Labour manifesto: Cornucopia of delights or a suicide note?

With the Tories so far ahead in the polls, you might be forgiven for thinking the (official) launch this week of Labour’s manifesto is a bit of an irrelevance. But, reports Joey Gardiner in the first of a weekly series of election specials, the document has much to offer construction - and besides, if the ideas were that bad, why would the Conservatives be stealing them?

When Labour leader Jeremy Corbyn finally unveiled the official Labour Party election manifesto this week, it wasn’t short on eye-catching policy ideas that would, if implemented, have a big impact on construction. From the setting up of a £250bn National Investment Bank to pay for new infrastructure, to a pledge to insulate four million homes and build 100,000 affordable homes a year, there was plenty for the industry to welcome (see Labour’s key policy pledges, below).

There are also, however, items that some in the sector may fear – not least of which is a corporation tax hike designed to raise around £20bn from business. Overall the manifesto confirmed the essential bargain for the industry contained in last week’s leaked document – increased capital project spend on one side, against an increase in tax and regulation on the other.

So, does Labour’s prescription for the industry read like the fantasy of a left-wing student activist, or a realistic and deliverable programme which could help boost construction’s order books at a time of economic uncertainty? And with the Conservative Party already responding with promises of a “new generation of council housebuilding”, is there a chance policies in it can be influential even if Labour doesn’t win the election?

Press reaction to the manifesto has polarised along party lines. While the Guardian’s Polly Toynbee described it as “a cornucopia of delights”, many national newspapers said it echoed Labour’s infamous 1983 manifesto, described by the late Gerald Kaufman MP as the “longest suicide note in history”.

In addition to the corporation tax rise, the manifesto included a big boost to workers’ rights, raising the minimum wage to £10/hr and seeing government contractors forced to pay suppliers on time and adhere to a 20:1 ratio between their lowest and highest paid employees. Rightwing think-tank the Institute of Economic Affairs said it contained “delusional and incoherent economics that would result in economic disaster for this country”. An analysis done by the body for the Daily Telegraph claimed spending promises in the manifesto added up to £94bn, with revenue raising measures adding up to only £63bn.

The manifesto promises a state bigger than we have known for 35 years … the period of austerity that began in 2010 would certainly end

Paul Johnson, Institute for Fiscal Studies

More worryingly for Labour, the CBI said that “proposals to damage the UK’s flexible labour market and competitive markets will threaten jobs and prosperity.” Paul Johnson, director of the respected Institute for Fiscal Studies, said the manifesto “promises a state not just bigger than that promised by the Conservatives, but one bigger than we have known for 35 years … the period of austerity that began in 2010 would certainly end.”

However, for construction specifically, many of the measures contained would command wide sector support. The Home Builders Federation, for example, has long been lobbying for the extension of the Help to Buy equity loan policy contained in the manifesto, while the Federation of Master Builders said it welcomes the Labour manifesto integrating housing and skills policies as “the right approach”.

Infrastructure investment is also prioritised, with a promise to boost spend by an extra £25bn a year on top of the £50bn spent by the current government, thus giving the party leeway to pledge construction of HS2 through to Scotland, a “Crossrail of the North”, and Crossrail 2 in London.

The party’s stance on Brexit, widely mocked in the media for a supposed lack of clarity, is actually very close to that articulated by the industry itself in Building’s Building A Better Brexit campaign: accepting the reality of exiting the EU but prioritising trading links and labour flexibility in the departure negotiations. The question of whether voters believe Corbyn could deliver successfully on these aims is, of course, another matter.

The area of the industry which the manifesto covers in most detail is undoubtedly housing. Here a long list of measures is headed by the desire to build 100,000 council and housing association homes a year as a proportion of a one million home target across the parliament as a whole. Smith Institute director Paul Hackett, a special adviser to John Prescott when deputy prime minister, says while the affordable homes commitment could cost up to £15bn over the parliament, the overall package is hardly out of Das Kapital. “Yes, it’s going to be costly, but there’s at least a real choice there and a real conversation. With more money there is the chance of additional homes. This is positive and sensible,” he says.

Alex Morton, a partner at policy and public affairs firm Field Consulting, who was David Cameron’s housing advisor until 2015, says: “Most of this is quite pragmatic, it’s less bad than people feared. [Shadow housing secretary] John Healey has been a housing minister before and I suspect his restraining influence is on display.”

Yes, it’s going to be costly, but there’s at least a real choice there and a real conversation. With more money there is the chance of additional homes. This is positive and sensible

Paul Hackett, Smith Institute

Notwithstanding the caricature of endless spending pledges, there is no money identified for “social infrastructure” such as schools and hospitals, beyond a non-specific promise to “boost” NHS capital spend.

Steve Beechey, group strategy director at contractor Wates, says: “This principle of infrastructure investment is good, and the policies on housing are to be celebrated. But it is surprising there is no commitment to education investment and nothing specific on the healthcare estate.”

Does the good news outweigh the concerns? One director at a major construction employer working on government contracts, who asked not to be named, said most firms would prefer lower regulation and lower taxation even if at the expense of higher capital project spend. “Businesses would be concerned about the negative impact on the economy of raising taxes and increasing regulations.”

Noble Francis, economics director at the Construction Products Association, echoes this, saying: “Whether the increased cost to firms from the corporation tax increase can fund the expenditure is unknown and even if it can, then would the increased construction activity offset the rise in tax? It’s far too early to say.”

However, if the opinion polls are correct, then the significance for the industry of Labour’s election manifesto may lie more in the political pressure it puts on the Conservative Party than any of the specific policies themselves. The Smith Institute’s Hackett says prime minister Theresa May’s announcement this weekend of a “new generation of council housing” – albeit funded with no new money – is simply a “devious” attempt to woo Labour voters, while Labour’s “more genuine attempt at policymaking” will be “undermined by the lack of credibility of the leader and the party.” The construction director says: “This won’t be the last time that policy makes its way across the political spectrum.”

Nevertheless, Field’s Morton thinks the two policy platforms “won’t end up that far apart” – although the thinking on the Conservative side on the detail is perhaps more advanced.

Labour’s key policy pledges

Contact your candidate

You can download this model letter to your constituency candidates by clicking here.

The letter summarises construction’s importance to the UK economy and calls on election candidates to consider the key demands in the Building a Better Brexit manifesto.

A list of the candidates is available from the official political parties’ websites, along with contact details. Feel free to add local examples of important construction projects or related issues – we would also be interested to hear about these local stories, so please email us building@ubm.com.

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