Alex Morton: How Sunak can save £30 billion a year

21 Oct

Alex Morton Head of Policy at the CPS and a former Number Ten Policy Unit Member.

Today, the Office for National Statistics will announce the provisional figures of Government borrowing for the first six months for 2020/21. They will be truly dire. We know because borrowing in the first five months alone were bigger than the previous annual total, and by August this year the national debt was larger than the UK economy, rising by over 10 per cent from 2019/20’s total.

Putting aside the ongoing – and crucial – debate about the nature of lockdown restrictions, it is clear even on the most optimistic forecasts, and with the best decisions, the UK will end the pandemic with a serious debt and deficit problem. Even assuming higher borrowing for years, something must give.

For that reason, the Centre for Policy Studies today publishes the paper Saving £30 billion: Nine Simple Steps, which discusses, on rough but plausible estimates, nine savings to cut £30 billion a year from the Government’s spending without jeopardising frontline services, or asking the politically impossible.

The Government is in the middle of a Spending Review, and we believe that now is the time for proposals to stop the threat of tax rises which will both hit growth and hard-pressed workers, companies and families. None of the savings would impact frontline delivery and none of them ask for MPs to vote through what would be political suicide.

Government efficiency

Despite the arguments made that austerity means no further reduction in spend is possible, we find significant potential savings across a wide range of areas, none of which impact frontline delivery. The first group of savings are thus about making the state more efficient.

  • We analyse the number of Government administrative staff versus the private sector and find initial convergence but significant disparities in reductions in recent years, with the private sector slimming down this group more effectively. We therefore propose benchmarking Government administrative staff totals to the private sector and reducing these in the public sector once a post-Covid recovery gets underway.

We also propose –

  • To abolish some quangos and to bring all quangos under the control of a relevant department. Each department should create a single body to manage HR, marketing, and other administrative functions for all quangos it oversees. This should also make bureaucracies more accountable and improve public sector productivity.
  • Pushing toward greater use of back office function sharing in local government, as occurs between Westminster and Kensington & Chelsea. There is no need for 350 councils to have distinct IT or press or procurement teams. The Housing and Local Government Department should publish data on the administrative costs for each council to push forward action. This should enable many of the savings around unitarisation without the massive political rows.
  • Improving e-procurement and data sharing, noting that other countries such as South Korea or Estonia have significantly improved productivity and reduced costs through this route, and agreeing with critics of the existing Government procurement systems.
  • Since the state owns land and property worth a staggering £1 trillion, we call for an inventory of all non-operational land followed by a sale and leaseback model across all this non-operational land, rather than past Spending Review’s top down land targets for each department. Just selling off the Network Rail arches gained £1.4 billion while boosting growth, and Covid-19 has changed office work patterns, so this should raise serious sums.

Ensuring a fair state

The second group of savings are about ensuring that the state does not give excessively to one or other group, and create a state focused on the core tasks of government. We propose:

  • Replacing the triple lock with a dual lock, which still gives pensioners the best of inflation or wage growth, and removing the tax anomaly of the Winter Fuel Payment and just treating as taxable income like other benefits.
  • Sell and replace high-value council properties when they fall vacant with a less expensive nearby equivalent. It is deeply unfair there are million-pound council properties in many parts of London and this is not what making sure people have a roof over their heads is about. This doesn’t even mean anyone has to move – just no more new expensive tenancies.
  • Roll child benefit into the child tax credit system with a further taper that reduces the top 10 per cent or so of households (essentially capturing those with two fairly high earners to bring them into line with a single high earner household).
  • Cut overseas aid to 0.5 per cent, still placing the UK in the top 10 donor countries and moving on from 2005 when this target was set at 0.7 per cent at a time when India and even China were legitimate UK aid recipients, not emerging economic superpowers. It would be both immoral and politically toxic to make the other savings while protecting a budget overseas that has nearly doubled in recent years.

Taken together, these savings would help bring down the deficit to an acceptable level. They involve some hard decisions and confrontation of vested interests, but not impossible ones, and all should pass through the Commons, even in its new rebellious state. The alternative, ever higher borrowing, or even worse, ever higher taxes, is unthinkable if we are to achieve what the CPS believes the number one priority post-pandemic must be – restoring sustained economic growth. We call on the Government to investigate and takes forward these ideas as part of the Spending Review process.

