Rishi Sunak and Jeremy Hunt have one, simple and overriding objective: After the chaos of the Johnson and Truss years they want to demonstrate some basic competence and to restore at least some of the government’s credibility. In this, Jeremy Hunt has had some success through the Budget announcement. Despite criticism from the right of his party that the country is experiencing the highest level of overall taxation since World War II, he has targeted money and Government investment at addressing some of the nation’s most pressing issues – childcare, a shrinking workforce and business investment. You can argue about whether these are fair (lifting the cap on lifetime pension saving) or will work in time (the extension of free childcare), but he has identified key issues, stated how he intends to tackle them and, notably, faced down strong calls from the right of his party for tax cuts, arguing that stability and sound money must be the priority.
But as the development and regeneration industries digest the detail of the Budget many will also be looking to see how it fits into a longer-term plan. And the answer to that is hard to find. Capable as they are, the Prime Minister and Chancellor cannot mask the fact that the past 13 years have been marked by ‘zigging’ and ‘zagging’ in the Government’s direction: First it was Cameron and Osborne’s austerity programme and attempts to devolve power, for example through their changes to the planning system; the upheaval of Brexit finally settled into a new Conservative coalition that fused the Home Counties with former Red Wall seats where there was a strong emphasis on (centrally-directed) Government support for deprived areas in the Midlands and the North; this then gave way to Liz Truss’s ill-fated libertarian experiment and, from the ashes of that, rose Sunak and Hunt’s modest ambition to demonstrate basic competence.
In addition to the difficult inheritance from his predecessors, Sunak must manage a Conservative Party with two main warring factions. Brexit has led to a major shift in internal Tory dynamics:
On the one hand you have the Singapore-on-Thames wing who want deregulation and tax cuts and argue that there is no point in having Brexit if you do not choose this path. In the face of this criticism, Hunt has repeatedly had to make the case for sound money – writing, for example, in the Sun on Sunday: “We believe in bringing tax rates down. But all I would say is you have to do so in a framework that is responsible for public finances. It has to be done in a responsible way.”
On the other hand, you have the Conservative MPs representing former Red Wall seats. A small state is the last thing their voters want. They voted Tory, many for the first time, because they thought the Government was going to give them extra help.
And in the midst of this battle of ideas you have Conservative MPs in southern Blue Wall seats, very concerned about the threat to them from the Liberal Democrats and, at a council level, swathes of independents and residents association councillors who have been campaigning strongly on the issue of perceived over-development. This concern led, late last year, to the Villiers-Seeley amendment to the Levelling Up & Regeneration Bill and incipient changes to the NPPF, which will diminish house building in many district and unitary authorities. This change has been about survival for Tory MPs and is not part of a longer-term strategy.
The Budget package has, nevertheless, seen a very interesting ‘zag’ for the regions. Hunt has announced a “devolution revolution”, under which Whitehall will cede unprecedented control over key budgets in areas such as education, transport and housing. This is being presented as the future of levelling up. This is very significant for the development and regeneration industries and will make understanding the politics and priorities of areas like Greater Manchester and the West Midlands much more important. Its impact for those regions is also potentially very positive.
Through their demonstration of basic political and economic competence, Sunak and Hunt are earning the right to be heard by voters, many of whom were repelled by the chaos and incompetence they witnessed in 2022. As they plot their way forward, they need to reconcile the competing factions and interests within the Conservative party and frame changes, such as the devolution of powers to the regions as part of a longer-term strategy that people can get behind.