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Wednesday, May 17, 2017

Two questions about Labour's manifesto

Labour's manifesto gets full marks for its sheer audacity. The document plays to the whims of every one of its core voters both in terms of the investment that it envisages and in the taking back into public ownership of key services such as water, the railways, Royal Mail and National Grid,

Money it seems is not a problem, it is growing on every tree and Jeremy Corbyn and his shadow chancellor plan to harvest it to the full. However, a number of reputable authorities have pointed out that even if you ignore the fact that it does not explain how they will pay for the renationalisation programme, there is a huge spending gap in their costings.

Together with a clampdown on tax avoidance, an extension of stamp duty reserve tax, VAT on private school fees and other tax-raising measures, Labour claim they will raise £48.6bn, but the Institute for Fiscal Studies puts the figure at between £20bn and £30bn, leaving a shortfall of up to £28.6bn.

The two big questions that Labour need to answer though revolve around the contradiction between what they are promising and their campaign slogan, 'For the many, not the few'.

The first of these is why they intend to enrich big City institutions and well-off investors by using taxpayers money to buy their shares off them so as to pursue their nationalisation programme? What exactly to they hope to achieve through this expenditure and why is that a bigger priority than investing in the health service and education?

The second question, is why, when they are splashing the cash everywhere else have Labour omitted to end the freeze on benefits? The freeze, which is due to run until 2020, is widely recognised to be a key driver behind forecasts of rising poverty to come, as the bottom 20 per cent of society sees its incomes fall.

As the Independent says, the Institute for Fiscal Studies warned earlier this month, that absolute child poverty is poised to rise back to rates last seen in the early 2000s, also pinpointing the benefits freeze:

“Cuts in the real value of benefits will reduce incomes among poorer working age households,” it said. “Real incomes are projected to fall among the poorest 20 per cent of households over the next five years, with households with children being particularly affected.”

This seems to be a natural target for Labour and yet they insist that they cannot afford it, whilst at the same time spending billions of pounds on taking railways and the national grid back into public ownership, a move that will only benefit 'the few'.

This above anything else in their manifesto, suggests that Labour have lost the plot.
I think you're overestimating the cost, as they aren't going to pay to end the franchises instantly. Instead the manifesto says
"Bring private rail companies back into public ownership as their franchises expire."

Royal Mail, on the other hand, I can see being very expensive to renationalise.
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