Election 2017: New Department for Housing among Labour’s mooted Whitehall reforms

Party’s manifesto confirms pledge to end public sector pay cap and take rail franchises into Whitehall control


By Richard Johnstone

16 May 2017

Labour leader Jeremy Corbyn publishing the party's manifesto. Photo: PA

Labour would create a new Department for Housing as part of its plans for Whitehall reform that could also include wide-ranging reforms to the functions of the Treasury.

In its general election manifesto, the party also confirmed its plans to end the current 1% cap on public sector pay increases and to introduce a maximum pay ratio of 20:1 in the public sector.

The document stated that a Department for Housing, separated from the Department for Communities and Local Government, would provide focus on the party’s pledge to build one million new homes as well as reviewing national standards and affordability of homes. As part of the reform, the Homes and Communities Agency would be given an expanded remit as a Whitehall housing delivery body, building on its current role to provide funding to the social housing sector.

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The manifesto also pledged that a Labour government would consult on implementing the recommendations of the Kerslake Review of the Treasury. Led by former civil service chief Lord Bob Kerslake, this review called for the Treasury to "up its game" to ensure that proper financial expertise is valued as highly as wider economic policymaking skills in the department, but stopped short of calling for a break-up of the department’s economic and financial functions. Instead, it called for the Treasury mandate and the expectations on it to be more sharply defined, and to include a specific responsibility to promote greater fiscal devolution, both to the devolved nations and the regions.

Other Whitehall pledges included a pledge to create a Ministry of Labour and a promise to end the self-regulation of Department for International Development’s deals with private contractors, following Public Accounts Committee warnings that outsourcing deals were increasing pressure on civil servants.

The manifesto also confirmed the party would re-nationalise the operation of the railways when franchises come up from renewal, based on the model of the Directly Operated Railways unit in the Department for Transport, which ran the East Coast line from 2009 to 2015.

A proposal to set up at least one publicly owned energy company in every region of the UK to compete with the so-called Big Six energy companies was also confirmed, while a new pledge to take private water companies into public ownership to create regional taxpayer-owned firms was revealed.

A National Investment Bank made up of £250bn of public and private funding would be created by a Labour government, focused on providing patient capital to small businesses, while a National Transformation Fund would invest £250bn over ten years in capital projects such as High Speed 2 and Crossrail 2 in London.

A spending document published alongside the manifesto stated that the party is committed to balancing say-to-day spending on public services with revenue raised. It sets out £48.6bn of revenue spending commitments, the largest being £11.2bn to remove university tuition fees and restoring maintenance grants. Labour’s confirmation that the party would end the public sector pay cap is costed at £4bn in extra spending.

It has also pledged to raise £48.6bn in revenue to pay for these, with the biggest item being £19.4bn from raising the headline rate from 19% to 21% from 2018-19, 24% from 2019-20 and 26% from 2020-21.

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