Promises, promises, but change is not as easy as Labour might like to think

Last week’s Supreme Court ruling and the return of parliament meant that coverage of the Labour Party conference took up less space on the front pages that it might normally have done. I don’t mean coverage of splits and the rows over Brexit; I mean coverage of the policy decisions taken.

There were plenty of them. Some were very big. Even those that were perhaps not that radical got dressed up as radical. Given the scale of the promises in the 2017 manifesto and some of what has been said since, to see another slew of big announcements was quite something.

In a sense, the least radical part of the 2017 manifesto was the promise of something like £75 billion a year of additional spending and an intention to raise £50 billion of extra tax. Tax and spending policy always divides the big parties and they always go into elections with promises. While these were by far the biggest pledges in generations, the Labour Party was entirely right to point out that they wouldn’t have taken UK tax and spend to unusual levels by international standards.

Last week there was more — £6 billion for free social care, a few billion to increase the generosity of Universal Credit, a few hundred million to abolish NHS prescription charges — yet it’s the other elements of the programme that are worth pausing over, including widespread nationalisations, the introduction of sectoral collective bargaining, a “real living wage” of at least £10 an hour and an ambition to get the average working week down to 32 hours without loss of pay. Conference passed motions supporting net zero carbon emissions by 2030 and Jeremy Corbyn announced that a Labour government would create a state-owned generic drugs company to manufacture cheap drugs for the NHS.

What should we make of all this? First, some of the policies as stated are perhaps less radical than they appear. Take Universal Credit, the troubled welfare reform programme now being rolled out after years of delay. While the headline was about abolition, the only details provided suggested some increases in generosity and modest reforms to delivery. It’s not even clear what abolition would mean. Given what a bad press Universal Credit has had, the promise to abolish it may hit home. There could well be merits in a substantial rebrand, but actually unpicking it and starting again would involve another decade of cost, uncertainty and enormous turmoil in the benefit system. Claimants really could do without that and I suspect (and hope) that the reality would be less dramatic than the headline.

At £6 billion a year, the eye-catching promise to provide free personal care for all older people wouldn’t come cheap. It would be a big increase in social care spending and would extend present levels of provision to those with assets or incomes above the existing means test, benefiting many and moving to a system where — like with the NHS — personal care is not provided free only to those with low means.

A sum of £6 billion, though, wouldn’t be enough to return provision to pre-2010 levels. Nor would it be enough to pay for the costs of residential care. It wouldn’t be a long-term solution. Like promises to end prescription charges and to end university tuition fees, it would extend the scope of people covered by the welfare state beyond those on low incomes but without much sense of how fundamental problems are going to be tackled.

Second, some of what was promised probably is not deliverable, although trying to deliver it could cause trouble. Mr McDonnell was careful to emphasise that while he wants a 32-hour working week without loss of pay, it won’t be imposed. The fact is that more than a quarter of workers already work part-time. Many low-paid men are already, for the first time in history really, working part-time and actually want to work more hours, not fewer. And if it’s not imposed, I would expect most still to want to work more hours to earn more. The costs of a 32-hour week without loss of pay in the public sector would run into many, many billions.

Another ambition unlikely to be realised is to get to net zero carbon emissions by 2030. It’s easy to say, staggeringly hard to do. Politicians instead should coalesce around the already genuinely ambitious target set by the Climate Change Committee (of which I am a member) to get to zero greenhouse gas emissions by 2050. Less conversation about new and clever-sounding targets and more serious policy action, please.

Third, running through some of the policies is a belief that if the government wills it, it will happen — and without causing other problems. Yes, of course we would like medicines to be cheaper, but don’t expect pharmaceuticals companies to keep investing as much in R&D if the benefits from patenting their discoveries are substantially reduced. It would be wonderful if we could get more than £20 billion a year in a painless way by taxing companies as suggested by the 2017 manifesto, but taxes have consequences, perhaps especially so in the face of the present political and economic uncertainty that has seen business investment collapse already. It would be brilliant if everyone could be paid £10 an hour or more, but there is no law that can force firms to create jobs that will pay that much to school-leavers, for example.

As ever, there are trade-offs. You can’t just wish them away, as our “cake and eat it” prime minister also thinks you can. The best way of achieving economic prosperity and social justice is not always, indeed not often, simply to mandate it. If only it were that simple.

Paul Johnson is director of the Institute for Fiscal Studies. Follow him on @PJTheEconomist

This article was first published in The Times and is reproduced here with permission.