Rachel Reeves' attempts to overhaul Britain's planning laws have failed after the senior lawyer she appointed as an adviser decided to leave government after just four months.
Catherine Howard will leave the Treasury when her contract expires on January 1, despite being informally asked to remain there indefinitely.
Howard is understood to have warned the government against immediately pushing ahead with some of its more radical proposals to scrap planning rules in a bid to encourage more infrastructure projects.
Her decision to leave the post comes amid disagreement at the top of the government over how far to go with the deregulation agenda, with some senior officials warning that Keir Starmer's latest attempt to jumpstart major construction projects could damage relations with the EU.
Concerns are also growing among some Labor MPs, with 30 of them writing to the Prime Minister this week urging him not to move forward with some of his more radical planning reforms.
Howard said in a statement: “Over the last four months I have thoroughly enjoyed my role as the Chancellor's adviser on infrastructure and planning, and during my time I have had the opportunity to advise the Treasury and help manage the important steps the government is taking to improve the planning system to support economic growth.
“I look forward to continuing my engagement with the Treasury and government as I return to the private sector.”
Starmer and Reeves have put planning at the heart of their push for economic growth, which has so far struggled to gain traction, with data released on Friday showing the economy shrank 0.1% in the three months to October.
Howard was appointed in September to help advise Reeves on planning changes leading up to the budget, a move welcomed by senior government officials and some Labor MPs. Chris Curtis, co-chair of the Economic Growth Group, said at the time that it would be an “extraordinary addition” to the Treasury.
Curtis told the Guardian: “Catherine has made a major contribution during her time at the Treasury, not least in ensuring that the biggest changes to planning in a generation were soon enshrined in law. Her experience has been a great asset to the government.”
Howard was then asked to stay on as long as possible as the Treasury found her advice useful, but she decided to leave in January to return to her role as a partner at private law firm Herbert Smith Freehills Kramer.
While in government, she is understood to have disagreed with Starmer's decision to announce that he would fully accept the recommendations of a review into fast-track nuclear power plant construction, written by economist John Fingleton.
Starmer said in post-budget speech last week: “As well as accepting Fingleton’s recommendations, I am asking the Business Secretary to apply these lessons across industrial strategy.”
Fingleton made a number of proposals, including changing rules on protected species and raising radiation limits for those living near or working at a nuclear power plant.
He proposed that infrastructure projects pay a large, pre-agreed, upfront sum to the government quango Natural England instead of protecting or replacing habitats lost to development.
His review also recommended making it more expensive for individuals and charities to litigate infrastructure projects.
Fingleton told the Guardian earlier this week: “We need to have a more mature relationship with risk. Projects often fail because of safety concerns, but often all you do is move the risk somewhere else.”
Howard believed Starmer should not have agreed to his recommendations to break EU habitat laws before seeking legal advice on whether they were consistent with legally binding conservation goals and trade agreements with the EU.
She expressed concerns shared with government departments including the Cabinet Office and the Environment Department, which said the review could threaten trade with the EU and lead to widespread habitat destruction.
These concerns are shared by some members of the Labor Party.
Chris HinchliffeLabor MP for North East Hertfordshire, led the campaign against the review.
He said: “It’s time for our Labor government to stop positioning nature as the enemy of a better life for ordinary people in this country and realize that for the vast majority it is the measure of it.”
