Snap Analysis 11 June, 2024

The GEek, Conservative Manifesto Reaction

When you’ve been in power for 14 years, coming up with a whole new set of manifesto pledges is no easy task — the most common response is ‘why haven’t you done this already?’, followed by ‘but didn’t you create the issue you’re now pledging to fix?’.

Nonetheless, the Conservative manifesto is a surprisingly wide-ranging read — and at 37 fewer pages than the Lib Dem offering.

The headline policy is another cut to National Insurance — a further 2p reduction by April 2027 — which combined with the two previous cuts will represent a halving of the rate from 12% to 6%. Taken in isolation, it’s not a bad tax cut — it’s focused on working families and it’s more targeted at lower earners than a cut to Income Tax would be. At a time when people are still feeling the cost of living crunch, enabling people to keep more of what they earn is surely a good thing. And before you shout ‘fiscal drag’ (which as a reader of ‘The Week’ I am certain will have been your first thought!), average earners are in fact facing the lowest levels of direct taxation in 50 years.

The trouble is, we can’t take that policy in isolation, because with the ‘fictional’ spending envelopes facing the next Chancellor, any cut to revenue (and the price tag for this cut hits near £10 billion 3 years in) creates a further hole — and as you’ll see below, we’re not convinced by the measures put forward to pay for it.

We’re also not convinced by the assertion that all departments will be able to deliver 2% annual productivity growth over the next spending review, not least as its based on the fact that the NHS has a “Plan” to deliver this (which, to put it politely, there is a significant degree of scepticism will be achieved).

🥇 REFORMING POLICY

Scrap low-quality degrees

It has long been recognised that not all university courses are delivering value for the students taking them, and with average post-university debt of around £43,000, addressing this should be a priority. To this end, the Conservatives have pledged to scrap 1 in 8 low-quality degree courses with a high dropout rate or a low proportion of students landing graduate jobs. We’re all for standing on the side of the consumer over the provider, particularly when many of the consumers of these particular courses are from more disadvantaged backgrounds, and on average do not receive the same university ‘premium’ in future earnings as those attending higher-ranked courses at ‘elite’ universities.

Widening access to higher education is key to social mobility, but this means ensuring those students are actually getting a good deal.

The Conservatives are committing to spend the monies saved on creating 100,000 more apprenticeships per year by the end of the coming Parliament. Every Party loves apprenticeships, but the key in ensuring they are high quality, genuinely additive and accessible by those who will benefit the most.

 

😤 REACTIONARY POLICY

Cut NHS managers

The Conservatives have come for the bogeymen and -women of the NHS: managers. Popularised as the pen-pushers and bureaucrats that prevent hardworking doctors from treating more patients, the pledge to cut 5,500 managers is playing to the electoral crowd. The problem is that the crowd is ill-informed, the NHS is in fact significantly undermanaged (NHS managers make up roughly 2% of the workforce, compared to 9.5% in the UK workforce as a whole) – a fact that is undoubtedly contributing to targets missed and care delayed. One of the biggest GP frustrations is the amount of time they spend on admin. Why would you want a highly qualified clinician spending time on patient flow or procurement or hospital logistics? Obviously you wouldn’t. Well managed organisations are high performing organisations, this is a bad policy which is likely to exacerbate the problems in the NHS.

 

💬 QUOTE OF THE MANIFESTO

 

“The only way to give people the peace of mind that government will be able to support them again when future shocks hit is to get borrowing and debt down. The alternative is to let borrowing get out of control, driving inflation and interest rates up, and leaving our children and grandchildren to pick up the bill."

 

👍 GOOD MANIFESTO FOR

 

Families

With family budgets under pressure, a big focus of the Conservative manifesto is on reducing household costs. In addition to the continued commitment to childcare expansion — saving eligible families an average of £6,900 per year — the Conservatives are committing to deliver further savings through implementing a series of energy efficiency measures. The manifesto predicts these could save each household between £935 and £970 a year.

Another positive family-friendly measure is the pledge to ensure every local authority in England has a Family Hub (though given some local authorities have a population of a million, this should be more ambitious). Family Hubs bring together multiple organisations to provide a range of support services (early learning interventions, breastfeeding, stopping smoking, etc.). The hubs are an exemplar for place-based, joined-up community assets that offer preventative services and improve outcomes for citizens.

