the top post in Energy & Climate Change (at the same time as breathing a sigh of relief that it wasn’t Simon Hughes – although, given that all junior positions have yet to be announced we shouldn’t speak too soon). The coalition agreement highlights the differences between the two parties in terms of nuclear with the Lib Dems vehemently opposed and the Conservatives committed to replacing civic nuclear power stations. A process has been agreed allowing the Liberal Democrats to maintain their opposition whilst permitting the government to bring forward the national planning statement and putting it before parliament; a Liberal Democrat spokesman will speak again the planning statement but Liberal Democrat MPs will abstain – at least there will be a three-line whip to abstain, however this doesn’t necessarily mean that they will all obey. Perhaps in recognition of this risk, the coalition agreement also sets out that the debate on nuclear will not be regarded as an issue of confidence – ie. should the new best friends in government fall-out over it they will kiss and make-up a little later and won’t go off and find some new friends to play with instead.
The full details of the coalition agreement will be published within a fortnight apparently. The Queen’s speech will be on 25th May so we will see which Bills will go through Parliament first – it would seem likely that, other than the severe austerity measures on their way, the new government is likely to bring forward Bills on areas of common ground in the first instance in order to demonstrate their harmonious working relationship.
Updates will continue until all relevant junior posts have been announced. If you would like anything further please so get in touch.
To finish, another very very wise man sent me this quote this morning stating that it seemed appropriate for the climate, it does indeed:
“………there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than the creation of a new system.
The initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who would gain from the new”
Nicolo Machiavelli
‘The Prince’
1513
PREVIOUS BULLETIN:
DISCLAIMER:
With an official Government now in place, although not quite fully fledged Currently we are all in shock and the office furniture is being rearranged into a more coalition style of working to make sure that we all get along swimmingly and talk with one voice. As a result of this upheaval I may not always be 100% focused on that old political neutrality thing again so please do excuse any potential bias . Not to mention that, even if we know who’s in Cabinet, in reality, no one actually has an idea of what is going on and what might happen when so, to revert to the old faithful Rumsfledism – there are known unknowns and there are unknown unknowns…
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So, where does this leave us then? Well, unless you’ve been in a bubble since 5:30pm, you will be aware that we now have a Conservative government – well, that’s not quite accurate, we are actually under a ConDem Government. This is the first coalition government since the war however, unlike that government, there seems to be an expectation (at least in terms of the public front) that this coalition government will last for the lifetime of a parliament. At the same time, Gordon Brown has stepped down both as PM and as Leader of the Labour Party with immediate effect. Harriet Harman is now acting leader until a leadership election can be held – it is anticipated that she will not run for the leadership, which will be a relief to those who would see her as Labour leader as being a sure way of keeping the party out of power for decades to come…
The new coalition government is now in place and is expected to have its first full Cabinet meeting later today. The first meeting is likely to be largely a case of bedding down, although they will be keen to ensure that they can come out with some sort of positive announcement or news to demonstrate the capabilities and consensual nature of the coalition. With so many people now in Government who have never seen the inside of a Government department and so many new MPs in Parliament, it may feel a little like the sixth formers have taken over the running of the school for a few days. However, there are serious decisions to be taken and some details of the nature of the agreement between the parties have started to emerge.
The markets have opened down on waking up the new Government but with no indication of panic and reflecting falls across global markets over night based on continuing fears over the Eurozone. To an extent, the market had already anticipated and adjusted to the likelihood of this outcome, however, it remains fragile.
The Lib Dems have managed to negotiate away the Tory plans to abandon cuts in inheritance tax whilst they will be abandoning plans for a Mansion Tax. However, the Conservatives have seemingly won the day on introducing the £6bn of cuts immediately – this is a brave move and will make the new government incredibly unpopular , however, it will be hoped that the influence of the Lib Dems will temper any of the more extreme measures. It may be that the theory is to get the pain out of the way quickly in order to be able to deliver on the promises of reform with the hopes of reaping the benefits in electoral terms further down the line. However, this will depend on the government surviving long enough to prove abilities which is clearly the firm intention but is by no means guaranteed. As expected there will be an emergency budget within 50 days which is expected to set out the severe cuts which the new coalition government anticipate will put the country into a position of recovery.
