After the shambolic leak of Labour’s draft manifesto, Comrade Corbyn launched the party’s manifesto to the public in Bradford on May 17, to rapturous applause from the party faithful. As one would expect from Corbyn and his team’s track record as apparently cuddly socialists, it’s an incoherent grab bag of policies designed to massively expand the role of the state in people’s everyday lives, supposedly in an aim to help people, all the while chipping further away at the now rather eroded foundations of freedom and liberty that British society was founded on.
Not only was the leak shambolic, but the big release was also as full of holes as Corbyn’s cardigans. His spending plans would cause the UK’s debt to explode by £250 billion (US$325 billion) and would see the government aiming to spend an extra £48.6 billion (US$63 billion) per year. Indeed, the chaotic nature of the unveiling was elevated to levels of parody by the fact that even though the manifesto – titled “For the Many, Not the Few” (ruin for the many, not Corbyn’s nomenklatura few) – claims to use an economic model entirely devised by world-leading economists, the policy of levying a tax on offshore company property actually relied in part on a database created by the current events and satire magazine Private Eye.
Policy proposals include free childcare for all 2-4 year olds; a fat-cat tax on city banks and the super-wealthy that would be worth 2.5% of incomes over £330,000 (US$428,000) and 5% of incomes over £500,000, and a raise in the corporate tax from 19% to 26%; nationalisation of the railways and water industries; re-nationalisation of the postal service; a new 45p tax threshold for incomes of £80,000 (US$104,000) a year and over and 50p on incomes of £123,000 and over, which would affect 1.3 million people who would end up paying £5,300 (US$6,900) more in tax. According to IFS estimates, the tax burden could increase to 37% by 2022 under a Labour government, dragging us back not the 1970’s but the 1950’s, when Britain was a bombed out shell living on debt and US subsidies. Labour says all its plans for spending, borrowing and taxing are fully costed, but as Matthew Lynn points out, this view seems to belong in another reality.
To conclude the economic arguments against the Labour manifesto, none of Corbyn’s sums add up. The Labour tax plans would actually bring in less tax revenue, and would only raise £20bn-£30bn, leaving a potential shortfall of £28.6 billion (US$37 billion), to be covered by guess what? More borrowing.
The fact is, higher tax rates and stifling economic intervention would lead to poorer economic growth, which in turn would result in lower revenue and adding to the shortfall. One can see how £250 billion more in debt suddenly looks frighteningly realistic.