Housebuilding

The Conservative manifesto has numerous policies aimed at encouraging housebuilding. These include providing a fast-track route through the planning system for new homes on previously developed land in the 20 largest cities; raising density levels in inner London by requiring the Mayor of London to plan for more homes on brownfield sites; and creating locally-led urban development corporations.

Encouraging housebuilding in urban areas is a sensible approach and the development corporation model has a long history of success. However, despite these welcome measures, we remain sceptical that these policies will be sufficient to meet the Conservatives’ punchy target of 1.6 million new homes in England over the next Parliament.

Localism (mostly)

The ghost of the levelling up agenda can be detected in this manifesto, which reiterates the commitment to roll out devolution deals across England by 2030 (to everywhere that wants one, that is). There seems to be a slight clarification of where the deeper ‘level 4’ powers will be available: the offer is now extended to everywhere with an existing devolution deal and a directly elected leader. City regions are promised an additional £8.55 billion in their City Region Sustainable Transport Settlements.

Most importantly, the manifesto promises a multi-year funding settlement for local authorities “to support social care” at the next Spending Review. The longer-term planning enabled by this would fulfil a very long-standing ask from the sector (though that money also needs to increase!).

At the same time, though, the manifesto is peppered with little examples of central government micromanagement, with promises to override councils setting their own local traffic rules, working practices, or planning approaches. More consistency needed!

(Some) health pledges

Setting aside that one of the NHS pledges takes our Reactionary Policy crown, there are some welcome – if not game-changing – measures in their health plan. We like the commitment to further expand Pharmacy First, an extremely positive initiative to expand community-based provision, which simultaneously reduces demand on GP practices and offers convenience for patients. We are also pleased to see the pledged increase in community diagnostics centres, particularly with the focus on “underserved areas” – though speeding up diagnosis also needs to be matched with speeding up access to treatment post-diagnosis. We are, however, disappointed to see the continued commitment to deliver 40 new hospitals.

On dentistry, the Conservative commitment to ensure newly qualified dentists have to spend a minimum number of years working in the NHS seems very sensible given the taxpayer investment involved (and in fact they had started consulting on this just before the election was called).

The Conservative manifesto, similar to the Lib Dems', also has multiple mental health pledges – including expanding school Mental Health Support Teams, opening “early support hubs” for young people (something we’ve called for), further increasing Talking Therapies provision, expanding Individual Placement and Support provision, and overhauling legislation. A thumbs-up from us.

A machine that delivers

Credit where credit’s due, it's unusual to see a manifesto with a focus on the importance of an effective government machine — which attracts “the best and brightest” — for delivering national priorities.

Our enthusiasm is tempered by the fact that the policies don’t amount to a radical vision for Whitehall reform, but we appreciate (weirdly) this isn’t probably a vote winning topic, and several pledges are individually promising. For example, given the potential of AI and technology to transform how Whitehall operates, and create more efficient, user-centred services, the pledge to “double” civil service expertise in this area is welcome. The growth of data and tech professionals in Whitehall (now the biggest employer of these skills in the country) is one of the real success stories of the last decade.

Moving secure, well-paid civil service jobs out of London to hubs in Stoke and Wolverhampton could really benefit those economies, and as analysis of the Darlington Economic Campus has found, could potentially lead to different ways of thinking, and a more open civil service. Nevertheless, the value of this decision will be depend on which jobs are re-located (there is a history lesson here in the questionable move of the ONS to Newport) and a clear strategy for ensuring this doesn’t compromise cross-government working, or government’s ability to attract the very best talent.

Similarly, a headcount reduction of 66,000, which the Conservatives tell us would reduce the civil service to the same size as 2019 while saving £3.9 billion, leaves questions unanswered. Not least, how a 13% reduction would save over a quarter of the civil service’s £14.2 billion staffing budget. A smaller, more agile civil service is a legitimate aim, but must be accompanied by a strategic vision for getting there.

 

👎 BAD MANIFESTO FOR

 

Scored savings

Spending money is always easier than raising (or saving!) it. This manifesto again proves this point, with pledges funded by tax and savings measures which may not (probably won’t?) be realised. Tackling the tax gap is expected to raise an additional £6 billion a year by 2029-30. But without clear plans to do that, it’s hard to assess plausibility.

