Insights

LOVELESS LABOUR’S LOST

There is real exasperation amongst more experienced Labour MPs on the way proposed welfare changes – and the apparent half-U-turn – has been handled. Following a tense Cabinet meeting last week and a public backlash against the mooted plans, the Work and Pensions Secretary Liz Kendall was forced to backtrack on her aim to freeze disability benefits in her sweeping welfare reforms.

Some are saying it feels like Winter Fuel Payments all over again, with lessons apparently not learnt from that debacle.

There are complaints that a handling strategy is ‘non-existent’; there’s been no ‘rolling of the pitch’; and Parliamentarians’ concerns are only being managed in retrospect rather than in advance of policies being announced. We hear that MPs had only just got their heads around the proposed cuts before Liz Kendall, the Secretary of State for Work and Pensions, supposedly announced a climbdown. Yet many MPs don’t understand the climbdown – and none of them know what to say to concerned constituents when policy positions seem to have a lifespan of under 48 hours.

Government Whips are reportedly none the wiser when being asked by their flocks to explain the policy, because they have no idea either. Discussing how this issue has unfolded, the word “s**t-show” was employed liberally and repeatedly.

Many seasoned Labour staffers, too, are not feeling the love. Many of them have been relegated to casework and policy emails, after Labour MPs have been subject to a flurry of angry constituent emails about recent policy announcements.

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FROM THATCHER, WITH LOVE

Hawthorn joined yesterday’s Margaret Thatcher conference by the Centre for Policy Studies.

“Boredom and contempt.” Those are the two words that were used to describe the current state of the Conservative Party during the CPS’ annual conference at Guildhall. Attended by some of the Tories’ most loyal supporters – including donors, financiers, and past and present Conservative MPs – the mood was honest to say the least.

Unsurprisingly, economic growth remained front and centre of debate, along with clean energy and an acknowledgement of the division it has caused amongst different factions of the party. When pressed for her views, 2024-intake and rising star Tory MP Katie Lam appeared eager to stress that net zero policy in its current state was a “misguided piece of legislation” without more comprehensive plans for its roll-out and costing.

Prior to her own speech at the event, there was a grudging acknowledgement of Kemi Badenoch’s poor performance in her first few months as Conservative leader. Mark Littlewood, the former director general of the IEA, said that the (Conservative) Party at the moment “oozes stupidity”.

George Osborne, the former Chancellor of the Exchequer, said “The Conservative Party has a big mountain to climb”.

Interestingly, he advised the party to focus on their strategy for countering the Liberal Democrats, as well as for the Reform UK party.

While delegates may come away from the event re-energised, their enthusiasm might be short-lived.

Hawthorn hears that  some former Conservative MPs are now resorting to applying to graduate schemes and entry-level public affairs roles, as they seek their next gig.

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TIDYING RED TAPE

On Monday morning, the Treasury released its new policy paper on reforming the regulatory system. While many of the proposals are ambitious – and have been lauded by growth-minded MPs – one phrase tickled this particular writer.

The paper says “Today, we take steps to: Remove complexity and tidy red tape across environmental permitting”. Tidying red tape hardly seems like the limit of the UK’s ambition, does it?

In any case, the paper was accompanied by an opinion piece in CityAM by Sir Keir Starmer, where he argued his Government will “bring back the animal spirits of the private sector”.

THE CONTEXT: This policy paper is just the latest salvo in the Government’s drive to make regulation more aligned with its growth agenda:

• In November at her Mansion House speech, Rachel Reeves claimed that regulatory changes after the financial crisis had “gone too far” and that watchdogs now needed to focus on “supporting economic growth”

• On January 16th, Reeves hauled a number of regulators into No 11 to interrogate their plans for growth – including Ofcom, Ofwat, Ofgem, The Office of Rail and Road, the Environment Agency and the Civil Aviation Authority

• On January 21st, Reeves jettisoned the chair of the CMA, installing Doug Gurr as interim chair

THE REACTION: Hawthorn understands that the release of the paper came as a surprise even to members of the influential Labour Growth Group. However, one prominent member said the development was “very good”, and a senior leader at the Labour Together pressure group agreed, though saying there was “more needed”. Reeves will meet eight regulators again at No 11 this morning.

THE SUMMARY: The paper highlights 3 actions the Government will be taking, which we summarise below:

Tackle complexity and the burden of regulation

Reduce uncertainty across our regulatory system

Challenge and shift excessive risk aversion in the system

1. Tackle complexity and the burden of regulation

As part of this action, the paper commits to cutting administrative costs for business by 25% by the end of the current Parliament. It consolidates a number of different regulators – consolidating the Payment Systems Regulator into the FCA, and consolidating three different employment bodies into the Fair Work Agency. It also states that ministers will consider the consolidation or merging of regulators as part of the upcoming Spending Review, suggesting there will be more streamlining of regulators to come.

The paper specifically calls out environmental and planning regulation as ripe for reform, promising to ease environmental permit requirements in particular for high-priority sectors. It also highlights a new process to appoint a single lead regulator in major projects, a move which will impact the progress of the Lower Thames Crossing and the mooted Heathrow expansion.

2. Reduce uncertainty across our regulatory system

With this action, the Government is working with regulators to seek a better understanding of their roles, in order to gain better transparency and improve performance. The CMA will also be on the hook to deliver a new “Growth-focused Strategic Steer”. The financial services sector comes under the spotlight, with a few announcements to enhance the attractiveness of the UK as a FS destination, and to support early-stage firms in the sector – though these remain light on specifics.

3. Challenge and shift excessive risk aversion in the system

The final action promises performance reviews of all regulators by their sponsoring Government departments, to hold regulators to account and monitor their performance.

It goes on to state that the newly-established Regulatory Innovation Office will work on a number of innovation priorities, including:

• Supporting the UK space industry

• Accelerating trials on drone and autonomous delivery

• Building a pathway for engineering biology innovations such as precision fermented foods

• Establishing a forum for regulators on the quantum industry

Finally, the paper is accompanied by an Annex which lists 60 “Key regulator pledges” from some of the biggest regulators called in to No 11 earlier this year. It states that these pledges will both 1) have a tangible effect on driving growth and investment, and 2) are implementable within 12 months.

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If you’d like to speak to Hawthorn about our Political Advisory offering, please email Mark Burr at m.burr@hawthornadvisors.com.