The above list, of Labour’s policies and how they would supposedly be paid for, looks like it was put together by a 14 year old who isn’t studying economics. The whole thing is a financially and economically illiterate farce. Mostly based on politics of envy and mostly going to cause real harm to the poorest in society. I will destroy their points, one by one.
- Corporation tax is the worst tax, it removes from the economy the money used for investment and job creation. Which is why nearly every government in the world, regardless of their politics, is minimising it. Not only that, the amount of corporation tax collected by the Treasury goes UP when the rate is decreased, as every economist knows. The Conservatives have steadily reduced the rate from 30% in 2008 to 19% today. The government received £56bn from corporation tax during the 2016-17 financial year, a 21 per cent increase from the previous year and a new record. So Labour’s proposal would REDUCE government income.
- Free school meals. If they put VAT on private school fees then many parents, unable to afford the extra 20%, will transfer their children to the public sector. Massively increasing the burden on the taxpayer. And reducing Working Tax Credit will hit the poorest working people in Britain, many of who will find work uneconomic so will move to the benefits system.
- £10 minimum wage for 5.5 million workers. This will export jobs. Companies will move to where the labour is cheaper. Many businesses will become uncompetitive and will shed staff. This is a policy to increase unemployment, especially among the low paid. Businesses with captive markets will just pass the costs on to their customers, making everything more expensive and hitting the poorest the most.
- Reversing inheritance tax cut. This tax is easily avoided, increasing it makes people more likely to do so. This will reduce government income.
- Renationalise the railways. Everything the government runs it runs badly, just look how execrable the nationalised BR was and how woefully useless the nationalised Network Rail is. Privatised rail has been an immense success, with traffic more than doubling. A state run railway would see a sharp reverse.
- Halting NHS outsourcing. Labour seem to be ignorant of the fact that outsourcing makes services a lot cheaper. Getting rid of outsourcing will add to NHS costs. So less money for new hips and for cancer drugs.
- Building 200,000 homes a year. 100,000 paid for by government borrowing, back to Labours complete financial mismanagement. And anyone who thinks that government is good at building and renting out houses is deluded. There is £784,000 of rent arrears to Newcastle council alone
- 4 new public holidays. That’s 120 million lost working days at a cost of about £16bn a year. Which the public will have to pay for in higher prices and more tax. This must be glaringly obvious.
- Ending zero hour jobs, despite many workers preferring them. Zero hours makes the economy more flexible and so more efficient, so removing them will have huge costs, which once again the public will have to pay.
- Banning companies bidding for contracts reduces competition, putting prices paid by the taxpayer up. Once again glaringly obvious.
- Halting free schools. This is just ideological and has no financial significance. Labour want to maximise their political control over education, despite their proven failures when doing so (look at the Pisa scores).
- Banning deals between HMRC and companies. This is impossible, in the days of global companies they can choose where to declare profits and we can’t stop them. These deals ensure that the UK gets fair revenue.
- Eradicate gender pay gap. Many economists argue that there is no gender pay gap, or that it is minimal. If the government control wages like this then employers will just employ the most productive staff for the money, so women (who are less productive) will lose jobs.
- Cutting business rates. Good idea to tax businesses less, but where is the £1.5bn coming from, not corporation tax, as we already know. As for credit payment terms, this is just interfering in the market. Lefties trying to say they know how capitalism works, when they obviously don’t.
So there you go. A bright A level economics school student could do better. Labour saying their spending plans are costed is an obvious and blatant lie. If these policies were implemented in the UK it would be a financial disaster that would cost hundreds of thousand of jobs and which would hit the poorest most.
This post was originally published by the author on his personal blog: http://www.bruceonpolitics.com/2017/04/27/labour-election-lies-economy/