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Labour lavish spending a thing of the past?

April 12, 2010

Gordon Brown chose a brand new 545 million pound hospital as the backdrop to unveil Labour’s election manifesto but the document signals that Labour’s past lavish spending on infrastructure is a thing of the past.

In these budget-challenged times, the focus will be on extracting maximum value from every pound spent on health, education and other services, the manifesto makes clear.

The Conservatives accused Labour of exploiting the state-run National Health Service by using the immense new, 1,200 bed acute care facility at Queen Elizabeth hospital in Edgbaston for a party political event.

But Brown, who was given a rousing reception by Labour supporters invited to the event, retorted that a construction firm was still in charge of the building and it would be handed over to the NHS in the next few weeks.

In any case, Labour’s choice of the building seemed more like a wistful look back to pre-financial crisis days when cash was plentiful than a pointer to what the future would hold if Labour beats the odds and wins a fourth term on May 6.

“To safeguard the NHS in tougher fiscal times, we need sustained reform,” the manifesto chapter on health says. “We will be tougher in ensuring value for money…”

In recognition of the need to rein in a budget deficit set to top 11 percent of Gross Domestic Product this year, the manifesto included no major new financial commitments.

Brown kept faith with his predecessor Tony Blair’s brand of market-driven new Labour by outlining a harsh Darwinian future for public services such as schools, hospitals and even police forces in which under-achievers will not survive but will be taken over by more efficient rivals.

The manifesto reflects a new view of business as well, shaped by the chastening experiences of the past few years. Gone is new Labour’s past liberal attitude towards business, a world of light regulation in which foreign companies with deep enough pockets were free to take over British firms in almost any sector.

After Brown’s government was forced to spend billions rescuing British banks, Britons’ tolerance for “fat cat” bankers and multi-million-pound bonuses has gone.

Public disquiet over Kraft’s recent takeover of British chocolate maker Cadbury showed the new concern about unfettered capitalism.

Labour’s manifesto reflects those new attitudes, as well as the feeling that Britain must try to breathe new life into its manufacturing sector, now that the old motor of growth – financial services – has fallen on hard times.

So the manifesto promises tighter regulation for banks, new powers for the Financial Services Authority to stop extravagant bonuses and recommends that the support of two-thirds of shareholders be required for takeovers rather than just a majority.

Labour wants to encourage new industries through a 4 billion pound UK Finance for Growth Fund and create a Green Investment Bank to invest in low-carbon infrastructure.

The manifesto also takes a tougher attitude towards immigration in recognition that the far-right BNP is encroaching on some of Labour’s working-class former strongholds.

It said Labour would gradually tighten immigration criteria in line with the needs of the British economy. Labour pledged to break the automatic link between staying in Britain for a set period and gaining citizenship. In future, it said, access to benefits and council houses would increasingly be reserved for British citizens and permanent residents.

The manifesto says little or nothing about the cuts many economists believe are inevitable if Britain is to get the deficit down significantly, but Labour’s election platform is nevertheless a product of hard times.

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