While the chancellor鈥檚 change of heart grabbed the headlines, the second day in Birmingham saw a Cabinet minister dispel rumours over HS2, calls for more SME housebuilders and Michael Heseltine making a last stand for EU membership, writes Ben Flatman

Day two of the Conservative Party conference was dominated by Kwasi Kwarteng鈥檚 U-turns and an overriding sense that, after 12 years in power, this this was a party with no real plan and few ideas.

Ben Flatman

Ben Flatman is architectural editor at 好色先生TV鈥檚 sister title 好色先生TV Design

When you have overseen a decade of tepid growth, two recessions and two major devaluations in the value of the pound, it becomes increasingly harder to pass the blame to anyone other than yourself. And yet this is what Liz Truss and Kwarteng are brazenly seeking to do.

The frustration and boredom of some of the party鈥檚 big beasts was on open display in Birmingham, while newly appointed ministers appeared so unsure of the shifting terrain around them that all they could do was repeat promises that policies would be coming along soon.

>> Also read: Day one at the conference: Industry cries out for stability 鈥 but U-turns and uncertainty continue

Michael Heseltine , the urban regeneration pioneer and veteran of Conservative governments from Heath to Major, repeatedly thundered, 鈥淲hat was the plan?鈥 in utter bemusement at Kwarteng鈥檚 seemingly uncosted approach to running to the county鈥檚 finances. 鈥淭hings are looking pretty bleak,鈥 he said, before saying the government needed to start clarifying its fiscal plans soon. 鈥淟ike this afternoon,鈥 he suggested.

Lee Rowley, the new housing minister continued on his round of conference events where he meekly defers to the rest of the panel and says that policy clarity will be along soon.

Deflection was much in evidence, with the party seeking to take credit for seemingly less disaster-prone elected mayors in the West Midlands and Tees Valley.

Michael Gove took credit for Kwarteng鈥檚 rapid change of fiscal policy on income tax. Kwarteng had 鈥渧ery gracefully acknowledged the strength of that argument鈥, he said, before adding that he was now going to 鈥渢ake a step back鈥. Presumably to indulge in a touch of schadenfreude as the government appears to implode in his absence.

West Midlands Combined Authority and HS2

This year鈥檚 conference is of course in Birmingham, where Andy Street has been the Tory mayor of the combined West Midlands authority since 2017. A former head of John Lewis, he is widely seen as a pragmatic centrist, happy to work across party lines to deliver for the wider region.

The Conservatives seem keen to take credit for what they portray as Street鈥檚 successes, such as the recent Commonwealth Games, although this might raise eyebrows among many of the Labour-run local authorities that shared responsibility for the event.

Congratulating Street, and pushing the government鈥檚 new investment zone agenda, Nadhim Zahawi, Chancellor of the Duchy of Lancaster, said: 鈥淚 want the first investment zone to be here in Birmingham.鈥

Zahawi and Street both declared their commitment towards bringing a gigafactory to Coventry. 鈥淲e will do everything in our power to make the offer as attractive as we can,鈥 said Zahawi.

Street then announced that he had agreed with Coventry City Council and Warwick District Council that he would be putting forward an application for an investment zone in the area to facilitate the new gigafactory.

Asked whether rumours that HS2 could be scrapped were true, Zahawi said: 鈥淭here is no way HS2 is going to be scrapped. HS2 is going ahead.鈥

The long shadow of Brexit

20221003_134957

Michael Heseltine, centre, speaking yesterday at a fringe event

Much is being made of the government鈥檚 proposed new investment zones, which some are comparing to the free enterprise zones established by Heseltine during Margaret Thatcher鈥檚 first government.

Heseltine was in Birmingham yesterday to the case for devolution and re-joining the EU. The event was hosted by the European Movement, an organisation set up by SirWinston Churchill in the wake of the Second World War to promote cross-continental cooperation.

To be successful, Heseltine said that his free enterprise zones had 鈥渉ad to have planning powers, land acquisition powers, leadership and certainty they would still be there in four to five years鈥.

Full details about the new investment zones are not yet available, although Rowley did say he expected more information to emerge over the coming weeks.

