Newington's Mark Glover considers the Labour manifesto and what it means for its election prospects.
Following last week’s early leak of the Labour manifesto much of the content in the formal launch had already been pored over at length over the weekend. But what did emerge as new was the level of tax changes and borrowing sought by Labour to fund their existing spending commitments and the massive increase of state intervention in the economy.
By way of a reminder, Labour said it would spend £48.6 billion on a range of benefits and entitlements in education and early years, health and social care, work and pensions and local government. There were also other commitments, including 10,000 extra police officers on the beat and a new minimum wage of £10 per hour by 2020.
This was followed by a significant investment in capital spending, which Labour frontbenchers said would get the economy going and boost GDP. There was funding for a potential £100 billion National Investment Bank, £20 billion Welsh and Scottish Investment Banks and a £250 billion National Transformation Fund. That’s before you even factor in the billions of pounds that would be needed to nationalise the railways, post office, National Grid and water utilities also feature in the manifesto. Even John Maynard Keynes might find all this pump-priming a little overwhelming.
To pay for all of this, more than two thirds of the burden will fall on increased taxes for business. That includes a corporation tax rise - up from 19 to 26%; an excessive pay levy on those earning over £330,000 per year; an offshore company property levy, and a range of protections and rights for employees which will increase wages bills for businesses. In addition, income tax rates would increase to 45% for those earning over £80,000 and 50% for those earning over £123,000. Labour expects these and other measures, such as charging VAT of public school fees, to raise £48.6 billion for the Treasury.
Whilst this is a brave attempt by Labour to at least try to cost its programme, the Party seems to have fallen into the old Left trap of seeing all business as one size and making huge profits. It ignores the fact that many companies are reinvesting – their often reasonable or modest profits - back into their businesses to allow their firms to grow and compete at home and abroad. There also seems to be no clear path to determine how Labour will deliver this investment whilst reducing the UK’s borrowing - a Holy Grail for government of all shades over the last ten years.
So will the electorate buy this radical reform agenda and trust Labour to deliver? Inflation is creeping up and Brexit uncertainty is starting to weigh, with some corporates looking to set up operations in continental Europe to maintain a foothold in the Single Market. Meanwhile migration targets are threatening to reduce the pool of affordable and often skilled labour in the country. I fear Labour is making a big ask of the country at a time when perhaps the Conservative strong and stable message might have more appeal with many voters.
But with both the main party manifestos out now, people can no longer say politicians are all the same - Corbyn and Labour have certainly presented voters with a choice.