And raising more than £1.2 billion a year from “bringing quango spending under control” also looks ambitious, not to mention raises questions about why this hasn’t be done (see also tax gap above). And we’ve already flagged the civil service headcount savings…

Exacerbating the tax gap

While the Conservatives are pledging to cut National Insurance for payroll workers by a further 2p, they’re promising to abolish it entirely for the self-employed. Historically, the self-employed paid less NI in return for accruing less in state pension. Not so anymore – which the manifesto explicitly re-confirms (“This will not affect their entitlement to the State Pension”). So that’s just a much more generous tax system for a particular group of workers… Incidentally, small businesses are responsible for the largest share of the tax gap according to HMRC, accounting for 56% in 2021-22.

Local finance reform

This manifesto has a coherent offer for local government and devolution – but this does not extend to how the sector should be financed. Pledges on Freeports and Business Rates Retention Zones offer interesting possibilities for local places, but a more ambitious programme to reinvent Business Rates altogether and move toward genuine fiscal devolution is missing here. The same applies to Council Tax, where a much-needed revaluation is ruled out, alongside any possibility of making the system more progressive with new bands. All this means that financially self-sustaining local systems remain a pipe dream.

Meanwhile, the tendency toward what Andy Street called “begging bowl” funding continues, missing an opportunity to build upon DLUHC’s recent experiments with streamlining and consolidating funding for the sector. This includes the (otherwise very welcome) additional cash for community-led projects available via an extension of the Community Ownership Fund, as well as the Shared Prosperity Fund (which would be around for three years before being diverted into the new National Service programme) and a range of new funding commitments for local transport.

Pork-barrel pension policy

The ‘Triple Lock Plus’ on state pensions — a pledge that no-one will have to pay tax on their state pension, however generous it becomes — is pork-barrel politics at its finest. The UK has made real strides in eliminating pensioner poverty, with pensioners today less likely to be in poverty than the rest of society. Yet, even before this announcement, the state pension was set to continue increasing as a share of national income, representing one of the biggest causes of long-term fiscal risk and crowding out other areas of public investment. And that’s before counting the four freebies (like TV licenses and free prescriptions) they namecheck in the manifesto… or indeed the fact that more than one in four pensioner households are millionaires.

Further diverting scarce resources to a group who are, in comparative terms, doing better than most, is the wrong priority — and no rationale is provided for why pensioners should be singled out for this tax cut (besides reducing admin costs of carrying out a tax assessment for pensioners).

Fuelling housing demand

Head in hands: the Conservatives have committed to launching a new Help to Buy scheme, costed at £940 million. There are many positive ways in which the government could spend £940 million, but all evidence points to this not being one of them.

A significant proportion of recipients of the previous Help to Buy loan could have afforded to buy a home without its help. Indeed, evidence shows that the loan benefitted property developers rather than first-time buyers in the form of higher house prices and therefore higher profits. Crucially, and as we highlight in our ‘good for’ policies, the most obvious ways to help more people onto the housing ladder is supply-side reforms — this just adds even more fuel to the fire of demand.

BOLDEST MANIFESTO POLICY... SO FAR

The Conservatives launched their election campaign with a pledge to introduce National Service. It was, as they say, a bold move. The Marmite policy would see all 18-year-olds take part either in 25 days of civic service or a 12-month placement in the forces.

The latter option is, in our minds, pretty uncontroversial – it’s a paid, competitive scheme that would see 30,000 young people trained in back office functions or cyber security, providing talent for the military and valuable skills for the young people.

The civic service, in contrast, would be “compulsory” for those not joining the military scheme. Setting aside the oxymoron that is mandatory volunteering, the proposal is genuinely radical – and there’s a dearth of such thinking so far in this campaign. The potential benefits, in addition to providing a big injection of support for vital civic and public services, are strengthened social fabric and community connection, the development of core skills, and improved wellbeing. That’s not to be sneered at. But… team Reform would like to know how this would work in practice, for example, do you get excused if you have a weekend job? What if there are not enough volunteering opportunities in your area? What if you have personal caring responsibilities? Will it be enforced, and how?

Points for thinking big, but much more detail needed.