Taking aim at what he perceived as government failures, Heseltine bemoaned the lack of a single point of contact for local authorities seeking to speak to government about leveraging public investment opportunities. 鈥淗ow many phone calls do you have to make to Whitehall now?鈥 he asked.

鈥淵ou can鈥檛 run a successful economy like that. And no other capitalist country tries to do it 鈥 they have strong devolved governments.鈥

He also emphasised the need for government ministers to get on the ground and understand the local context. 鈥淢y whole experience of urban regeneration is that you have to go there and listen. The weakness of the current system is that they think Whitehall knows best,鈥 he said.

Urging Truss to reject what he saw as 鈥渁ppalling鈥 short-term politics, he said she needed 鈥渢o appoint ministers who know what they are doing. Stop chopping and changing.鈥

Heseltine was keen to attribute many of the UK鈥檚 current problems 鈥 including low growth 鈥 to Brexit. Responding to the government鈥檚 repeated claims that it will unleash British competitiveness by repealing EU legacy regulations, he asked: 鈥淲hich regulations are they going to get rid of?鈥

He also highlighted the huge economic uncertainty created by the government鈥檚 promise to look at the entire regulatory environment. 鈥淲hat does that do to someone looking to invest in this country?鈥 he asked.

Talking about the climate crisis, Heseltine said: 鈥淭he younger generation are not going to tolerate the growing environmental backwardness and the idea that we can afford to ignore what is happening to the environment.鈥

He also floated the idea of a land commission and land registry, with the public sector taking a far more directive role in regeneration, with 鈥減ower to buy and reclaim development land鈥.

At the same event, former justice secretary David Gauke (one of the Tory pro-Europeans kicked out during Boris Johnson鈥檚 2019 purge), said that 鈥渙ne of the best ways to address our economic growth is to address the problems caused by Brexit鈥.

It is not a view widely shared, or least widely aired elsewhere at the conference, and we may be waiting some time before a British government is able to admit that the barriers to trade created by Brexit are hobbling the economy.

Sadiq Khan gets a 鈥渞eset鈥 request from London minister

Paul Scully, the minister for London, told me that he was hoping for a 鈥渞eset鈥 in relations between the government and the capital鈥檚 mayor. Scully said he was frustrated that,  while Khan happily acknowledges government support for London behind closed doors, he continues to disparage the Tories in public.

Scully said he was looking for Khan to be more 鈥渦p front and accountable鈥 with the people of London, saying that there no point in a mayor who did not take responsibility for their own administration鈥檚 failings.

鈥淪ince the change in PM he is having friendly talks with the secretaries of state for transport and levelling up, so perhaps there鈥檚 a chance for a reset,鈥 Scully said.

Regarding the challenges facing Transport for London he restated the government鈥檚 support. 鈥淐learly the government is not going to let London fall over,鈥 he said. But he was keen to see Khan make savings and changes in return for continuing central government funding for the capital鈥檚 transport system.

Scully also told me he was ready to 鈥渃onsider changes together鈥 with Khan, but that the government needed 鈥渢o make sure the mayor is doing his share鈥.

Whether the mayor will see things from the same perspective remains to be seen.

Thames Estuary

The government is keen to build on the perceived success of the Tory mayor of the Tees Valley, Ben Houchen, who has overseen the implementation of three enterprise zones within his combined authority. This has contributed to a growing focus on the economic potential of the UK鈥檚 estuary economies.

Kate Willard, chair of the Thames Estuary Growth Board, spoke about her plans to help unlock investment. It was all about 鈥済rowth, growth, growth 鈥 good green, fair growth,鈥 she said in a boosterish performance that might have made Boris Johnson blush.

The focus was on untapping the entirety of the Thames鈥檚 river-frontage, with a reinvigorated Thames Pathway. Willard also pointed towards the growth board鈥檚 work in proposing a new 鈥渉ydrogen ecosystem鈥 around the estuary, to promote new clean river-borne freight.

Pointing out that much of the water-borne traffic along the river is currently either waste being carried out of London or building materials going in, she said there was huge potential to expand commercial use of the Thames.

