The New Statesman Special Report - Prescott and the builders

George Monbiotreveals a conflict of interest at the heart of government

The final arbiter of planning matters in England is the Secretary of State for the Environment, Transport and the Regions, who is also the Deputy Prime Minister, John Prescott. He, with his ministers and officials, establishes the planning policies that guide council decisions. He also grants or withholds planning permission in difficult and important cases. Prescott and his department, in other words, are the regulators of development in Britain.

You might expect, therefore, that their judgement would be unclouded by any considerations other than the merits or demerits of a particular planning application, or the development needs of the nation as a whole. But Prescott and his department preside over the British government's starkest conflict of interest. The sector they are supposed to regulate is also, bizarrely, the sector they are charged with promoting.

This conflict first became apparent under the previous government and the then secretary of state for the environment, John Gummer, who claimed to be the greenest secretary of state there had ever been. Under Gummer's guidance, the Department of the Environment expanded and enhanced the special favours it rendered to construction companies, which many regard as among the foremost threats to the environment in Britain. Gummer became the champion of the very industry he was supposed to be restraining.

In 1993, he installed a new division within the department called the Construction Sponsorship Directorate. Its £26m yearly budget was higher than that provided for the national parks. According to the department's annual report, it aimed "to help all sectors of the UK construction industry, including the building products and materials sectors . . . It is the advocate within government and the European Union for these industries . . . It also acts as the focal point within government for the property industry." The directorate boasted that it would "promote improvements to the policy and legislative framework in which the industry works". It was committed to "the review of legislation to remove unnecessary regulatory burdens". This "framework" and these "burdens" were to be wholly overseen by the Department of the Environment. Thus Gummer created a lobby within government for the removal of the very legislation he was supposed to defend and enforce.

Who were the people occupying the top positions in this important body? Thanks to what the department described as "a continuing programme of staff interchange with industry", they included representatives of the industry itself. Sir Ian Dixon, of the construction company Willmott Dixon, was knighted for his services to the directorate. Both his son and Rick Willmott, another scion of the firm, were seconded into it.

As if this were not enough, Gummer established yet another body in 1995: a quango called the Construction Industry Board, "to provide strategic leadership and guidance for the development and active promotion of the UK construction industry". The chairman was Sir Ian Dixon, the president John Gummer. The DoE provided 50 per cent of the funds.

One of the board's early complaints was that "planning constraints are inhibiting a faster growth in the housebuilding sector". With its help, five industry lobby groups launched a campaign called "Britain Needs Building".

While Gummer worked tirelessly to promote the industry he was supposed to be regulating, his deputy, Tony Baldry - responsible, remarkably, for both planning and construction - was even more helpful. Writing about his ministerial experiences, he recalled: "Industry representatives spoke of the need to have more access to government and I readily offered the facility of a fortnightly briefing with myself as construction minister. I recall that the senior civil servants present were uneasy about my offer, but the first 'Baldry Briefing' was held on 25 November 1992. More than 60 of these briefings were held during the next three years and they became a key element of a new and vibrant arrangement for the government's sponsorship of this essential industry."

All this may help to explain some DoE decisions that, at the time, seemed unfathomable. The greenest-ever secretary of state agreed, for example, to the construction of Manchester airport's second runway, even though it destroyed one of the most stunning landscapes in the north-west of England and had been dismissed as unnecessary by transport consultants, who argued that derelict land around Liverpool airport could easily accommodate any expansion of air travel in the region. He rejected a House of Lords proposal, stoutly resisted by the construction industry, for a register of contaminated land. He suggested, to the fury of many Tory MPs, the relaxation of greenbelt guidelines. He offered a special dispensation for new "stately homes" to be built in the countryside. For three years, he mysteriously failed to introduce a moratorium on the construction of out-of-town superstores, despite his repeated claims that he was about to deliver one.

None of these decisions makes sense if we see John Gummer as a diligent defender of the nation's fabric, addressing seriously his responsibility for planning control and environmental protection. They become comprehensible only when we see that, as well as regulating development in Britain, he was also promoting it.

