Building firms can live with the newts - but the pro-Brexit hedge funders can't

It seems building firms are quite happy with business as usual - it's the hedge funders who want a deregulation bonanza. The third in a three piece series on EU environmental regulations and Brexit.

Brendan Montague
23 March 2018

"What they want is the wild west". Photo by Kasabubu.

The same week as developers were launching yet another political attack on the great crested newt, Sir Oliver Letwin registered a new company, The Red Tape Initiative (RTI), at Companies House. The new think tank would reopen the debate about the great crested newt, housing developments, the European birds and habitats directives and their implementation.

But what was the RTI? The private company was registered by Letwin with Lord (Jonathan) Marland, who made a fortune in the insurance company acquisitions game, and a chap called Nick Tyrone. The firm was registered to a shared workspace in Victoria, London.

It was described by Politico as “the other UK Brexit department”.

Letwin, according to those close to him, got the message that Theresa May would not require his services in negotiating and implementing Brexit. He would not be able to set up an ad hoc House of Commons committee in the way he may have expected. He would not have his own team of civil servants, nor recourse to taxpayers’ money. So he set up shop elsewhere.

But the new organisation has access to the front bench, and therefore influence on the Brexit process. Michael Gove, the environment secretary, attended its launch. Greg Clark, now the business secretary, wrote to the initiative offering support from civil servants at the Department for Business, Energy and Industrial Strategy. “The aim is to get things prepared, perhaps in time for the commencement of the Brexit negotiations, and the introduction of the Great Reform Bill,” Letwin said.

Tyrone - the man running the RTI – is neither a Conservative nor a Brexiteer, but an Orange Book Liberal, interestingly.

He would now be at the intersection between the house building industry and the government, part of the lobbying matrix. Tyrone was not ideologically predisposed to hate EU regulations. Indeed, he had written previously: “The EU was a convenient scapegoat for a very long time when it came to regulations business and some individuals didn’t like. What happens if we find out that most of it is domestically made? What bogeyman gets the blame then?”

The RTI has a good amount of cash. The think tank began with £162,000 in donations from industry. Marland - a former trade envoy to David Cameron - gave £50,000 seed money. Geoffrey Guy, chairman at GW Pharmaceuticals, donated £50,000. The Ana Leaf Foundation, a health charity based in Jersey, put in £50,000. The Public Interest Foundation, a policy not-for-profit, was responsible for the final £12,000.

The new think tank explained that it was a “wholly non-partisan project…to forge a consensus on the regulatory changes that could benefit both businesses and their employees in a post-Brexit Britain”.

Its advisory board includes leading Conservative, Labour and Liberal Democrat politicians, and it is working with the Confederation of British Industry (CBI), British Chamber of Commerce, Institute of Directors and Federation of Small Businesses are working with the RTI. The website goes on to state that “representatives of environmental and other NGOs” have also been invited, so that they can “help us identify changes that could quickly be made in specific areas of EU regulation, with immediate benefits for jobs and businesses in the UK and with no adverse effects on our ecology or our society.”

The funders were keen that the new think tank would identify European regulation that could be quickly and easily swept away, freeing business from such shackles to bring growth and prosperity back to this green and pleasant land.

Letwin told the press: “We’re going to start in June on the housing one, with an industry-sector panel with input from various groups including the Trades Union Congress, CBI and the Home Builders Federation. We’ll be talking to people at the front end.”

“Seizing the opportunity of Brexit”

Just two months after Article 50 was triggered, the chairman of the HBF was invited to meet the Red Tape Initiative – in a meeting chaired by Oliver Letwin and held in Portcullis house - to discuss housing regulation – and was invited back a month later to discuss infrastructure.

As we’ve seen, ‘EU red tape’ and particularly the birds and habitats directives were already in their sights.

The HBF had recently published a report, Reversing the decline of small housebuilders, which included a section, Seizing the opportunity of Brexit, which stated “we would like to work closely with government over the next 18 months to identify the areas of EU regulation that could be reformed, reduced or removed”.

