What is on Sue Gray’s ‘disaster list’ of problems for a new Labour government?

An emerging prisons crisis is one of the first problems new ministers will have to tackle after next week’s election. John Rentoul looks at what else is on the urgent ‘to-do’ list

Sue Gray drew up a list in April of potential disasters that could disrupt the early months of a Labour government (PA)

Prisons will run out of space within days, risking public safety, prison governors in England and Wales warn. The Prison Governors’ Association says that soon, police officers will be unable to detain people because there will be nowhere to put them.

The current government has already taken several emergency measures to try to prevent the prison population from hitting its limit of 88,778, but figures published on Friday showed that the number of prisoners is just 1,400 short of the maximum.

Labour criticised the extension of early release, with Keir Starmer accusing Rishi Sunak at Prime Minister’s Questions of allowing prisoners guilty of domestic violence to be let out early.

Overcrowded prisons were at the top of Sue Gray’s list when the Labour leader’s chief of staff drew up a list in April of potential disasters that could disrupt the early months of a Labour government. But this problem has received hardly any coverage during the election campaign – so what else is on the “Gray alert” list?

Potential collapse of Thames Water

Britain’s largest water company is in trouble because higher interest rates have increased the cost of its £18bn of debt. Ministers have already drawn up contingency plans to nationalise the business. Sewage in general has been an issue in the election campaign – especially for the Lib Dems – though few details have been given of how the huge costs will be met. But the cost to the Exchequer of taking over responsibility for Thames Water’s debts has not featured in any party’s plans.

Public sector pay negotiations

Starmer has come under pressure in some interviews to explain how he would secure a deal with the junior doctors to settle their pay dispute. He has said that he would not concede their full demand for a 35 per cent pay rise; he has only stated that he would “roll up my sleeves in a grown-up way” to end the strikes.

This, presumably, will mean spending more than the Conservatives have been willing to spend, thus blowing another hole in the party’s costings, which are already tenuous enough, relying as they do on increased revenue for abolishing non-dom status even more than the Tories have abolished it.

Meanwhile Aslef, the train drivers’ union, has not agreed a pay deal with the semi-nationalised train companies. And soon, next year’s pay negotiations start.

NHS funding crisis

Pay for doctors, nurses and other health service staff is the main component of NHS spending, but there is the wider question of funding the service over five years – a period in which Labour has promised to “clear the Covid backlog” completely. Detailed spending plans have not been set out, and the more money that is swallowed by catch-up spending on the NHS, the less will be available for other public services. Meanwhile, Starmer has insisted that there will be no return to “austerity”.

Universities going under

The squeeze on student visas has increased the pressure on university budgets, which were already in serious difficulty because inflation has eroded the value of maximum tuition fees for UK students.

Bankruptcy has been averted in the past by mergers or job losses, but at some point, whoever is in government after 4 July is likely to have to act.

Failing local councils

Michael Gove, the secretary of state for the department that will presumably cease to be called “levelling up” if Labour wins but will keep “local government” in its title, insists that local councils are in financial trouble only because they have been “mismanaged”. If so, a lot more of them have been mismanaged than used to be. But it doesn’t really matter why they have run out of money – they will still need to be rescued with cash from central government.

With Labour and the Conservatives already accused by Paul Johnson of the Institute for Fiscal Studies of a “conspiracy of silence” about the state of the post-election public finances, any of these crises could destabilise the next government’s finances.

Not so much “black swan” events, because they are foreseeable – perhaps they are “Gray swans”.