But while this conflict of interest budded during the Conservatives' term of office, under Labour it has blossomed.

It is clear that John Prescott did not, at first, understand what was expected of him. From the beginning, he knew that he was the development industry's regulator, but he did not seem to appreciate that he was also supposed to be its promoter. When, soon after the 1997 election, the contract for the cladding of the Millennium Dome was awarded to a German company, Prescott lamented Britain's failure to supply the material. It was, he said, "a sad reflection on the competency of the industry".

The response was swift and furious. "I can't understand what his problem is," growled Graham Watts, the chief executive of the Construction Industry Council. "It is supposed to be his job to act as advocate for it [the construction industry] in government."

"We have a lot of work to do," the chief executive of one of Britain's biggest construction companies commented, "to educate old Labour people like Prescott."

The education was clearly a rapid one. Within seven weeks, Prescott was telling a construction industry conference: "I want to be a champion for your industry." His junior minister, Nick Raynsford, followed, with equal enthusiasm, the lead of his predecessor, Baldry. "I see my job," he told Building magazine, "as . . . creating a climate in which the industry can do well . . . There is no question of construction being downgraded [in the department's priorities]. Quite the opposite."

The Construction Industry Board, still 50 per cent funded by the Department of the Environment, Transport and the Regions, launched two public relations projects. The first, called the Considerate Constructors Scheme, looked like a fine idea: builders would be encouraged to show consideration to local residents and businesses, to dress properly and to refrain from being lewd or rude. But there would be no question of regulation or even independent monitoring. Instead of enforcing codes of behaviour, the board explained, the scheme would produce "well-designed literature and eye-catching posters displayed on prominent sites". Any local authority involvement "would be of an advisory rather than policing nature".

All this, as Building magazine explained, was to head off a construction industry consumer protection bill. Thus, the DETR helped pay for an unpoliced, unmonitored promotional scheme whose purpose was to avoid the consumer protection regulation it would otherwise introduce. "We want to see the industry take pride in its reputation," said Raynsford, "not to have to apologise for it."

The board also organised a "National Construction Week", which seemed to suffer from the erratic time-keeping familiar to anyone who deals with builders. The first week lasted 11 days. The second was delayed by six months. One of the main purposes was "to highlight how environmentally conscious Britain's builders are". "Many youngsters may think the industry is a despoiler of the environment," the board noted. "We need to correct this misconception." On hand to help, as sponsors of the event, were those staunch defenders of the environment, Blue Circle Cement, Hanson plc (which owns the Amey Roadstone Corporation), Tarmac and McAlpine. Both these government-aided weeks also incorporated "an event to influence MPs".

The meetings that Tony Baldry organised appear to have been enhanced and extended by Raynsford. The government refuses to reveal whom Raynsford meets or how often he meets them, but it is possible to piece together at least part of the picture. The lobby group the Construction Industry Council was pleased to report that "a series of 'new-look' ministerial discussions with ministers from our Sponsoring Department [sic] began in October 1997". Building magazine was told that "20 movers and shakers with construction expertise regularly meet to advise construction spokesman Nick Raynsford on policy". The House Builders Federation records that, during the 1997 Labour Party conference, "we had a very worthwhile meeting with Nick Raynsford, minister for construction, who kindly gave us a long and valuable slot in a very full diary".

The British Constructional Steel Association is pleased to note that "good relations have been established with the new government", especially with Raynsford. This happy circumstance could account for the otherwise incomprehensible association of the government, the British Constructional Steel Association and the British Cement Association to launch a "government-sponsored campaign to increase the commercial and industrial new-build market". The campaign conflicts directly with another DETR objective: to encourage the renovation and reuse of existing buildings in the name of sustainability.

