Lexis®Library update: Among a raft of measures intended to ease the financial burden of the cost-of-living crisis, the Growth Plan 2022 set out the government’s intention to provide additional funding for energy bills, streamline infrastructure projects through reforming planning and environmental legislation, stimulate investment by introducing ‘Investment Zones’ and removing the bankers’ bonus cap, plus historically large tax cuts in multiple areas. Reflecting its post-Brexit policy, the government also announced a new Bill aimed at reviewing and repealing retained EU law. Stephanie Hall, Partner at Davitt Jones Bould, and Thérèse Rankin, Associate at Bates Wells, comment on the measures announced.
The Growth Plan 2022 delivered by the government aims towards ‘reaching a 2.5% trend rate’ of year-on-year growth. With inflation at a near 40-year high of 9.9% in August 2022, the Chancellor set out how the government will drive efficiency, enhance UK competitiveness, and commit to fiscal sustainability by ‘reforming the supply side of the economy, cutting and simplifying tax, and maintaining fiscal discipline’.
Aspects of the Growth Plan 2022 that are relevant to public sector practitioners are summarised below.
Energy prices
The Growth Plan 2022 proposes various methods of increasing the UK’s energy resilience. These include advancing the development of home-grown nuclear, hydrogen, Carbon Capture, Usage and Storage, and other renewable technologies. Additionally, it referred to the launch of an oil and gas licensing round and the end of the moratorium on shale gas extraction (fracking), which was first announced on 22 September 2022.
Hall comments:
‘With the cost-of-living crisis remaining high on the agenda, there is much focus on what can be done to secure an affordable energy supply. The day before the budget, it was perhaps not surprising that the government lifted the ban on fracking, although time will tell how safe and reliable this source of energy will turn out to be’.
The government also confirmed that, from April 2023, energy suppliers will be required by new legislation to reduce the costs of energy bills for their most vulnerable customers, which the government has said will save customers an average of £200 annually. Similarly, the government has pledged support of up to £2.1bn over the next two years for successful applicants from local authorities, schools, hospitals and housing associations. There is currently no detail on eligibility criteria, and when the applications will open.
In addition, environmental and social costs, including green levies, currently included in domestic energy bills for two years, will be covered temporarily by the government, contributing an average saving of £150 provided by the previously announced Energy Price Guarantee.
For details, see:
- Growth Plan 2022—key Environment announcements, LNB News 23/09/2022 34.
- Growth Plan 2022—key Energy announcements, LNB News 23/09/2022 58.
Infrastructure projects
The Growth Plan 2022 reiterates proposals to reform planning and environmental legislation with the aim of streamlining the various consultation requirements and the number of environmental assessments and appraisals required in conjunction with a project. Changes to the environmental impact assessment, strategic environmental assessment and habitats regulation assessment regimes are likely. These have been on the Conservative government’s agenda since Brexit, so are nothing new, although details have yet to be made available.
Other measures aimed at accelerating the delivery of infrastructure announced in the Growth Plan include:
- increasing the flexibility to make changes to a development consent order once it has been submitted
- prioritising the delivery of National Policy Statements for energy, water resources and national networks
- reforms to accelerate roads delivery, including by consenting more through the Highways Act 1980 (HiA 1980) and by considering options for changing the judicial review system to avoid claims that cause unnecessary delays to delivery
To help increase energy resilience, the Budget reconfirms the previously announced end to the moratorium on fracking. Additionally, the Budget promises to bring the consenting process and planning policy for onshore wind ‘in line with other infrastructure to allow it to be deployed more easily in England’.
The Growth Plan 2022 also sets out a list of infrastructure projects that the government will prioritise for acceleration, across transport, energy and digital infrastructure. This includes two carbon capture and storage projects (the Hynet Cluster and the East Coast Cluster), the remaining round three offshore wind projects, round four offshore wind projects and offshore wind extension projects, and multiple road and rail schemes. The government also commits to continue focussing on delivering its wider infrastructure priorities, from major projects such as HS2, to its wider nuclear strategy.
Regarding housebuilding, the government has said it will set out ‘its vision to unlock homeownership for a new generation by building more homes in the places people want to live and work’ later this autumn. Additionally, the government will promote the disposal of surplus public sector land by allowing departments greater flexibility to reinvest the proceeds of land sales over multiple years, which it hopes will encourage the sale of more public land for housing. The Growth Plan 2022 confirms that the devolved administrations will ‘have bespoke flexibilities to move funding between financial years and the government’, with the government discussing the implication of this change with them ‘in due course’.
Hall comments:
‘With the cost-of-living crisis remaining high on the agenda, there is much focus on what can be done to secure an affordable energy supply. The day before the budget, it was perhaps not surprising that the government lifted the ban on fracking, although time will tell how safe and reliable this source of energy will turn out to be.
The budget promises a new planning bill which will simplify planning restrictions and requirements originating in EU law, with the aim of speeding up the consenting process for nationally significant infrastructure projects. Every new administration in recent years has promised to do the same thing and who can forget Eric Pickles’ comments from 2011 as Communities and Local Government Secretary criticising Maserati-driving Planning lawyers benefiting from the complexities of the system? It will be interesting to see whether this government can rise to the challenge and deliver where others have failed.