The chairman of the HBF was evidently very impressed by the conversations which took place, telling his members: “The final work stream around regulatory quick wins is looking at what regulation emanating from the EU could potentially be expunged, replaced or improved post-Brexit….HBF attended the first meeting of a new cross-party ‘Red Tape Initiative’ chaired by former Cabinet minister, Sir Oliver Letwin MP, established to look at regulatory quick wins. The group, which is supported by legal specialists and is attempting to maintain a political consensus, explored areas such as the Habitats and Birds Directives, state aid, the Official Journal of the European Union, and the Mortgage Credit Directive.”

Kate Jennings, head of conservation policy at the RSPB, also attended some of the RTI meetings. Jennings told openDemocracy that there were no statutory bodies in the room, including Natural England. This was a “missing perspective”, she said.

Jennings acknowledged: “When I arrived I was expecting an aggressive focus on deregulation. But that is not what I found. Where suggestions were made that felt inappropriate, then it was usually another industry representative in the room who curbed it. It did not feel like there was an ideology driving this. I was pleasantly surprised.”

But she concluded: “That is not to say that a more ideologically extreme version of the same thing may be happening under the radar elsewhere.”

What emerged from the meetings, according to two independent sources, was a confirmation that the interests of business and the environmental charities were in many ways aligned, and in terms of the actual directives this meant defending the status quo. Jennings said: “The business representatives in the room said that they wanted certainty and consistency. We have an interest in the laws being protected, they have an interest in the laws not being changed.”

The first meetings of the RTI took place just as the government published the findings of its Cutting Red Tape review, Cutting Red Tape, Review of House Building. The findings were very different.

“House builders and trade bodies in the sector told us that there were significant burdens linked to regulation...these add to the overall build cost of housing units and delay the commencement of development.” It concluded: “The sector reports that that regulation relating to some protected species can lead to costs and delays to housing developers. Any delays in protected species mitigation can have a knock-on effect, creating further delays for the house builder.”

The government report included some startling claims. “One house builder reported the cost of dealing with great crested newts in 2013 at an average of £2,261.55 per newt relocated. This took into account consultancy fees, land purchase for the relocated newts and contracting costs for the physical relocation.

Another large builder reported a sum of £500,000 spent on one site where just five newts were found." Patrick McLoughlin, a former transport minister, “railed at the directive after a newt colony held up the building of a railway station in Derbyshire”, the Financial Times reported. “Despite attempts to catch and relocate the creatures, more kept on turning up.”

The newspaper added that the government report would have real world ramifications for our great crested newt. “Britain’s great crested newts are facing a less certain future post-Brexit as ministers prepare to axe rights afforded to them by European legislation in a bid to speed up development projects,” the newspaper claimed.

“Government figures have told the Financial Times that the EU habitats directive is among measures set to be repealed, citing the ‘excessive’ protection given to the amphibian as a reason to change the law.” It added: “The great crested newt is endangered in some parts of Europe, but remains fairly common in England.”

Carry on lobbying

The HBF has, at the same time, been lobbying Natural England directly, according to responses to Freedom of Information requests submitted by environment charity Friends of the Earth. James Stevens, the director of cities at the HBF wrote to Natural England in April last year asking for a meeting to discuss a High Court ruling reducing the number of houses at a proposed development in Ashdown Forest, on the basis it would damage the habitats of endangered species.

The HBF got its meeting the following month. However, staff at the government agency appear to have been extremely cautious. “[Natural England] met with HBF this morning, in an expressly listening mode. Our legal team were there for the discussions. In short HBF were seeking to ensure that we understood their concerns and wanted to make representations to us about ensuring join‐up between public bodies in the resolution of the issues raised through this case”, an internal memo noted.

The great crested newt and the Brexit red herring

We are now awaiting the findings of the Red Tape Initiative. Letwin and his colleagues scoured the length and breadth of the UK looking for home builders and other British businesses who could identify any European regulation that could be easily removed, that would help their bottom line. They asked for specific examples and evidence of where the environmental regulations had increased costs. But, according to sources close to the process, they failed to find anything of significance.

It now seems certain that the RTI will not be recommending any change to the birds and habitats directives and will instead call for them to be included - and indeed strengthened - as they pass into UK law through the Withdrawal Bill. Indeed, senior staff have intimated that the think tank will lobby government to get the June 2016 memorandum of understanding signed. Brexit has caused a massive waste of time, and that delay should now come to an end.

