Financial Times

Labour is back in power in the UK after 14 years, elected on a promise to reinvigorate a public realm suffering from the prolonged effects of stagnant economic growth, the political upheaval of Brexit, and austerity.

Prime Minister Sir Keir Starmer has pledged to restore Britain’s “broken” public services by triggering a wave of public and private investment, and reforming how the UK is governed.

But Labour’s policy prospectus remains dwarfed by deep structural challenges.

Health

Labour has pledged to increase real health spending by just 1.1 per cent a year, according to an analysis by the Nuffield Trust. This would mean lower growth than during the austerity era after 2010 and falls far short of the additional funding needed to deliver the NHS long-term workforce plan.

Meanwhile, a promised extra 2mn hospital appointments each year represents only a 2 per cent rise relative to the 102mn outpatient appointments attended in 2023.

The NHS waiting list in England stands at 7.6mn. Each case on the waiting list can require multiple appointments, meaning even in an optimistic scenario Labour’s plans would not clear the backlog over five years, according to the Health Foundation.

“It doesn’t seem likely that this will make much headway into the size of waiting lists, or meet Labour’s ambition to drive down waiting times,” said Sarah Scobie, acting director of research at the Nuffield Trust.

Housebuilding

Labour has pledged to “get Britain building again”, targeting the construction of 1.5mn new homes during the five-year parliament.

Industry experts have said this is a bold pledge, given that successive administrations have failed to hit 300,000 homes a year since the government almost entirely stopped building houses after 1980, leaving it heavily reliant on the private sector to deliver a political promise.

Lucian Cook, director of residential research at Savills, the property group, said Labour would need to engineer a “very significant shift” in housing policy to get “anywhere close” to hitting its 1.5mn target by the end of the parliament.

“Unless you’re going to pump more grant funding into affordable housing, Labour is going to rely on the collective effect of a whole series of measures, including planning reform, demand stimulation and reinvigorating the smaller housebuilders that have recently been in decline,” he added.

Schools

Labour has pledged in its manifesto to spend £450mn to recruit 6,500 new “expert” teachers to English schools. This equates to just under two teachers per secondary school in England.

Despite efforts by the Conservative government to attract more graduates to the profession, secondary school teacher recruitment reached only 51 per cent of the government target of 26,360 for 2023-24.

Professor Beng Huat See of Birmingham university’s school of education said Labour’s recruitment plan was “not likely to work” and faced several challenges, including a restructuring of the teacher training sector in 2021 that led to a nearly one-third decline in the number of training providers for the 2024 academic year.

Investment

Labour has promised to boost public sector investment by almost £5bn a year by 2028-29, mainly through spending programmes including Great British Energy, a new publicly owned clean energy company; a National Wealth Fund to invest in industry; and a Warm Homes Plan to spur insulation of old housing stock.

But the drive comes after two decades of under-investment by international standards. UK public investment has been a cumulative £500bn less than if the country had matched the average investment of OECD countries since 2000, according to analysis by the Resolution Foundation think-tank.

And while £5bn a year is helpful, it would only undo one-fifth of the investment cuts scheduled to take place over the next parliament under the current fiscal rules, according to James Smith, research director at the Resolution Foundation.

“We’re still in a position where, under Labour plans, public investment is falling as a share of the economy, just slightly more slowly than it would have under the conservative government plans,” he said.

Potholes

Labour has allocated £65mn to fill an additional 1mn potholes each year in England, a rise of more than 50 per cent on current levels but still far short of what is needed to recover from a maintenance backlog caused by a decade of under-investment.

Annual road maintenance budgets fell £1.1bn short of what was needed to restore roads to councils’ target condition in 2024, according to an analysis of local authority data by the Asphalt Industry Alliance, a pressure group.

“It’s hard to see how much impact the £65mn additional funding each year will have, given a repair backlog of £14.4bn,” said David Giles, AIA chair.

Child poverty

Labour has promised an “ambitious strategy” to tackle child poverty, which has increased during the Conservative era for families with three or more children as a result of a decision to limit benefits to the first two children in a family.

A decision on whether or not to lift the cap is expected to form part of a promised review into the UK’s universal credit benefits system, but would cost £3.4bn, according to the Institute for Fiscal Studies think-tank.

As a starting point, Labour has promised free breakfast clubs in primary schools, but official data shows that without removing the two-child cap — as party activists and grandees including former prime minister Gordon Brown have called for — the number of children in relative poverty will continue to rise.

University funding

Labour has admitted in its manifesto that the UK university funding system is “in crisis” but declined to specify how it will address the structural funding problems caused by the £9,250 domestic tuition fee being in effect frozen for more than a decade.

Fees were last increased in 2018, when they were raised £250 from £9,000 — £700 short of where they would have been if they had risen in line with inflation. Now, fees for English students would need to rise to more than £12,500 a year to be worth the same in real terms as they were in 2012.

Nick Hillman, director of the Higher Education Policy Institute think-tank, said universities were likely to struggle to close the gap left by a decade of frozen fees.

“Labour may want to help universities and students, but voters, as well as the Treasury, have more urgent concerns. That’s why a short-term amelioration package including somewhat higher student fees makes the most sense now,” he said.

Labour’s mountain to climb: the challenge facing Keir Starmer’s government