The new Government will scrap most of the planned increase in National Insurance contributions for employers and a “substantial increase” in personal tax allowances will be introduced to help middle and lower income workers, a measure the Lib Dems had been calling for. There has also been a concession with the pledge to stop people earning under £10,000 paying income tax being made something to work toward, with no deadline for completion (whether or not it is complete before this Parliament is dissolved is a different question and depends very much on whether the coalition survives beyond the next 12 months).
A Referendum will take place on Democratic Reform but based on a new Alternative Vote system and not on fully-fledged PR. The Lib Dems have also negotiated measures to introduce a fixed term parliament of five years (although there is some discrepancy between the BBC and Sky News this morning as to whether it is a four year fixed term or a five year fixed term). This is a canny move as it means that the Conservatives couldn’t simply dissolve parliament and call another election in advance of any referendum on democratic reform and changes to the voting system thereby securing their position. The five year fixed-term parliament seems rather ambitious – few parliaments go the full five years and it would be truly surprising if this current coalition lasts the distance; it obviously does not preclude a Government collapsing on the back of a no-confidence vote. Four years may have been a more realistic target – however, it can’t have escaped the attention of both the Conservatives and the Lib Dems that, a four year term would result in the General Election being held on the same day as the London elections from this point forward, something that did not prove to work in either party’s favour last week. In addition, the Lib Dems have won the concession of a wholly or largely elected House of Lords with details to be confirmed.
The Cabinet so far…
- William Hague - Foreign Secretary
- George Osborne - Chancellor of the Exchequer
- Liam Fox - Defence Secretary (dashing the hopes of many – well, several – who had hoped to see Paddy Ashdown in the post)
- Andrew Lansley - Health
In addition, we now know that there are five Lib Dem Cabinet Ministers:
- Nick Clegg - Deputy Prime Minister
- Vince Cable - Responsibility for Business and Banks (not clear at this stage if this means First Secretary to the Treasury or a new, separate post, more likely to be the latter)
- David Laws - Education Secretary (place of Conservative MP Michael Gove, who stated that he would be prepared to give up his Cabinet seat if it meant forming a successful coalition)
- Danny Alexander - Scottish Secretary (well, it would have been incredibly difficult for a Conservative Minister to try to intervene in Scotland)
- Chris Huhne - Portfolio tbc but expected to be in Cabinet
No indication yet of who will be in DCLG, Transport, DEFRA, DECC or BIS – or whether or not these departments will continue to exist in their present form. The number of Junior Minister is unclear and this will emerge over the next few days, however, it has been confirmed that there will be Lib Dem representation in every department with around 20 jobs in total. This could have a fundamental impact on some central government policies in arras such as planning, transport, energy and waste. In terms of transport, many people will be watching expectantly to see what indications are given in terms of funding for Crossrail. If for any reason funding is not confirmed, this will certainly make the industry wobble. Depending on who is part in charge of the relevant departments we will get an indication of the level of importance and immediacy placed on making changes or progressing manifesto commitments in that department therefore it will be important to watch the changes over the next few days.
It has been confirmed that they will get rid of ID cards – something that both the Lib Dem and Tories opposed together. There is a debate over how much this is really signifying a change given that the previous Government was already looking at scrapping key parts of this. The Lib Dems have also agreed to a cap on immigration and a commitment not to join the euro for the lifetime of this parliament.
The Government will maintain Trident and the renewal will go-ahead, however, the Lib Dems are being given the option to look at alternatives to Trident (this seems a very woolly commitment – looking at alternatives is hardly an indication of any intention to amend policy - and may have been a concession that Clegg needed to pacify aspects of his party but realistically does not see serious change coming).
It is worth considering the price that has been paid both parties to establish a Government as this will potentially have a huge impact on the future stability of the ConDem government – and potentially on the prospects for democratic reform. The first 100 days will be fascinating to watch. It is likely that we will see quite radical change happening quite quickly.
As ever, we will keep you updated as the saga unfolds and we begin to understand more about the structure of the new government. At least David Dimbleby will now be able to get up from the chair which he has appeared to be in without a break since last Thursday, we were all beginning to worry for his well-being…
Written by Stephen Byfield