The idea that Labour cannot be trusted with the economy has deep roots. The 1950 Conservative party manifesto pulled no punches, warning that “a vote for Socialism is a vote to continue the policy which has endangered our economic and present independence both as a nation and as men and women.” Between 1974 and 1997 Labour failed to win a general election against a Tory opponent wedded to small state, low taxation rhetoric.
Following Labour's electoral defeat in 2010, the party embarked on an internal struggle for it soul. The fight was personified by the fratricidal leadership contest between Blairite David Miliband and his union-backed brother Ed. The campaign lasted four months, during which time the party, in full navel-gazing mode, did little to fend off accusations that it had been solely responsible for the parlous state of the UK’s public finances.
Against this backdrop, the Labour's 2015 manifesto goes to great lengths to stress fiscal responsibility. A Miliband government, it says, will cut the deficit every year of the next parliament, with its budgets verified against this claim by the independent Office for Budget Responsibility. “We have no proposals for any new spending paid for by additional borrowing,” the document says. “All of our commitments will be paid for by reducing spending elsewhere or by raising extra revenue.”
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Promised tax rises, such as the mansion tax, are aimed at top earners – a politically sensible strategy, perhaps, but one which has only limited revenue-raising potential compared to more straightforward tax measures such as putting a penny on income tax. Thus, efficiency measures are earmarked to take much of the strain, leaving the civil service in line for another five years of significant pruning. “Outside of the protected areas of health, education and international development there will be cuts in spending,” the manifesto promises.
'Biggest savings'
However, the manifesto itself is vague on details as to where the axe is likely to fall. Some help is at hand via a raft of documents released in recent months feeding into the party’s “zero-based review”. Few voters are likely to read the manifesto, let alone this set of documents produced by an army of policy wonks. But these accompanying documents to the manifesto provide the best clue as to the potential shape of Whitehall in the event of a Labour victory.
The manifesto promises to implement the findings of the review, “reforming government bureaucracies, devolving power and services to our towns and cities, and redesigning public services”. The review has yet to produce final recommendations, but gives a fair indication of a number of areas where savings would be found from government budgets.
The biggest savings would come from tax avoidance and evasion – although the Institute for Fiscal Studies has described all three parties’ promises in this area as “made up”. Nonetheless, as part of the drive, Labour’s review has promised a “root-and-branch” review of HM Revenue and Customs’ process for managing investigations, prioritising resources and the focus of HMRC’s leadership on tax avoidance and evasion.
Other policies emerging through the zero-based review include scrapping Police and Crime Commissioners and the Free Schools programme, selling more government property, scrapping the New Homes Bonus for local authorities and increasing income from arms-length bodies.
One zero-based review document deals specifically with government efficiency. Promises here include substituting permanent for temporary staff, reducing the use of ‘bespoke’ ICT solutions, providing multi-year budgets for departments and increasing the use of pooled budgets along the lines of the Troubled Families programme.
'Shake-up'
In some areas, this week’s manifesto actually goes further than the zero-based review recommendations, most notably on Free Schools. Whereas the review called only for an end to new schools being opened in areas with no demand, the manifesto pledges to scrap the programme entirely. This move would allow the party to switch resources to capping class sizes in junior schools to under 30 pupils, it says.
The manifesto also pledges a cap on structural social security expenditure - such as housing benefit and disability allowances - in each spending review. The policy was announced by Miliband in 2013, but the party has yet to announce a figure for the cap. It is also promising to retain the household benefit cap – which has proved popular among voters – and will “ask the Social Security Advisory Committee to examine if it should be lower in some areas”.
Another previously-announced commitment included in the manifesto is the creation of an independent National Infrastructure Commission to assess and make recommendations to government on how best to meet the UK’s infrastructure needs. It also promises continued support for the construction of the High Speed Two rail project whilst keeping costs down, as well as the expansion of rail links across the North of England.
Elsewhere on transport, Labour stops short of advocating full nationalisation of the railways, while promising more public control. It says a new National Rail body would oversee and plan for the railways, while giving rail users a greater say in policy. In addition, a shake-up of the franchising process would allow public sector operators to take on lines and “challenge the private train operating companies on a level playing field”.
Devolution is another huge theme in the manifesto, with Whitehall set to lose powers to the regions over economic development, skills, employment, housing, transport, health and business support. In a departure from the coalition’s piecemeal approach, the party would introduce an English Devolution Act to rationalise the process. And Labour is also promising to “put Welsh devolution on the same statutory basis as Scottish devolution”, based on the principle that powers are devolved unless specifically reserved, along with permanent constitutional arrangements for a Welsh legislature. These initiatives would follow a Constitutional Convention, which would be established to determine the future of the UK’s governance.
A devolved replacement for the Work Programme is also included among the party’s proposals . Previously, the party’s work and pensions spokeswoman Rachel Reeves has indicated that this would involve breaking down contracts into smaller areas – possibly around local authority boundaries – in order to open it up to smaller providers. On immigration issues, the party says it will recruit an additional 1,000 borders staff, to be paid for by a charge on non-visa visitors to the UK. It would also extend the remit of the Gangmasters Licensing Authority, and require people working in public facing government roles to speak English.
'More collaboration'
The party does not overlook the savings which can be gained from digital technology within government. However, policies here are vaguer, with a promise only to “enable better communication, more collaboration, and sharing of data between services”. It says every company working with the Ministry of Defence should sign a cyber-security charter to reduce the risk of hacking.
Other initiatives set to impact all government departments include the creation of “thousands more” public sector apprenticeships, and engaging “every government department” in the work of preventing extremism and fighting terrorism.
Conclusion
While some key messages in the 2015 Labour manifesto are aimed at taking on the “rich and powerful”, the manifesto avoids a large scale Old-Labour-style drive for renationalisation. The principle of outsourcing is implicitly supported, albeit with greater efficiency savings promised in this area. Some policies, particularly on immigration and social security, are a reflection of a harsher public mood. For all the talk of the party moving to the left, such policies would have been unthinkable even under New Labour.
However, cuts to government departments look set to be implemented more slowly than plans revealed by the Conservative Party. Ed Balls has delivered an unequivocal commitment that Labour will eliminate the current budget deficit by 2020, whereas the Tories are promising to bear down on both capital and current deficits much more quickly.
Labour’s promised cuts would nonetheless be significant and painful for the civil service – which has already harvested much of the low-hanging fruit within the efficiency orchard. Job cuts within government departments are not mentioned once in the manifesto, and much faith is placed in saving gains from shared services, improved procurement and increased use of digital technology. However, with the benefits these solutions unquantified and somewhat unproven, it is remains to be seen how the party will square the circle of promising stronger public services at a lower cost.
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