The Week 27 September 2024

Fresh (if that’s the word) from a rainy and slightly surreal Labour conference – and with the news agenda understandably dominated by foreign affairs – it’s the right moment to report back about the new Government policies that were launched this week.

Except… well, there wasn’t much, was there? A new?working paper on powers?to promote building on brownfield sites – but not set out in much detail. A new undertaking to ensure the provision of accommodation for veterans and vulnerable groups – assuming, of course, that enough homes will exist to meet this and all the other areas of demand. And confirmation of some things we’ve heard about before, including a “Hillsborough Law” that would criminalise misleading or obstructive behaviour from public officials (a very welcome step?recommended?by the Joint Committee on Human Rights).

It’s perhaps not surprising that this week would be light on policy and big on vision. The conference itself was expected to be a kind of election-eve rally before a November election, rather than a showcase for the plans of a new Government. And there has been a flurry of activity and announcements in the short time since Labour took office. Better to get on with those things than hold something back for the purposes of a conference.

Most importantly, of course, we are only a month away from the next Budget, and the shadow of that event loomed over every policy discussion in Liverpool. After all, the missions and objectives of this Government will all depend – at least to some extent – on the resources that are made available for them. There is only so much that can be achieved through changes to ‘architecture’ and ‘crowding in’ of private sector investment.

This means that the hints we can glean from the Chancellor’s speech are noteworthy. Reeves argued that investment would be essential to achieve growth. A?possible tweak?to the fiscal rules to allow more capital spending might give Reeves more room to manoeuvre – by allowing her to?borrow some more money?without breaching those rules.

Philosophical points aside (what is the meaning of a set of rules when they just get changed at any time to suit the government of the day), the idea of removing what some have called an?‘inbuilt bias’ against borrowing for investment?could be sensible – if applied with care.

For example, if a change is made so that the benefits of investments are recognised as well as the costs through a broader measure of the health of the government balance sheet, incorporating non-financial or illiquid assets when determining whether public sector debt is falling. This could allow for the longer-term benefits of investment to be recognised rather than overlooked due to short-term constraints. With sufficient scrutiny, of course.

A bit of a fudge – but one that could make a difference in the Government’s quest for growth.

Onto our read of the week…

I recommend?Robert Shrimley’s piece?in yesterday’s?Financial Times, where the main message of Labour’s conference is caricatured as “your country needs you to take it on the chin”. This is an interesting reflection on the shifting relationship between citizen and State. In one sense, we can see a respectable – and unusual – attempt to be honest with the public about the reality of trade-offs: if we need more prisons, they need to built somewhere, and that’s not going to necessarily be a dream-come-true for the people living nearby. But Shrimsley detects another, more paternalistic aspect to this message: the implication that at times the State really does know best. The problem with this is that the apparent dysfunction within No 10, the ongoing difficulties facing new ministers grappling with the Whitehall machine, and the parallel promises to build citizen power (by letting people “take back control”) all make that argument seem less plausible.