Alex Morton: How Sunak can save £30 billion a year

21 Oct

Alex Morton Head of Policy at the CPS and a former Number Ten Policy Unit Member.

Today, the Office for National Statistics will announce the provisional figures of Government borrowing for the first six months for 2020/21. They will be truly dire. We know because borrowing in the first five months alone were bigger than the previous annual total, and by August this year the national debt was larger than the UK economy, rising by over 10 per cent from 2019/20’s total.

Putting aside the ongoing – and crucial – debate about the nature of lockdown restrictions, it is clear even on the most optimistic forecasts, and with the best decisions, the UK will end the pandemic with a serious debt and deficit problem. Even assuming higher borrowing for years, something must give.

For that reason, the Centre for Policy Studies today publishes the paper Saving £30 billion: Nine Simple Steps, which discusses, on rough but plausible estimates, nine savings to cut £30 billion a year from the Government’s spending without jeopardising frontline services, or asking the politically impossible.

The Government is in the middle of a Spending Review, and we believe that now is the time for proposals to stop the threat of tax rises which will both hit growth and hard-pressed workers, companies and families. None of the savings would impact frontline delivery and none of them ask for MPs to vote through what would be political suicide.

Government efficiency

Despite the arguments made that austerity means no further reduction in spend is possible, we find significant potential savings across a wide range of areas, none of which impact frontline delivery. The first group of savings are thus about making the state more efficient.

  • We analyse the number of Government administrative staff versus the private sector and find initial convergence but significant disparities in reductions in recent years, with the private sector slimming down this group more effectively. We therefore propose benchmarking Government administrative staff totals to the private sector and reducing these in the public sector once a post-Covid recovery gets underway.

We also propose –

  • To abolish some quangos and to bring all quangos under the control of a relevant department. Each department should create a single body to manage HR, marketing, and other administrative functions for all quangos it oversees. This should also make bureaucracies more accountable and improve public sector productivity.
  • Pushing toward greater use of back office function sharing in local government, as occurs between Westminster and Kensington & Chelsea. There is no need for 350 councils to have distinct IT or press or procurement teams. The Housing and Local Government Department should publish data on the administrative costs for each council to push forward action. This should enable many of the savings around unitarisation without the massive political rows.
  • Improving e-procurement and data sharing, noting that other countries such as South Korea or Estonia have significantly improved productivity and reduced costs through this route, and agreeing with critics of the existing Government procurement systems.
  • Since the state owns land and property worth a staggering £1 trillion, we call for an inventory of all non-operational land followed by a sale and leaseback model across all this non-operational land, rather than past Spending Review’s top down land targets for each department. Just selling off the Network Rail arches gained £1.4 billion while boosting growth, and Covid-19 has changed office work patterns, so this should raise serious sums.

Ensuring a fair state

The second group of savings are about ensuring that the state does not give excessively to one or other group, and create a state focused on the core tasks of government. We propose:

  • Replacing the triple lock with a dual lock, which still gives pensioners the best of inflation or wage growth, and removing the tax anomaly of the Winter Fuel Payment and just treating as taxable income like other benefits.
  • Sell and replace high-value council properties when they fall vacant with a less expensive nearby equivalent. It is deeply unfair there are million-pound council properties in many parts of London and this is not what making sure people have a roof over their heads is about. This doesn’t even mean anyone has to move – just no more new expensive tenancies.
  • Roll child benefit into the child tax credit system with a further taper that reduces the top 10 per cent or so of households (essentially capturing those with two fairly high earners to bring them into line with a single high earner household).
  • Cut overseas aid to 0.5 per cent, still placing the UK in the top 10 donor countries and moving on from 2005 when this target was set at 0.7 per cent at a time when India and even China were legitimate UK aid recipients, not emerging economic superpowers. It would be both immoral and politically toxic to make the other savings while protecting a budget overseas that has nearly doubled in recent years.

Taken together, these savings would help bring down the deficit to an acceptable level. They involve some hard decisions and confrontation of vested interests, but not impossible ones, and all should pass through the Commons, even in its new rebellious state. The alternative, ever higher borrowing, or even worse, ever higher taxes, is unthinkable if we are to achieve what the CPS believes the number one priority post-pandemic must be – restoring sustained economic growth. We call on the Government to investigate and takes forward these ideas as part of the Spending Review process.

