The big questions facing Simon ClarkePosted: September 8, 2022 | |
Originally published as a column for Inside Housing.
Simon Clarke has yet to reveal much of his thinking on the key issues facing his new department but the early signals coming from the new government mean it’s already clear that tough choices lie ahead.
As chief secretary to the Treasury since September 2021 he was responsible for scrutinising and departmental requests for more public spending. Now he replaces Greg Clark at the Department for Levelling Up, Housing and Communities (DLUHC), where he briefly served as a minister for regional growth and local government in 2020.
As a prominent supporter of Liz Truss, Clarke will have some influence with the prime minister and could be heard acting as her spokesman on energy costs on the Today programme on Thursday.
Like any secretary of state he will fight for the departmental interest and but it seems doubtful whether he will have as much heft in Whitehall as his predecessor but one Michael Gove.
Indeed there are already some straws in the wind. Consider a story leaked to the Telegraph over the weekend about a £1.5bn underspend at the DLUHC.
With Gove sent to political Siberia under the new regime, the story alleged that he had plotted to waste the money. As a Whitehall source told the paper:
‘DLUHC is said to be considering a “couple of projects” for the money, but the source said there was “nothing particularly good to use it on…basically there’s very little that has a good benefit-to-cost ratio, hence it’s still sitting there”.’
Most people working in housing would not struggle to think of a couple of projects that would represent value for money and an ally of Gove hit back that:
‘Underspends normally occur because of Treasury incompetence…Gove was looking at using the money to help house Ukrainian refugees, turbocharge Right to Buy and unlock thousands of new genuinely affordable homes. The idea it might have been a waste of taxpayers’ money is ludicrous.’
If it looks like a non-story, the timing does not look like a coincidence and it must raise concern about DLUHC budgets going forward.
Levelling up remains in that departmental title and will presumably be important to the Middlesbrough South and East Cleveland MP but the signals coming from the Truss campaign suggest it will not be as prominent an issue as under Boris Johnson.
The new prime minister has channelled her inner (and sometimes outer) Margaret Thatcher in her enthusiasm for free markets, low taxes, deregulation and a small state.
If Truss is serious about this agenda then planning reform would presumably be a priority, except that it was thwarted in 2021 by a Tory backbench rebellion just like it was in the late 1980s under Nicholas Ridley and just like it was in a more internal battle within the coalition in 2010 and 2011.
Truss made some ambiguous (perhaps deliberately ambiguous) comments during the leadership campaign about wanting to ‘rip up the red tape that’s holding back housebuilding’ but also ‘put an end to Stalinist housing targets’ that suggest she wants more housebuilding but fewer new homes.
The manifesto commitment to progress towards 300,000 new homes a year by the mid-2020s apparently remains but looks less of a priority, and even less achievable, than it did before the pandemic and cost of living crisis.
That matters both in itself and because without radical land and planning reform the only way to meet it is to fund more affordable housing.
On that front, what will the new secretary of state do about Michael Gove’s verbal commitment that any new Right to Buy discounts will not be paid for out of DLUHC budgets? Will he maintain the commitment to social rent?
Will renter reform legislation survive the new enthusiasm for deregulation or will there be moves to water it down?
If the new government is serious about unleashing the power of the market, it will no doubt want to look closely at the implications of a proposed merger between two leading housebuilders.
Vistry, the fifth biggest, and Countryside, the seventh biggest, built more than 16,000 new homes last year, which would make the combined outfit number two behind only Barratt.
But the issue goes beyond that because Vistry is itself the result of a merger between Bovis Homes and the Linden Homes unit of Galliford Try. As recently as 2019, these two and Countryside were the seventh, eighth and tenth biggest housebuilders.
Many ministers have bemoaned a lack of competition in the sector and the decline of small and medium sized developers and this deal will make things worse. Michael Gove went even further when he accused leading developers of being a cartel at the height of the building safety crisis.
So what about Clarke? On housebuilding, he may soon have to face up to the issue of what to do about a housing market downturn and whether to repeat the support for the industry that followed the crashes of 1992 and 2008.
On building safety, levelling up committee chair Clive Betts has already written to alert him to concerns that remain but Gove’s reforms may already have drawn the political sting from the issue.
So the temptation for Clarke, and for a government resisting windfall taxes on energy companies, will be to reconcile with what were once natural Tory supporters, drop the anti-developer rhetoric and dial down the threats.
However, as he will be only too aware, that could be storing up problems with the Treasury and for his own budgets. Because it was Clarke himself who was the Treasury chief secretary who made the agreement that allowed Gove to act on the building safety crisis.
We know from a letter leaked to Newsnight that Gove had to promise to ‘put safety before supply’ and that existing departmental budgets would be the ‘backstop’ if he failed to raise enough money from the construction industry to fix mid-rise buildings.
We also know that Gove was allowed to make the ‘high-level threat’ of tax or legal solutions in discussions with developers but that the Treasury reserved the final say and that the package had to exclude non-cladding issues.
As gamekeeper turned poacher, it now falls to the new housing secretary to deliver on the promises that he extracted from his predecessor but one.
But it’s just one of the many issues crowding his new in-tray.