Tyrone, from the RTI, told openDemocracy: “We have ended up with something we hope will make conservation of the great crested newt better post-Brexit. We are still playing with our recommendation - we want the relevant green groups to feel 100 percent happy with the wording - but they will be about moving things along conservation-wise.

“Once our recommendations are finalised, we will be taking them to DEFRA in the hopes of bringing the environmental groups and the builders back to the same page, to the place they were before the vote to leave the EU occurred."

He added: "The experience of speaking to hundreds of business people about Brexit has been revealing. I would have thought there would have been more appetite for large scale deregulation than what we're finding so far.

“Truth is, most businesses want a lot of continuity after Brexit. This does range sector to sector, but there hasn't been a slash and burn mentality from the business community regarding EU regulation at all. They are much more worried about their European supply chains being disrupted."

A source who has worked closely with the RTI on their programme of work

was even less subtle. “They think there is going to be this great undoing of mass amounts of regulation that can hit the dust. They are a little bit desperate to get any hard story, anything tangible that will give evidence.

“This is just my experience, but pretty much everyone we came across is in the range from ‘Brexit is awful’ to ‘we wish it was not happening, but we have to accept it’. I’ve never spoken to anyone who says that Brexit is wonderful and the EU is getting in our way.”

Sir Oliver told openDemocracy: "It has been remarkable the degree of agreement between the conservationists and developers about the way forward on environmental issues.

“In amongst the fretting about the Habitats Directives being "swept away" - and let us remind ourselves, the Defra secretary has stated categorically that environmental protections will be enhanced not reduced post-Brexit - there seems to be consensus on how we can make things clearer and more straightforward for developers while making conservation of key species a clear priority."

It also directly contradicts the findings of the government’s own Cutting Red Tape report and whoever has been briefing the Financial Times. The Conservative party is still riven in the middle between the idealists in the Brexit camp still dreaming of a deregulatory utopia in which British industrial vigour is restored, and the realists in the Brexit-if-we-must camp who accept that housing developments cannot be allowed to wipe out part of Britain’s wildlife, and that environmental regulations are already pragmatic compromises between conservationists and business interests.

Finally, it directly contradicts the narrative that Britain is some exceptional island, full of genius entrepreneurs, which is only being held back by faceless European bureaucrats. A story which is bold and vivid, easy to conceptualise and easy to be swept up in. But, according to the RTI research at least, completely at odds with reality.

So we can trust those who are leading Brexit to remain pragmatic, realistic and honest. To be diplomatic and understand the history and detail in relation to complex issues such as the conflict in interests protecting our natural environment, including our newts, and desiring industry and development to meet our needs, such as housing.

This, most recently, from Boris Johnson, the foreign secretary: “It is only by taking back control of our laws that UK firms and entrepreneurs will have the freedom to innovate, without the risk of having to comply with some directive devised by Brussels, at the urgings of some lobby group, with the aim of holding back a UK competitor...

“We can simplify planning, and speed up public procurement, and perhaps we would then be faster in building the homes young people need; and we might decide that it was indeed absolutely necessary for every environmental impact assessment to monitor two life cycles of the snail and build special swimming pools for newts – not all of which they use – but it would at least be our decision.”

It’s not the home builders but the hedge fund managers who want deregulation

An attendee of one of the RTI meetings, who asked not to be named, added: “It’s not actually the home builders - it is the hedge fund managers. “What they want is the wild west. So much EU regulation has come in since 2008 and what they want to do is go back to how it was. There is a group of people who see Brexit as an opportunity to massively deregulate and cause chaos. What will be interesting is what the hedge fund managers get out of Brexit.”

What does all this mean for the great crested newt, which is now coming out of hibernation? It means British environmental and social policy remains simultaneously confused and morbidly frozen. Rhetoric has more power than reason.

The environmental crises of climate change and the collapse of biodiversity are currently being completely ignored. The warring factions in the Tory party carry on warring, the cultural war of Brexit rolls on and the British press continues to be absolutely fascinated. The great crested newt is awaking to a cold world. Snow in March. Uncertainty and inconsistency in government environmental policy. Our nocturnal newt is once again left in the dark.

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