As housing day opens at the Conservative conference, our survey finds Party members split on Johnson’s planning reforms

4 Oct

It’s housing day at the Conservative Party conference – with Robert Jenrick and his ministerial team leading an interactive event in the main virtual auditorium at 13.30, which will cover local government and other departmental responsibilities too.

The Prime Minister teed policy debate up yesterday with his trailing of a new long-term fixed-rate mortgages plan to encourage higher home ownership among young people.  But his flagship plan for housing will be contained in the forthcoming Bill on planning reforms.

The centrepiece of these is top-down housing targets for local authorities – which has provoked six pieces by MPs and others on this site since the start of September, and seized the attention of Tory-held councils and Conservative councillors in England.

Our survey finding reflects the differences and arguments that have gone back and forth on ConHome.  Forty-six per cent of our survey respondents back the plans.  Forty per cent don’t.  Fourteen per cent are don’t knows – a relatively high number for this section.

Everything we’ve seen on this site, the Commons chamber and the media suggests that these plans will get a rough ride from Tory backbenchers and local councillors, particularly in greenfield-rich seats outside cities in the south and the midlands.

Profile: Robert Jenrick, who rose without trace until he hit two bumps in the road

24 Jun

Until the age of 38, which he attained on 9th January this year, Robert Jenrick had ascended the political ladder at remarkable speed while remaining unknown to the wider public.

Nor can one yet say that as Secretary of State for Housing, Communities and Local Government he has become a household name, often though he appeared at the Downing Street press conferences on Covid-19.

For there is nothing distinctive in Jenrick’s manner: he does not lodge himself in the memory.

Labour is trying to change that. It wants people to remember him, if not by name, then as the Tory minister who “auctioned off the planning system to a billionaire donor at a Conservative Party fundraising dinner”, as Steve Reed, Jenrick’s Labour opposite number, recently put it.

And this afternoon in the Commons, Labour will press for the release of all documents to do with that affair.

The fundraising dinner took place last November. Jenrick found himself sitting next to Richard Desmond, former proprietor of The Daily Express, who is seeking permission for a one billion pound redevelopment of that paper’s disused Westferry Printworks in the Isle of Dogs, to include over 1500 flats.

Jenrick had already called in the scheme, and in January this year he approved it, on the day before Desmond would have become liable to pay Tower Hamlets Council a Community Infrastructure Levy of about £40 million on the scheme.

The council opened legal proceedings against Jenrick, who in May conceded that the timing of his decision “would lead the fair-minded and informed observer to conclude that there was a real possibility” of bias.

The Planning Court said the Housing Secretary had accepted the decision “was unlawful by reason of apparent bias and should be quashed”, which it proceeded to do.

Another minister will now decide whether to approve Desmond’s development, and Labour is doing all it can to exploit Jenrick’s embarrassment, as would the Conservatives if the positions were reversed.

When taking the decision to approve Desmond’s plan, Jenrick not only rejected the advice of the local council and planning inspector, which is usual enough, but is reported to have rejected the advice of his own chief planning officer, which is highly unusual.

Desmond paid £12,000 to attend the dinner, of which Jenrick recently said in the Commons:

“My department knew about my attendance at the event before I went to it. It knew about the fact that I had inadvertently sat next to the applicant. I did not know who I was going to be seated by until I sat at the table. I discussed and took advice from my officials within the department at all times.”

There is something hapless about the word “inadvertently”. A Tory MP told ConHome with considerable annoyance that Jenrick “should never have been sitting next to Desmond”, but blamed the organisers of the dinner, not Jenrick, for this, and described the Housing Secretary as “well-respected”.

Another senior Tory backbencher said of Jenrick:

“He is a decent man, a solicitor by training, highly diligent, and I would trust him over Mr Desmond any day.”

But a third backbencher, a former minister, said Jenrick is known as “Generic”

“because there’s nothing there. If he walked across a sieve he’d probably completely disappear. He’s a suit. What does he believe? He’s an example of the new kind of Cabinet Minister who forms up with a pair of shiny shoes, takes his orders from Dominic Cummings and goes and delivers them.

“He’s arrived from nowhere and as for all politicians who do that when he hits a bump he goes off the road.”

