Reality bites for May government

Julian Francis
18 September 2016

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As the party conference season begins, Julian Francis takes a look at some of the key priorities and decisions MPs will face when they get back to Westminster.   

Following all of the political turmoil after the Brexit referendum, the resignation of David Cameron and the rise of Theresa May, the autumn session of parliament is shaping up to be a return to politics as usually with a number of decisions that have been delayed coming back to haunt the political class. 

With the glow from her triumph of seizing the keys to Downing Street beginning to dim and the holiday to Switzerland behind her, Mrs May must now begin to govern the country and put some real flesh on the bones of  her rhetoric. Given this, it is worth looking forward to see what issues will be coming up in the next few months. The problems the government faces are of such importance that they will no doubt be very grateful when the Christmas recess comes round.

Energy decisions needed

The PM will be pleased to have got the Hinkley Point C announcement out of the way. The problem with Hinkley was not so much one about a large scale energy project so much as it is was being seen as a test for the new government. The international dimensions to the project which touch on our relations with France and China will overshadow the decision to go ahead with the project and will be taken by pundits as a sign of what is to come. Much of the diplomatic chatter has obscured the vital debate about the future of UK energy supply in the coming decades but that should not prevent the industry making its case. 

We are already seeing the government making some interesting decisions on energy policy from the attempts to prolong the life of coal burning stations through the coming winter with government subsidisation, the announcement of more “capacity market” contracts to keep plants open after 2021 to the attempts to increase gas and renewable energy supplies. 

We are told that none of this should be seen as the government moving away from nuclear as they firmly state that nuclear will remain a vital part of the mix. Meanwhile, it must not be forgotten that Hitachi continue to move ahead with the Horizon project in Wylfa and their representatives could be seen having key meetings in Whitehall while most people were away. 

Further to this, the government will have to decide whether it will go ahead and subsidise the Swansea Tidal Lagoon as another source of supply for the UK grid that can help ensure the UK remains energy self-sufficient. As with Hinckley, international considerations will have an impact on the decision. As part of a potential Brexit deal, the concept of a North Sea Union comprising Denmark, Germany, the Netherlands, France, Belgium, Sweden, and Norway has once again been raised. At the heart of such a grouping would be the promotion of an integrated sphere for offshore energy and marine research, and as well as a better grid network with interconnectors to drive down costs and boost back-up power. Tidal will be a key part of such a strategy for the region and could see the UK as a market leader for the technology.

Transport

Transport will also figure heavily in the coming months with a number of key projects needing to be signed off. 

First and foremost will be expansion of airport capacity in the South East with the government being asked to make a deceptively easy decision of either expanding Heathrow or Gatwick. You could be forgiven for being a little sceptical about a decision finally being made on a project that has been dominating political debate for more than a decade and arguably has been around since the 1970s, but Brexit has concentrated minds. 

The Prime Minister herself is to chair a cabinet sub-committee that will look at this issue and has stated that a decision will be made in October. That said, the political issues around Heathrow expansion have not gone away with a significant number of MPs adverse to expansion that will be opposed by their constituents. Something that Mrs May will be only too aware of as her constituency is one of the ones affected. Given the small size of her majority, party management will be key to getting any decision through a fractious parliament. 

HS2 will also be in the agenda as the hybrid bill makes its way through the Lords in the coming weeks. The Lords will be focusing on the technical details of the bill so the industry must be prepared for very specific issues to be highlighted in this process. With no overall majority in the Lords, the government will have to pick its battles carefully with one eye on the appetite of the Commons to accept any amendments with the other on the actual delivery of the project. Concerted political campaigns can still generate results for determined opponents, so this is all far from over.    

With Crossrail beginning the process of transforming from project delivery to operation under TfL as the Elizabeth Line, the debate will now start in earnest for Crossrail 2. The Chancellor will have to make clear in the autumn statement if he will continue with his predecessor’s policy or will he loosen the government purse strings and agree to some element of public finance for the project. Balloons have been raised stating the government sees a case for public investment in infrastructure projects but the industry awaits any concrete demonstrations that this will now be actual policy.  Crossrail 2 would be an ideal project to demonstrate this new approach.

Housing, devolution and Brexit

Alongside all of this there will also be the issue of housing and housing supply that is fast becoming one of the biggest political issues in the country. How the government proposes to deal with the issue could well be the difference between electoral success and failure in 2020. Similarly, devolution and investment in the Northern Powerhouse will continue to make weather but there are signs of winter coming for both of these projects with the PM concerned about the political fallout from both projects. The development of the new industrial strategy will no doubt allow us to more fully understand government thinking going forward on these issues but for now we must just wait and see.

As if all of this is not enough, we will still have to deal with the reality of Brexit. The government will have to start making decisions on how it will proceed and implement Brexit and what the future direction of the country will be. Everything between now and our eventual exit from the EU will be dominated by the Brexit question and this more than anything else will be the lodestar of this administration. A slim majority combined with simmering resentment and mistrust in Westminster will not make Mrs May’s life easy but we as an industry must be aware of these pressures if we are to be able to influence the government and achieve our objectives. 

Politically and for our industry, this coming autumn is set to be a very busy time indeed – and on a number of fronts. 

Julian Francis is director of policy and external affairs at the Association for Consultancy and Engineering.