Kwarteng's 'race to growth' in mini-budget sparks environmental fears

Kwarteng’s ‘race to growth’ in mini-budget sparks environmental fears

Chancellor Kwasi Kwarteng has unveiled plans to tear up environmental protections across large swathes of the UK as part of Liz Truss’ ‘dash for growth’ strategy.

The plans – which will be a central part of Mr Kwarteng’s emergency budget on Friday – have sparked horror among green groups, who have warned they are putting the country’s natural beauty at risk in the face of a series of developments from bad quality.

The budget will include a “growth plan” including measures to tackle high energy prices and inflation and accelerate major infrastructure projects, as well as a network of investment zones where planning rules will be pirated to encourage development.

Mr Kwarteng is expected to say the highly controversial initiatives – coupled with a series of tax cuts for businesses and the wealthy – will help break a “stagnation cycle” that has seen growth stagnate and taxes rise.

He will say boosting growth by lowering taxes and reducing regulation is the ‘central mission’ of Liz Truss’ government, promising to usher in a ‘new era’ of higher wages, more opportunity and tax revenue to finance public services.

In an indication of the fierce opposition he expects from his plans, he will tell MPs: “We will be bold and unashamed in the pursuit of growth – even if that means making tough decisions.”

But rural charity CPRE policy director Tom Fyans warned: “This government’s obsession with spurring growth at all costs is alarming and will not end well for the countryside or our rural communities.

Describing the Investment Zones as ‘deregulation on steroids’, Mr Fyans said: ‘Successive governments have already seriously weakened planning controls and the result has been a disastrous decade of design. CPRE’s own research in 2020 found that 75% of all new homes were substandard or shoddy.

“This government presents a false choice between being green and driving economic growth.”

Friends of the Earth policy chief Mike Childs said plans to weaken environmental safeguards were “deeply worrying”.

“The Chancellor treats economic growth and environmental protection as mutually exclusive, but that is not the case,” he said. “It is this tired thinking that is at the root of the energy, climate and ecological crises we face.”

Lamenting the Chancellor’s failure to use the mini-budget to draw up a plan to insulate homes, Mr Childs said: ‘We really needed this budget to alleviate emergency living costs, restore the nature and reduce the emissions that cause climate change, but it totally fails on all counts.

As the Bank of England hiked interest rates as the UK officially slipped into recession, economists warned that Ms Truss’s plans – which involve a massive increase in government borrowing – put finances of the country down an “unsustainable” path.

The 0.50% rise in base rates was lower than the 0.75 expected by most city forecasters, but left the cost of borrowing at a 14-year high at 2.25% as the Bank was struggling to contain inflation.

The Independent Institute for Fiscal Studies has calculated that even after Mr Kwarteng’s package the average worker will be £500 worse off in real terms than they were last year – a reduction of about 3% of his income.

And the Joseph Rowntree Foundation said millions of Britain’s poorest people were being “left behind” by the Chancellor.

Mr Kwarteng announced on Thursday that predecessor Rishi Sunak’s 1.25% National Insurance hike would be scrapped from November 6, fulfilling a flagship pledge from Ms Truss’ Tory leadership campaign.

And he is expected to use his mini budget to kill Sunak’s planned rise in corporation tax from 19p to 25p, as well as cut stamp duty paid on house purchases worth over £125,000 .

Together, these measures represent an unfunded tax cut of more than £30billion, and the Chancellor has controversially rejected offers from the Office for Budget Responsibility to pass judgment on their impact on public finances.

Treasury figures showed the NI reduction will be worth an average of £3,890 for high earners over £150,000 a year, £175 for those earning less than £50,000 and nothing at all for those paid less of £12,750.

Low pay think tank the Resolution Foundation said the Chancellor was ‘giving the most to those who needed help the least’.

Some 38 councils and city authorities combined across England – ranging from the West Midlands to Tees Valley, Somerset and Hull – are in talks with the government about tenders for investment areas in their area.

Each zone will offer “generous” time-limited tax cuts for businesses, as well as liberalized planning rules to accelerate development and free up land for the construction of houses, factories, offices and shops. , said the Treasury.

This could include the end of height restrictions on developments and fixed percentages for affordable homes to replace currently negotiated levels based on local needs.

At the same time, 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 protecting habitats and species.

Citing examples of delays of seven years on road projects and 13 years to approve an offshore wind farm, Mr. Kwarteng will say: “The time it takes to get consent for projects of national importance is getting slower, no faster, while our international competitors forge ahead. . We have to end this.

“We will liberalize planning rules on specified agreed sites, freeing up land and accelerating development.

“And we will lower taxes, with businesses in designated sites enjoying generous tax breaks.”

Shevaun Haviland, chief executive of the UK Chambers of Commerce, said businesses would “welcome” the Chancellor’s promise to focus on growth and “act on our creaky planning system”.

Ms Haviland said the investment zones have the potential to deliver on the government’s leveling promises, but warned of the risk that they will only “shift growth and investment from one area to another. another without creating new economic activity”.

Labor Treasury spokesman Pat McFadden said Ms Truss’ decision to rack up public debt at a time of sky-high inflation and soaring interest rates was not a “new plan for economic growth “.

“They just went from the next level to the trickle down and it hasn’t worked in the past,” he said.

“The whole pattern of changing Conservative leaders every two years and pretending it’s a fresh start has created instability and chaos. What Britain needs right now is a government that can give business certainty, secure our economy and grow it. The Conservatives cannot offer that.

Liberal Democrat Treasury spokeswoman Sarah Olney said: ‘Kwasi Kwarteng was growth minister for three years and now says he presided over a vicious circle of stagnation. It is a shocking admission of the damage done to our economy by years of incompetence and chaos under this Conservative government.

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