Jenrick has actually hit two bumps. In March, he repeatedly emphasised, in his role as one of the Government’s leading spokesmen on the pandemic, that people “should stay at home whenever possible”, but at the start of April he was found to have travelled to his house in Herefordshire:

“Under-fire minister Robert Jenrick has claimed the £1.1 million Grade I listed country mansion he drove 150 miles to during the coronavirus lockdown is his family home – but his official website says the opposite, MailOnline can reveal today.

“The Housing Secretary is also facing calls to quit unless he can offer a ‘very good explanation’ about a 40 mile trip to drop supplies at his parents’ house in Shropshire last weekend when neighbours said they were already delivering essentials.

“Mr Jenrick, a key player in the Government’s response to the pandemic that has claimed 7,978 lives in Britain, has repeatedly told the public to stay at home and not make unnecessary journeys to stop the spread of coronavirus, including travelling to any second homes.”

On the same day that report appeared, 9th April, Boris Johnson came out of intensive care at St Thomas’s Hospital, and three days later he delivered his heartfelt message of thanks to the NHS for saving his life.

Compared to that, the questionable conduct of an unknown Cabinet minister looked unimportant. It made nothing like the impact of the revelation on 22nd May of Dominic Cummings’ family trip during lockdown to County Durham.

Cummings presents a wonderful target. He is blamed by Remainers for steering the Leave campaign to victory, is close to the Prime Minister and loves riling the media. Piers Morgan and Alastair Campbell were among those who led the demands for Cummings to be sacked, and Tory MPs found their inboxes flooded by emails from members of the public who were furious that there seemed to be one rule for the ruling class, represented by Cummings, and another for everyone else.

Nobody regards Jenrick as an evil genius, and he has never intentionally riled the media. He has instead followed the more conventional course of giving the media nothing much to report, and most people have probably already forgotten about his travels during lockdown.

Jenrick was born in Wolverhampton in 1982, grew up in Herefordshire and Shropshire, and was educated at Wolverhampton Grammar School, a fee-paying establishment, followed by St John’s College, Cambridge, where he took a First in History, after which he spent a year studying Political Science at the University of Pennsylvania.

He proceeded to qualify, in 2008, as a solicitor, to work for two American law firms in Moscow and in London, and on the international business side of Christie’s Auction House.

In the same year, he gained selection as the Conservative candidate for Newcastle-under-Lyme, in Staffordshire, where in the general election of 2010 the Conservative vote rose by almost 5,000, but he was still 1500 votes short of taking the seat, which only went Tory last December.

During one week of the 2010 campaign, he contributed a diary to ConHome which included this passage:

“Unexpectedly this afternoon, a legal contact calls. He’s an environmental lawyer in Washington D.C. who is co-ordinating efforts in the U.S. to develop the first Green Investment Bank with the Obama administration. I put him in touch with the Shadow Environment team, some of whom it turns out will be in D.C. tomorrow and may be able to meet up. This follows on from bringing together the Environment team with Better Place, an Israeli company developing an electric car system that will soon be on the streets of Tel Aviv and San Francisco. Better Place’s CEO, Shai Agassi, is one of the most impressive men I’ve met: he is pragmatic and not a climate crusader and he puts privately-funded technological advancement at the heart of tackling climate change.”

We see Jenrick at the age of 28 proud of his ability to network, and remarkably at ease as he does so.

In 2013, Better Place went bankrupt, and Jenrick was adopted as the Conservative candidate in Newark, where it was expected that the scandal-afflicted Tory MP, Patrick Mercer, would stand down at the general election in 2015.

Mercer instead stood down in April 2014, precipitating a by-election in Newark where the Conservatives needed to beat off a strong challenge from UKIP in order to look like credible contenders for 2015.

Tory MPs were ordered to visit Newark three times during the campaign, Cabinet ministers were expected to put in five appearances, members of the House of Lords could be found delivering leaflets, and the party’s depleted reserves of activists were incentivised by the prospect of fighting alongside the officer class.

Jenrick found himself at the centre of a national campaign. Roger Helmer, the UKIP candidate, accused him of owning three homes, none of them anywhere near Newark.

The formidable Simon Walters, political editor of The Mail on Sunday, arrived to see what he could make of Jenrick:

Mr Jenrick presents himself as a ‘father, local man, son of a secretary and small businessman and state primary school-educated’ candidate.

But that is not quite the whole story.