She called for the government to invest in a hydrogen innovation centre on the estuary and made the case for more light freight, using 鈥渃lean boats鈥 and looking at opportunities to combine river-borne logistics chains with existing passenger services.

Scully was keen to put the development of the estuarine economy within the context of the government鈥檚 evolving 鈥渋nvestment zones鈥 agenda. He described investment zones as 鈥渇reeports plus鈥.

Paul Carter, former leader of Kent County Council, called for a combined authority to cover the north and south banks of the estuary east of London, as well as a third Thames crossing, the lack of which he described as a 鈥渉uge inhibitor鈥 to investment.

Indeed Carter was disappointed not see a third crossing in the government鈥檚 latest list of infrastructure priorities. 鈥淚 wouldn鈥檛 say a third crossing is off the agenda,鈥 said Scully in response.

Net zero and the green economy

During a discussion about the new infrastructure that Britain needs to deliver a net zero economy, former minister for universities and science Lord Willetts was warned that there was 鈥渁 real risk鈥 that Kwarteng鈥檚 tax cuts 鈥渨ould lead to a fall in capital investment鈥 in the UK.

Juliet Davenport, president of the Energy Institute, argued for 鈥渇undamentally re-engineering the economics of energy鈥.

She added: 鈥淚f we want to get growth, then we need to reduce energy consumption. And if we reduce demand, we can address the cost of living crisis.鈥

But she highlighted one of the bottlenecks in delivering this change as being the lack of skills in the economy. 鈥淯niversities are at capacity on training and retraining for net zero,鈥 she said.

Willetts responded by making the case for a more flexible education system that did not require young people to make key choices about subjects and career choices so early.

He called for more flexible routes into engineering. 鈥淥ur job is to liberalise the system,鈥 he said, calling for new ways for students without classic engineering A-levels to move into the net zero sector at a later stage.

Promoting SME house builders

There seems to be a growing consensus across the Conservative Party that to drive up volumes, choice and quality, the government needs to be encouraging the return of more SME firms to the housing sector.

Gove coruscated the volume builders on Monday. 鈥淢any of the large house builders are land investment speculators, not really house builders,鈥 he said.

Speaking of the reasons why so many people seemed to oppose new housing development, he said 鈥渄esign and quality is not prioritised鈥 and that too often planning inspectors 鈥渙verride local objections鈥.

Calling for reforms to the planning system to encourage 鈥渕ore SME and artisan house builders鈥, he also said that we 鈥渘eed to take account of beauty and quality in architecture鈥.

Talking about falling rates of home ownership and issues around affordability, he was highly critical of the UK鈥檚 culture of treating housing as an investment vehicle. 鈥淪orry to be a revolutionary, but we have unfairly subsidised private landlords and buy to let,鈥 he said.

Speaking more generally about the UK economy, Gove went on to say that there was 鈥渢oo much investment in property rather than equity, which is not good for growth鈥.

Elsewhere at the conference yesterday, Stuart Baseley, executive chairman of the Home Builders Federation, also talked about how to encourage more SMEs into the housing sector. 鈥淚 don鈥檛 think we need wholesale strategic planning reform,鈥 he said. 鈥淲e just need to make the system we have work, rather than tinkering with it.鈥

Rob Boughton, CEO of residential developers Thakeham Group, bemoaned the endless consultations his company had to go through when taking a scheme through planning and suggested that such processes could be reduced in number and streamlined.

While expressing a willingness to pay more in planning fees to help unblock the current planning system, Boughton expressed frustration at paying upfront for planning p-performance agreements before any applications had even been lodged. It was 鈥渉ugely costed鈥 he said, and a likely barrier to SMEs entering the market.

Discussing the impact of 鈥渘utrient neutrality鈥 requirements imposed by Natural England, Baseley said: 鈥淲e all want to protect the environment, but it鈥檚 got out of balance.鈥 Pointing to the thousands of homes that were being held up, he said that, 鈥渇or now, existing consents are being built, but soon house building will stop. I know SMEs who are struggling because of this and will go bust.鈥