In March 1998, some of Britain's biggest housebuilding companies started lobbying Raynsford not to apply new regulations - which insist that new houses be more accessible to disabled people - to "starter homes". The regulations had been brought about largely through the work of the Access Committee for England (Ace), a forum for disabled people's charities, largely funded by the Department of Health. Ace was intended to play a major role in ensuring that the regulations were enforced. Four weeks after the builders' lobbying began, the Department of Health, following consultation with the DETR, cut Ace's entire core funding, forcing it to fold.

The department argues that its support for the construction industry will secure public benefits, including an improvement in health and safety standards and environmental sustainability. Its "Rethinking Construction" initiative identified a number of demonstration projects that would show how construction can create "a better and more sustainable environment". They included a drive-through McDonald's, five giant superstores, a production site for Rugby Cement Works, a new motorway and part of a nuclear power plant.

Thus, the conflicts of interest which govern the DETR have led to planning policies that are, if possible, even more hostile to the environment and ordinary people's quality of life than Gummer's were. Prescott, who came into government with what appeared to be genuinely green intentions, is turning into one of Britain's principal environmental hazards.

He has, for example, refused repeatedly to remove a financial incentive that helps encourage the rich to buy two homes while the poor have none. The owners of houses that are not permanently occupied need pay only half the amount of council tax they pay on homes they inhabit throughout the year. There are 224,000 second homes in Britain, which happens to be roughly equivalent to the official number of homeless families and single people. In some rural areas, villages have been almost entirely bought up by second-home owners, and prices have risen so fast that local people cannot afford to buy. Moreover, large numbers of the houses built ostensibly to solve Britain's urgent housing crisis have instead been sold abroad as speculative investments. In 1997, 50 per cent of all the new homes built in central and inner London were purchased by people or companies based in the Far East. All this helps ensure that more houses need to be built by the construction industry.

In 1998, Prescott overturned a planning inspector's recommendation to approve a greenfield industrial development on a 150-acre site near Sutton Coldfield, even though an ex-industrial site nearby could have accommodated it. The "brownfield" land would have been more expensive for the developers.

Raynsford has, like the House Builders Federation, repeatedly pressed for low urban densities and more greenfield development, even though Prescott's advisers have shown that the urban regeneration the government seeks will only materialise if cities remain compact. Planners, Raynsford says, should be "more flexible and positive in their approach to development". He has promised the British Council of Shopping Centres that he will fight to prevent protracted delays to major new retail schemes. He was partly responsible for the government's U-turn on proposals to tax out-of-town parking places, arguing against his department's own recommendations at Labour's 1998 local government conference.

The Department of the Environment, Transport and the Regions, the government has announced, will "speed up" the planning process in response to "business need". Its consultation paper Modernising Planning suggested that special "orders" could be issued, authorising the construction of major developments such as airports and nuclear waste repositories. "National policy statements" outlining "the need for and benefits of major projects" would "avoid unnecessary speculation and debate at subsequent planning inquiries . . . " The paper suggested that only "major landowners" and "local groups with membership of 50 people or more" should be allowed to speak at public inquiries. Dissenters would have to form "a membership organisation" and encourage people to join it before the inquiry could hear their objections. All of these measures further tilt the balance of decision-making towards developers and away from local people.

A report published by the department last year warned that business was being hampered by "an increasing anti-development mood". It suggested that "clear proactive policies" were needed to assist "business development".

Development in Britain is already our greatest source of inequality. While hundreds of thousands are homeless, and some 30,000 elderly people die of cold each winter because their homes are unfit for human habitation, every city bristles with new office blocks and superstores. Land desperately needed for affordable housing is used, instead, to build exclusive developments of luxury homes. While parks and community centres deteriorate, new leisure facilities for those who can afford to pay handsomely are springing up all over Britain. These are symptoms of our loss of control over the planning process.

When we are unable to ensure that construction meets our needs, the decisions about how we live are taken by people who hope to profit from our exclusion. When planning is in the hands of the developers, development will always work against us.

That is why the construction industry's infiltration of the department that is supposed to protect us is so important.

This essay is based on the writer's Captive State: the corporate takeover of Britain, just published by Macmillan (£12.99)