Next week, at the Tory party conference in Manchester, a key group of civil servants will learn whether they are – relatively speaking – as loved by the right of politics as they appear to be by the left.
Tax officials are not usually popular, but they would be essential to the realisation of the financial promises made by shadow chancellor John McDonnell, if Labour takes power again in 2020.
The Labour government would need many more tax officials, armed with greater powers than they have now, if the huge sums in uncollected tax – on which Labour’s projected spending plans depend – were to materialise.
Next week the current chancellor, George Osborne, steps up to the podium. His mentions of HM Revenue & Customs will be worth hearing. For all the Tories’ ideological objection to taxation and Osborne’s determination to cut staff numbers, HMRC has in recent years been one bit of Whitehall that has received words of encouragement from a politician who isn’t exactly the public sector’s best friend. Lin Homer (who will be gone by the next election) is one permanent secretary to have basked in Tory approval.
Osborne has been known to nick ideas and capture trends started by Labour and setting HMRC on the hunt for missing taxes would suit his financial plans as well – but would he boost HMRC at the expense of abandoning cuts in staffing and pay?
McDonnell’s appointment of former head of the civil service Lord Bob Kerslake to carry out a review of the Treasury, which shares the same headquarters as HMRC, is audacious. The role and capacity of the Treasury, including its understanding of science, research and investment, have long been under scrutiny, and Kerslake will have no truck with the dogma that says control over public spending necessitates the short-termism and sterility that so often characterises Treasury judgments.
To his examination of the Treasury, Kerslake will bring not just the expertise of a Cipfa accountant but also the accumulated experience of his years in local government and at the Homes and Communities Agency (HCA) as well, of course, as his time in Whitehall itself.
Kerslake’s former permanent secretary colleagues will be queuing up to suggest ways in which spending control could be better organised, let alone macroeconomic policymaking and oversight of the Bank of England. In other circumstances Osborne might well be tempted to join the anti-Treasury crowd, but not in the middle of a spending review when he needs his officials to keep chanting the mantra about recovery and prosperity and the necessity of continuing austerity.
That said, Osborne’s speechwriters will have kept their antennae attuned to this week’s Labour party conference in Brighton. Labour shadow ministers made various quasi-commitments on the machinery of government, some of which he might fancy. Among them (implied rather than spelled out) is a de facto “department of the north-west”. The Institute for Government has noted just how many Labour frontbenchers represent seats in the Merseyside, Lancashire and greater Manchester area and Osborne is all in favour of putting more emphasis behind his northern powerhouse, provided it doesn’t cost much. The presence of Sir Richard Leese and colleagues from other local authorities on Osborne’s recent trip to China made this point: the Chinese may be persuaded to build the infrastructure that the Treasury won’t.
Yet it’s in infrastructure that Osborne has the biggest room for manoeuvre. Although his overall target for cutting the deficit includes capital spending, he has shown several times during the past five years that there are wheezes and dodges a resourceful chancellor can employ.
One Tory challenge next week has to be housing. Right to buy doesn’t build a single dwelling and help to buy is getting terrible press, from the experts at the Bank of England. This week shadow housing minister, John Healey, has committed Labour to a big and fully costed housing programme. But Labour, unlike the Tories, has no hang up about councils owning stock and acting as developers.
What Osborne needs is some Heseltinian device to appear to get on with social housebuilding, so he would not need the councils. Call it the housing corporation or reinvigorate the HCA – and find a Kerslake lookalike to give its leadership credibility.
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