It is unclear where the budget leaves the Levelling Up Bill, but recent reports have suggested it may be shelved under Truss’ leadership. Given that the Chair of the Parliamentary Levelling Up Committee had previously commented that the Bill lacks detail and does little to secure the funding needed to transform communities, that may be no bad thing.
As we enter party conference season, does the emergency budget signify a change in tack and yet another 'new dawn' for the planning system, or will planning reform again be put on the 'too difficult to tackle now' pile and left to a future administration?’
For details, see: Growth Plan 2022—key Planning announcements, LNB News 23/09/2022 21.
Investment Zones
The government will co-ordinate with devolved administrations and local partners to establish ‘Investment Zones’. These will include designated development sites in respect of which the government will work to address specific measures needed to drive growth. Areas with Investment Zones will benefit from tax incentives, planning liberalisation, and wider support for the local economy. The Chancellor further suggested ‘disapplying legacy EU red tape where appropriate’ to facilitate their development, though no details have yet been outlined.
Hall comments:
‘One of the flagship announcements in the budget is the introduction of so called 'Investment Zones' in up to 38 local authorities in the UK. The UK has been historically slow to embrace the concept of zoning—the enterprise zones of the early 2010s and the much-derided 'growth, renewal and protection' zoning in the 2020 Planning White Paper being prime examples—although there have been some notable exceptions where the concept has been successful, such as the regeneration of the London Docklands in the 1980s. The investment zones will benefit from a lighter-touch planning regime and relaxation of environmental protection rules, both of which are likely to prove controversial. It is understood that the level of affordable housing to be provided in the zones will be fixed and not subject to negotiation. This raises interesting questions around viability, which can vary greatly both across the country and within individual regions themselves. There is concern that the creation of zones will lead to displacement of investment and employment opportunities, rather than the creation of new wealth. It remains to be seen how the zones will be designated and a balance will need to be struck between ensuring appropriate consultation and accountability, whilst delivering on the promise to release land and accelerate development.’
For details, see: Growth Plan 2022—key Local government announcements, LNB News 23/09/2022 26.
Bankers’ bonus cap
The Prudential Regulation Authority (PRA) will remove the current cap to bankers’ bonuses, which limits remuneration of certain bank staff to 100% of their fixed pay (or 200% with shareholder approval). The government supported that bonuses align the incentives of individuals with those of the bank, in turn supporting growth in the UK economy. The Chancellor also said further reforms to financial services would follow later in Autumn 2022, including ‘scrapping EU rules from Solvency II’.
In his speech, Kwarteng said the UK needs global banks ‘to create jobs here, invest here, and pay taxes here in London, not Paris, not Frankfurt, not New York. All the bonus cap did was to push up the basic salaries of bankers, or drive activity outside Europe. It never capped total remuneration, so let’s not sit here and pretend otherwise.’
Kwarteng also said the government would set out ‘an ambitious package’ of financial services regulatory reforms later in Autumn 2022. Section 3.15 of the plan states: ‘The financial services sector will be at the heart of the government’s programme for driving growth across the whole economy. Later this autumn the government will bring forward an ambitious deregulatory package to unleash the potential of the UK financial services sector. This will include the government plan for repealing EU law for financial services and replacing it with rules tailor made for the UK, and scrapping EU rules from Solvency II to free up billions of pounds for investment.’
For details, see: Growth Plan 2022—key Financial Services announcements, LNB News 23/09/2022 37.
Retained EU law
On 22 September 2022, the government introduced the Retained EU Law (Revocation and Reform) Bill 2022 to Parliament. Previously referred to as the ‘Brexit Freedoms Bill’, the legislation is intended to ‘put the UK statute book on a more sustainable footing’ post-Brexit, by ending the special status of retained EU law under UK law. Announcing the Bill, the government noted that retained EU Law ‘was never intended to sit on the statute book indefinitely’. Accordingly, the Bill makes provision for abolishing the special status of retained EU law in UK law from the end of 2023 and will enable the government to specify, amend, repeal and replace retained EU law more easily via secondary legislation. The Bill contains provisions on sunsetting the majority of retained EU law, ending the principle of supremacy of retained EU law and associated EU law principles in UK law, creating a new category of ‘assimilated law’, facilitating departures from retained EU case law, allowing easier modification of retained EU legislation, and further powers relating to EU law and assimilated law. It also contains provisions on the abolition of the business impact target.
Rankin comments:
‘Simultaneously to its Growth Plan (and as alluded to in the emergency budget announcement), the government has also announced a new Bill aimed at reviewing and potentially repealing a number of EU-derived laws. This could have potentially significant ramifications for employment law, and as a consequence the labour market, as the former is heavily influenced by such EU-derived laws. Employment law practitioners will be watching the progress of this Bill, and its consequences, with great interest.”
For details, see: Brexit Bulletin—Retained EU Law (Revocation and Reform) Bill introduced, LNB News 22/09/2022 78.
Source: The Growth Plan 2022
Written by Mikaela Kritikou and Sammy Baba-Ahmed.
This content was first published by LNB News / Lexis®Library, a LexisNexis® company, on 23 September 2022 and is published with permission. Further information can be found at: www.lexisnexis.co.uk
