25 November 2019

Bronwen Maddox weighs up the Conservative, Labour and Liberal Democrat manifestos.

Conservative manifesto: caution everywhere – except on Brexit

The Conservatives have produced a strikingly cautious manifesto, other than in the domain of their biggest theme – Brexit. It is credible that a new government “gets Brexit done” in the sense of getting a Withdrawal Agreement Bill through Parliament soon after the election and leaving the European Union before the 31 January deadline.

However, there cannot be as much confidence that trade deals then follow as smoothly. Fishing rights could complicate talks with the EU; no deal remains a real possibility in December 2020, although the willingness of both sides to compromise back in the autumn offers some reassurance.

More of a problem is the impact of Brexit on the rest of the programme, and the political task of containing the assorted disappointments and compromises that trade deals may demand (farming is much higher up this list than NHS procurement). Constitutional questions and the discontent of the devolved nations get light treatment but this is likely to be one of the big themes after Brexit.

Boris Johnson’s plan treats Northern Ireland differently from the rest of the UK, aggravating feelings there, while his Brexit does little to assuage Remain-leaning Scotland. The greater the hit to economic growth from leaving the EU – and all credible models show that there would be one – the more impact also on the Conservatives’ other plans.

Their spending plans are modest – £2.7bn extra in today’s prices by 2023/24 (against Labour’s more than £83bn), although this does not count the considerable £4.3bn and £23.2bn for schools and the NHS already in the pipeline. This money is probably enough to maintain standards in schools, hospitals and general practice over the next Parliament. But it is not enough to improve standards.

One big omission is social care – either any serious sum of money or a plan for solving it, beyond a pledge for cross-party action. Given the repeated postponement already of the government’s plans, that is a pity.

Nor is there much money for the rest of public services. Despite the pledged increase in police, the criminal justice system remains squeezed. So does defence, with army, navy and air force chiefs battling it out for resources. The biggest omission is about growth; HS2, being controversial, gets the airiest of references. While there is more talk about money and support for the north and Midlands – where the party is looking to pick up votes – this does not amount to a plan for growth.

The big promise in the manifesto is no rises in the three “big” taxes – income, national insurance and VAT, while maintaining the aim of balancing the current budget by 2022. In the short term, that is credible. But in the longer term, given the costs that an ageing society will bring in health and social care, it is not. It perpetuates the notion that people can enjoy better public services without paying more. They cannot.

Verdict: Cautious – conservative, even – other than on Brexit itself. It makes important new commitments to investment and development of regions and cities. But it ducks acknowledgement of the sheer cost of public services in the future and, perhaps its greatest omission, does not put words to the value of the Union of the UK remaining intact.

Labour manifesto: a radical programme for government but lacking in Brexit specifics

There is an exhilaration and a “to hell with it” quality about the Labour manifesto. Jeremy Corbyn and his team have finally said what they mean, freeing themselves of the compromises of the 2017 manifesto. It is, indeed, radical (a favourite word); it envisages a central role for the state in every area in which they think government policy is failing. Nationalisation, a four-day week (without reduced pay), more power to the unions, directions to housebuilders on affordable homes.

The strength of the manifesto is that it accurately describes the many failings of public policy at the moment. The weaknesses are the eyewatering sums of extra money, the assumptions about how people and businesses would behave as a result, and the impossibility, in our view, of delivering all this programme in a Parliament.

The proposed spending (so far – promises keep coming out) is for an extra £83bn per year of day-to-day spending by 2023/24, plus a further £58bn as a single payment on compensating women for the rise in the pension age. Affordable? No – as the Institute for Fiscal Studies said, these are colossal sums; the pension promise alone would put another £12bn on borrowing for the next five years.  It is not credible that a Corbyn government could collect the tax it proposes without hitting many people beyond the “top 5%" it says will be affected.

It is, too, likely to have underestimated the mobility of higher rate taxpayers. Nor can it assume that businesses will be attracted by this programme – including the appropriation of 10% of their shares – enough to keep investing.

John McDonnell, shadow chancellor, expressed conviction that companies – with mandated workers on their boards – would invest “for the long term” rather than raise prices or cut wages in response to higher taxes. But shareholders will suffer – and as Nick Robinson on the BBC’s Today programme said to McDonnell repeatedly, that is everyone with a pension.

In implementation terms, the programme also presents problems. The easiest and quickest step for a Labour government to take would be to announce new taxes in an early budget. But then? There are real questions of whether the public sector can efficiently spend money at this rate.

For a start, the creation of three new government departments is not a trivial matter; it costs a minimum of £15m each but can be much higher, as we have argued, and causes more than a year of damage to productivity. Plans to cancel Universal Credit and undertake a new series of welfare reforms will also be expensive, complex and could take the best part of a decade.

In terms of bringing industries back into state hands, Labour has yet to make the case that the government can run them better. There have been real failings of privatisation and the regulatory regime intended to protect customers. But it was born out of experience that government could be unwieldy, expensive and poor at innovation.

As our work on outsourcing has shown, sometimes government runs services and construction better, but sometimes the private sector. At the moment, there is not the capacity in government to manage all the activities that Labour envisages, such as running nationalised industries and bringing schools more under local authority supervision.

The big omission in the document, however, is Brexit. This is not just the now well-discussed question of the Labour leader’s “neutral” stance in any second referendum, but the specifics of the deal that Labour envisages negotiating with the EU. Closer, and “better”; that is all we know. It is possible, however, that a Labour government might decide that assorted EU rules (competition in railways, capital controls, state aid and so on) make a less close relationship more desirable than it currently thinks.

In any case, Labour’s timetable is implausibly tight. We have argued that it could almost certainly not “sort” Brexit and hold a second referendum within six months. The time after Brexit – if it went ahead – would also have to be spent on negotiating a future relationship. That would absorb much of the civil service’s capacity.

Verdict: Whether Labour likes it or not, a time-consuming resolution of Brexit stands between it and even beginning to implement its radical programme. The cost and sheer scale of bureaucratic change implied in that programme could well prevent it from fast progress.

Liberal Democrat manifesto: plenty of policies – but for what type of government?

The most important policy of the Lib Dems was clear long before the manifesto: to revoke Article 50. That is, to stop Brexit without going back to people in another referendum. It may be a position which Jo Swinson now regrets given polls that show that even many Remainers find it too black and white.

The next most important point is not in the manifesto: it is the circumstances under which the Lib Dem leader would agree to support another party in power. Over the course of the campaign, Swinson has moved from the assertion that she could be the next prime minster to dropping hints about whether she would support Labour (or even the Conservatives).

That is the only credible position. What, otherwise, would be the value of the seats they do win? But in that case, it is worth spelling out a lot more what those circumstances might be. People will understand if the Lib Dems are wary again of formal coalition, but they are not realistically in a position to win a majority, and so the value is in knowing how they would shape others.

Brexit aside, the Lib Dems have a big fistful of policies that are different from the other parties. They would put a penny on income tax to pay for the NHS and social care (unlike Labour and the Conservatives, they are not pretending that it can flourish without more tax). They would recruit 20,000 more teachers and offer free childcare. They would make 80% of electricity generation from renewables by 2030, and resettle 10,000 refugees a year, freeze train fares and legalise cannabis.

The themes are identifiably Lib Dem, but the number and scale of ambition raises questions about their priorities.

Verdict: Until Liberal Democrat conditions for supporting another party – and their own priorities – are clear, it is hard to give much weight to their promises.