Contribution
I thank the deputy Prime Minister for advance sight of her statement. I congratulate her on her appointment—it is a major achievement—and I look forward to working with her.
I also congratulate the right hon. Lady on the wording of her statement. The phrase “rewiring the state” was first coined by the Leader of the Opposition in her leadership contest in the summer of 2024, and for a very good reason. The state does need rewiring; we agree on that. It is in urgent need of rewiring. It needs rewiring so that politicians can make decisions, it needs rewiring so that elected Governments can fulfil their mandates speedily, and it needs rewiring so that the state does not continue to grow ad infinitum.
I know that the new Administration delight in nothing more than criticising the Blair Government. There were many reasons to criticise the Blair Government, but I wish to talk about just three: the first is quangos, the second is the nature of the Treasury and the third is the issue of legal constraint. Some of the worst of these problems are those of entrenched institutional inertia. We have seen over time how quangos have led to Ministers having less agency over important decisions that affect our constituents’ lives, so it is unfortunate that the deputy Prime Minister has today announced the creation of a massive new quango in the OneGov Delivery Agency. It will be in charge of Government recruitment, the civil service, pensions, shared services, security vetting, and so on. It will oversee the spending of considerable public money. It is a step in the wrong direction, because Ministers will retain responsibility for those services, but they will lose power over them.
One of the reasons we have seen a proliferation of arm’s length bodies is that they have become a way of dodging excessive bureaucracy put on by the centre. In this instance, by the centre I really mean the Treasury. In its modern form, the Treasury is the behemoth created by Gordon Brown and designed to control Whitehall and to reduce departmental Ministers’ authority over their spend and their decisions. I was therefore genuinely interested to hear the right hon. Lady say over the summer that the Treasury was an “imperial finance department”. I had rather hoped that she was going to lead the charge to smash the barricades and destroy this terrible imperial power, but instead it appears that the empire has struck back. The briefing we were given initially was that No. 10 North was going to take control of growth. That seems to have been watered down. It is now rumoured that the Chancellor will give the speech on growth next week, and that the real power remains within No. 11 south. Will the right hon. Lady tell the House what powers, levers and budget she will have, as head of No. 10 North, to increase growth across the UK?
Legal constraint is obviously a massive problem. Over the Blair years, laws such as the Human Rights Act 1998 and environmental legislation created endless sources of judicial review, which made it increasingly difficult for Government to do things—to build infrastructure and so on. That is a colossal drag on the capabilities of the state. If the right hon. Lady wishes to work on that, the Conservatives would be happy to work with her.
In the statement, we heard a further exposition on devolution and the merits of No. 10 North. For that to be credible, the Government need to be able to give three basic guarantees. The first is that this will lead to an overall reduction in the size of the civil service. Despite promises made after the election, the opposite has happened under Labour; since the general election, the headcount of the civil service has risen by over 11,000. Will that be reduced, and by when? The second guarantee is on the nature of devolution—whether it is driven by the interests of local people, or just by those of one party. Over the summer, Labour councillors were allowed to redraw the boundaries of the authorities that they hope to represent, and to do so before any independent review by the Local Government Boundary Commission. Labour set about the biggest reorganisation of local government in 50 years with no mandate to do so, and announced it on the day before recess, with no scrutiny. One wonders how it can be localism if it is imposed—and imposed with constraints.
Also over the summer, after the Prime Minister had made his interesting announcement about assigned income tax and retained business rates, the Mayor of the Tees Valley, Lord Houchen, said that he would create
“a new rebate scheme to put money back into people’s pockets and let families keep more of the money they earn.”
It is an excellent idea—an excellent Conservative idea—so excellent that it was immediately shot down by the deputy Prime Minister. Will she tell us whether combined authority mayors will be able to cut taxes or give rebates, so that working people can keep more of their money—or will this just lead to higher taxes? Otherwise, it appears that local mayors will not have the freedom to cut taxes; they will only have the freedom to increase them. They will only have the freedom to increase the size of the state, not reduce it. It appears that this Government are rewiring the state—but just to grow it.
The last point is simply about cost. How much is this reorganisation costing? How much is being spent on No. 10 North? How much will need to be spent in order to power the localisation agenda that this Administration have put forward? Where is that money coming from? Is it coming from other Departments, in which case, from where, or is it coming from tax, and if so, which taxes? If it is coming from borrowing—well, I think the bond markets will have something to say about that. Until the Government can show that they are able to cut taxes and spending, so that we can get real growth across the country, I am afraid that all of this will just be another northern pipe-dream.