Jeremy Corbyn’s speech to the Labour Party Conference represented a very different notion of the role of government in the UK from that of the last 30 years. There was little in his speech that amounted to new policy. But taken together with statements by other Shadow Cabinet members, the implications of Labour’s programme for the way government is organised – and whether it has the capacity to cope – are considerable.
Labour’s position, now clarified, is to stay within the Single Market and Customs Union during a transition period of unspecified length. To that extent, it is essentially the same as the Government’s notion of a “standstill” during transition. Beyond that? Corbyn didn’t tell us. His invocation of a “jobs-based Brexit” is a nod towards his desire to have a freer hand on state aid and competition policy than is possible within the Single Market.
But he did not tell us what he might do to protect the jobs at risk in the City and the rest of the services sector, which taken together make up around 70% of the UK economy.
Beyond committing to the rights of the three million EU citizens now resident in the UK, he did not give a sense of future immigration policy under Labour.
Public sector pay
Labour’s plan to allow public sector pay to rise may achieve Corbyn’s stated aim – demonstrating that Labour values public workers – but will not by itself solve the workforce woes facing the public sector.
The evidence – as will be shown in the upcoming Performance Tracker (to be published October 19) – points to workload as being a bigger factor in dissatisfaction among teachers and NHS workers.
Unless a Labour government found still more money to boost numbers as well as pay it will not be a total answer. A pay injection is most urgently needed in prisons, to speed up recruitment and slow the high turnover of staff. But prison officers, who continue to face escalating violence, got no mention in Corbyn’s speech.
Investment in infrastructure
Corbyn committed Labour to extensive investment in infrastructure across the UK. The Institute for Government has argued for the need to assess the economic value of such projects carefully if they are not to be white elephants. If decisions are made for reasons that are not economic (such as a desire to boost certain regions) then Labour should say so.
On regional policy, Labour should note that in the space of just over 20 years, the main vehicles for regional governance have included government offices, regional assemblies, Regional Development Agencies and currently Local Enterprise Partnerships. It should try not to casually add to this astonishing record of churn in an area where politicians are so often enthusiastic, except about devolving the ability to tax and spend.
Public vs private
Corbyn repeated Labour’s intention to renationalise rail, water, energy and the Royal Mail. This taps into a public appetite for questioning some of the results of more than 30 years in shifting the border between public and private through privatisation, outsourcing of government activity and the Private Finance Initiative (PFI) contracts.
There are good questions to be asked about what has worked best in outsourcing, the regulation of privatised utilities and PFI – which will be discussed in an upcoming Institute for Government report on financing infrastructure. But these are complex areas, which now represent a considerable part of the economy, and which include many examples of where private companies have vastly improved management. Many also involve foreign companies with diplomatic implications.
Renationalisation would extend government borrowing, although that might be supported by the revenues of the companies themselves. But without full compensation for shareholders – as some shadow ministers have suggested – this would undermine investors’ support for national borrowing.
Meanwhile, breaking PFI contracts is legally difficult and expensive. It is not clear from Corbyn’s speech that Labour has a plan for handling this process, or for managing the organisations and contracts once they are back in public hands.
Capacity of government
The implication of Labour’s programme is either an expansion of central government – or accepting that it can’t do everything. Corbyn did acknowledge that “there is no bigger test in politics” than Brexit; what is less clear is whether Labour has thought through the constraints this might pose on ambitions for a radical agenda.
Brexit is already consuming the capacity of the civil service and that considerably constrains the wider agenda which the Prime Minister would like to be pursuing. Labour’s radical slate of policies is not only demanding in terms of capacity, but some of them (such as renationalisation of key privatised industries) themselves imply an expansion of government if carried through.
Debt and deficits
One of the big gaps in Corbyn’s speech was how Labour thinks it would finance its plans. The cost of renationalisation, while it has inevitably attracted much comment, may be a red herring as it could be done by borrowing against the stream of revenues from the industries themselves.
But if shareholders are not compensated, the tolerance for holding UK government debt will fall. The case for borrowing for infrastructure investment – if the projects are worthwhile – is not hugely controversial. The greater question is over Labour’s plans for funding of public services and how it intends to manage public spending while “ending austerity”.