In fact, he and American wife Michal own not one, but two, £2 million homes in London and a £1 million country pile built by an 18th Century slave-trader.

Their Newark ‘home’ is a rented house obtained when he was picked as a candidate six months ago.

And his Party CV omits to say he went to a £13,000-a-year private secondary school.

Together with his director’s  job at Christie’s auction house, it is just the type of posh Tory boy image Cameron and co can’t shrug off.

Mr Jenrick, who looks even younger than his 32 years, sticks rigidly to his Tory HQ autocue when asked about national issues.

During our interview at a cafeteria in Tuxford, near Newark, he is finally stirred when I ask whether, in his keenness to come across as a regular guy, he has misled voters.

To win the candidacy, he promised he would move his family lock, stock and barrel to Newark. A 250-mile round-trip  to Westminster if he becomes  MP – quite a commute for a  self-proclaimed family man  with two young daughters.

How many nights has the family actually spent in their Newark ‘home?’

‘Er, it has grown over time.’  He won’t say.

His election leaflets are also silent about the couple’s £2 million flat in Marylebone, London. It went up in value by £300,000 last year, more than twice the average price of a home in Newark.

Last October, the couple splashed out an extra £2.5 million on a house in fashionable Vincent Square, Westminster, less than a mile from Parliament, which they plan to move into soon.

On top of that they bought Grade I listed Eye Manor in Herefordshire for £1.1 million  in 2009.

Mr Jenrick says he is ‘almost sure’ they will sell it and move to Newark if he becomes MP.

It is to be hoped this interview is not the first Mrs Jenrick, a top commercial lawyer whose professional name is Michal Berkner, eight years Mr Jenrick’s senior, has heard of that.

The Conservatives won the Newark by-election by 7,403 votes from UKIP, and Jenrick’s majority has since risen to 21,816. Some vexation is nevertheless expressed in Newark that Jenrick has yet to sell Eye Manor, and appears to prefer going there with his wife and their three daughters.

As one constituent said, “It’s perfectly clear who wears the trousers and it isn’t him. She indulges his little hobby of being an MP.”

But if one were fortunate enough to own Eye Manor, parting with it might feel unbearable. Here is Marcus Binney, singing its praises in The Times before the Jenricks bought it:

For its size, Eye Manor, near Leominster in Herefordshire, has the most gorgeous series of Charles II interiors in England. Here is plasterwork as overflowing in richly sculpted fruit and flowers as carvings by the great Grinling Gibbons. It gets better: over the past 20 years the late owner, Margery Montcrieff, laid out an intricate, inventive and enchanting formal garden that almost vies with Sissinghurst in Kent. 

One of the sympathetic things about Jenrick is his love of history. When ConHome spoke to him during the Newark by-election, he “seemed reassuringly dull”, but

When asked who his political hero is, he became more animated, and vouchsafed that he is writing a book about the English Civil War, in which Newark played a prominent role: it was a royalist stronghold which was three times besieged unsuccessfully by the parliamentarians. The first siege was raised by no less a figure than Prince Rupert, the most dashing royalist of them all.

And Prince Rupert turns out to be Mr Jenrick’s hero. Beneath that somewhat impassive exterior perhaps there beats the heart of a true cavalier.

At Westminster, Jenrick remarked in his maiden speech that “there are, after all, no final victories in politics; all achievements, however hard won, can be and are undone.”

After the 2015 general election he became in rapid succession PPS to Esther McVey, Michael Gove, Liz Truss and Amber Rudd, before in January 2018 being appointed Exchequer Secretary by Theresa May.

He was climbing the ladder, and in the summer of 2019 he, Rishi Sunak and Oliver Dowden questioned Johnson for an hour at Jenrick’s house in Vincent Square, and at a well-judged moment put their names to a joint piece for The Times Red Box which appeared under the reasonably clear headline:

“The Tories are in deep trouble. Only Boris Johnson can save us.”

All three authors are now in the Cabinet. Jenrick has been lined up to carry out the radical reform of the planning system on which Johnson and Cummings are intent.

Will he still be in office to carry out this work? Johnson and Cummings have shown they do not like being pushed around by the newspapers, which are crawling over every planning decision in which Jenrick has been involved.

So perhaps he will hang on. He will need, however, to learn the art of sometimes saying no to people, including developers such as Desmond.