The UK’s change in cabinet 2022

London, 5 September 2022 – With the announcement of Liz Truss as the UK’s new prime minister, please see below commentary on the effects the new policies will have on business. 

Robert Gardener, Director of Government Affairs at Hogan Lovells, said: “Following a summer of policy commitments, and given the limited time to address the escalating cost of living and the challenges surrounding the price and security of energy, I would expect the new PM to be heavily focused on both the substance and operation of regulation. Liz Truss has made clear her intentions to merge the three financial regulators and to cut further links with EU regulation, but also to empower ministers to call in the decisions of overly-cautious watchdogs in order to release capital for major infrastructure projects. It is these fast-moving and highly-political initiatives at the intersection of policy and law which will create the greatest risk and opportunity for Business throughout the current decade.”

Implications for real estate at large

By Hannah Quarterman, A partner in the planning practice at Hogan Lovells’

“Truss seems likely to offer a support package to individuals and businesses to help with escalating energy costs. This assistance is much needed, especially in the hospitality, construction and life sciences sectors although, unfortunately, in a blow for the ESG agenda, part of the new Prime Minister’s proposed energy assistance package includes suspending the “green levy” on energy bills. However, it is not clear whether any proposed package will be sufficient to avoid significant insolvencies and restructurings, particularly given that the cost of energy is only one of the issues affecting these sectors. Soaring inflation and the increased cost of borrowing, are also having a significant impact on the real estate industry. 

The new Prime Minister has also indicated that she intends to cut VAT, although this could exacerbate the UK’s current inflation woes in the medium term. Some predict that the new Prime Minister’s immediate economic plans could result in interest rates rising to approximately 7% in the coming months. Whilst some savers without mortgages or other borrowings may be buoyed by this news, such an increase in interest rates could have a significant and costly impact for many stakeholders in the Real Estate sector.”

Planning: Abandoning ‘Stalinist’ housing targets through simplified planning zones

“Truss is reported as wanting to ‘rip up red tape that’s holding back housebuilding and give more power to local communities’. This would include removing centralised housing targets in favour of ‘opportunity zones’ to encourage faster and easier development on brownfield sites. The Prime Minister suggests that areas ‘ripe for transformation around the country’ should be identified which would benefit from lower taxes and relaxed planning restrictions, opening ‘the floodgates to new waves of investment’.

Zoning should sound familiar to those who can remember the 2020 Planning White Paper. However, zoning (along with many of the other proposed planning reforms) was heavily criticised. It hasn’t featured in the scaled-back planning reforms proposed in the Levelling Up and Regeneration Bill published in May 2022 and currently passing through the Committee Stages. Many will be intrigued to see whether it makes a comeback – especially given how controversial it was with many in the Tory heartlands the first time round.” 

Development: New approach to development of the green belt?

“Truss has long been an advocate for the relaxation of green belt policies, stating as part of her leadership bid in 2019 that ‘we need to build a million homes on the London green belt near railway stations, and around other growing cities’. While no such assertions have been heard during the current contest, Jacob Rees-Mogg, current front-runner as Levelling-Up Secretary, is also a supporter of green belt development near transport hubs. 

This marks a firm move away from the green belt protection position in the 2019 Conservative Manifesto, and it seems likely that there will be some sort of attempt to dilute green belt protection as part of the new Prime Minister’s investment and growth agenda.”

Energy: Re-opening the door for fracking and other energy initiatives

“Despite the clear commitment in the 2019 Manifesto, Truss has indicated a willingness to lift the moratorium on fracking ‘where local communities support it’. Based on what we've seen to date in terms of local views on fracking, this feels like a somewhat empty offer. While Truss has made clear her opposition to solar farms, there has been support for the exploitation of ‘all the gas in the North Sea’ and the move to speed up delivery of nuclear energy.”

Implications for data privacy

Eduardo Ustaran, Co-Head of Hogan Lovells’ Privacy and Cybersecurity practice, said: “The new Prime Minister is inheriting an ongoing data protection reform of great significance for the UK economy. The current direction of travel suggests that this reform will not drastically change the existing framework but a more radical departure from any law originating from the EU, like the GDPR, could have implications for the ongoing flow of data between the EU and the UK. 

“In addition, pulling out of the European Convention on Human Rights would definitely have an effect on the adequacy of transfers of data from the EU to the UK. Although this seems unlikely at present, this is an issue of very direct practical implications for UK businesses.”

 


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