Kwarteng’s ‘reach for growth’ in mini-budget raises environmental fears
Chancellor Kwasi Kwarteng has unveiled plans to scrap environmental protections across huge swaths of the UK as part of Liz Truss’ ‘push for growth’ strategy.
The plans – to be a centerpiece of Mr Kwarteng’s emergency budget on Friday – sparked consternation among green groups, who warned they were putting the country’s natural beauty at risk from a series of shoddy developments.
The budget will include a “plan for growth” including measures to tackle high energy prices and inflation and speed up major infrastructure projects, along with a network of investment zones where planning rules will be hacked to encourage development.
Mr Kwarteng is expected to say the hotly contested initiatives – combined with a host of tax cuts for businesses and the wealthy – will help break the “cycle of stagnation” in which growth stagnates and taxes rise.
He will say that fueling growth through tax cuts and deregulation is the “central mission” of Liz Truss’s government, promising to usher in a “new era” of higher wages, more opportunities and tax revenue to fund public services.
In an indication of the fierce opposition he expects to his plans, he will tell MPs: “We will be bold and unashamed in our pursuit of growth – even when it means making tough decisions.”
But the political director of rural charity CPRE, Tom Fiennes, warned: “This government’s obsession with boosting growth at all costs is worrying and will not end well for the countryside or our rural communities.”
Describing investment zones as “deregulation on steroids”, Mr Fyans said: “Successive governments have already seriously weakened planning controls and the result has been a decade of disastrous design. CPRE’s own research in 2020 revealed that 75 per cent of all new homes are of mediocre or poor quality.
“This government is presenting a false choice between being green and boosting economic growth.”
Friends of the Earth head of policy Mike Childs said the plans to weaken environmental safeguards were “deeply worrying”.
“The chancellor is treating economic growth and environmental protection as mutually exclusive, but they are not,” he said. “This is the tired mindset that is driving the energy, climate and environmental crisis we face.”
Lamenting the chancellor’s failure to use the budget to produce a plan to insulate homes, Mr Childs said: “We really needed this budget to ease the cost of living in emergencies, restore nature and reduce emissions, causing climate change, but fails miserably on all counts.”
With the Bank of England raising interest rates as the UK officially slipped into recession, economists warned that Mrs Truss’ plans – which include a huge increase in government borrowing – put the nation’s finances on an “unsustainable” path.
The 0.50 percent rise in key rates was less than the 0.75 most City forecasts had predicted but left the cost of borrowing at a 14-year high of 2.25 percent as the bank struggled to contain inflation .
The independent Institute for Fiscal Research estimated that even after Mr Kwarteng’s package, the average worker would be £500 worse off in real terms than last year – a drop of around 3 per cent in their earnings.
The Joseph Rowntree Foundation said millions of Britain’s poorest people had been “left out” by the chancellor.
Mr Kwarteng announced on Thursday that his predecessor Rishi Sunak’s 1.25 per cent increase in National Insurance would be scrapped from November 6, fulfilling a flagship promise of Ms Truss’s Tory leadership campaign.
And he is expected to use his mini-budget to kill Sunack’s planned rise in corporation tax from 19p to 25p, as well as reduce the stamp duty paid on home purchases over £125,000.
Together, the moves lead to more than £30bn of unfunded tax cuts, and the chancellor has controversially rejected offers by the Office for Budget Responsibility to assess their impact on the public finances.
Treasury figures show that cutting NI will cost an average of £3,890 for high earners above £150,000 a year, £175 for those earning below £50,000 and nothing at all for people on incomes below £12,750.
The low-paid think tank Resolution Foundation said the chancellor “gives most to those who need help least”.
Around 38 councils and combined municipal authorities across England – from the West Midlands to Tees Valley, Somerset and Hull – are negotiating with the government to bid for investment zones in their area.
Each zone will offer “generous” and time-limited business tax cuts, along with liberalized planning rules, to speed up development and free up land for homes, factories, offices and shops, the Treasury said.
This could include an end to building height restrictions and flat rates for affordable housing to replace levels currently negotiated according to local needs.
Meanwhile, the growth plan will accelerate the construction of up to 100 road and rail projects, nuclear power plants and wind farms by reducing environmental requirements and relaxing regulations to protect habitats and species.
Citing examples of seven-year delays for road schemes and 13 years for approval of an offshore wind farm, Mr Kwarteng will say: “The time it takes to get consent for projects of national importance is getting slower, not faster , while our international competitors are moving forward . We have to put an end to this.
“We will liberalize planning rules in certain agreed sites, freeing up land and speeding up development.
“And we will cut taxes, with businesses in certain locations benefiting from generous tax breaks.”
Shevaughn Haviland, director general of the British Chambers of Commerce, said businesses would “enthusiastically welcome” the Chancellor’s pledge to focus on growth and “take action on our creaking planning system”.
Ms Haviland said investment zones had the potential to deliver on the Government’s equalization promises, but warned of the risk they would simply “shift growth and investment from one area to another without creating new economic activity”.
Labor Department spokesman Pat McFadden said Ms Truss’ decision to pile up public debt at a time of sky-high inflation and soaring interest rates did not represent “a new plan for economic growth”.
“They’ve just gone from leveling up to going down, and that hasn’t worked in the past,” he said
“The whole pattern of changing Tory leaders every two years and pretending it’s a fresh start has created instability and chaos. What Britain needs now is a government that can give business certainty, make our economy secure and grow it. The Tories cannot propose that.
Liberal Democrat Treasury spokeswoman Sarah Olney said: “Kwasi Kwarteng was growth minister for three years and now says he has run a vicious cycle of stagnation. This is a shocking admission of the damage done to our economy during the years of incompetence and chaos under this Conservative government.