Jeremy Corbyn’s Labour Party is ready for power. While tearing itself apart over Brexit and antisemitism, the party has benefited from Brexit troubles in the Tory Party and the rupture caused by the Brexit Party. Though not looking like gaining a majority in Westminster, Corbyn could very well get the keys to No. 10 after an election later in the year.
Worryingly, many voters seem sanguine about the prospect of a government of radical socialists. Many seem to expect moderate changes to Britain’s welfare state to make it more like its continental European counterparts. But the people about to gain power are no moderates. John McDonnell, his vice chancellor, is a self-declared Marxist who wants the UK to be Cuba’s repressive communist regime’s ‘staunchest ally’. Seamus Milne, chief strategist, is a far-left figure with a past in Straight Left, a pro-communist publication. Andrew Murray, another close adviser and trade unionist, is a former communist who joined Labour from the Communist Party to assist Corbyn. Corbyn himself, who used to write for the British Communist Party’s newspaper, was of course a vocal cheerleader for Hugo Chavez disastrous socialist experiment in Venezuela.
Despite the unsavoury past of so many top figures, the public chose to regard Corbyn as a mainstream social democrat in a European mould. His 2017 manifesto was comprised of dubious and economically illiterate policies which certainly would upend British politics, where state spending has historically been lower than many countries in continental Europe. Scandinavia was upheld as the model. But as we pointed out at the time, Scandinavian spending commitments requires Scandinavian taxation – yet Labour predictably only targeted the ‘wealthy’ for increased taxation.
But Labour is not being honest with the electorate. Beneath the vein of social democratic respectability lurks extreme radicalism. Emboldened by the popularity of their last manifesto and determined to change the country, the party leadership is considering policies which would wreck the British economy.
Rumours are that the party is planning a 20% wealth tax to be introduced immediately after taking power. McDonnell has previously praised economist Greg Philo’s idea of taxing the wealthiest 10% at such a rate. Of course, wealth taxes are not unprecedented in Europe, but at very different rates. France, the world’s most heavily taxed country according to the OECD, recently abolished such a tax. It has been replaced by a tax on property at an increasing scale reaching 1.5% for property values over EUR 10m, similar rates to the abolished wealth tax. Estimates are that EUR 200bn of capital left France in the first decade after the re-introduction of wealth taxes in 1998. The consequences of a rate set at 20% are hard to underestimate.
Labour are keen to increase the minimum wage to £10/ hour, by far the highest level in the world at around 70% of median earnings. This would extend to under-18s, a more than doubling of the current level. The impact on the labour market would be significant. The Office of Budget Responsibility has warned that Chancellor Philip Hammond’s rumoured plan to raise the minimum wage to 66% of median earnings would cost 140,000 jobs. But mandating pay at the bottom of the income scale is not enough. During his leadership campaign, Corbyn expressed support for introducing a national maximum wage to curb what he describes as excessive pay. Such a move would obviously be unprecedented in any liberal democracy.
In a report entitled “Land for the many“, commissioned by the party, a potential future land policy is outlined, including rent caps (a very bad idea which we address here), a radical proposal to set up a public land fund to reduce the cost of housing and a host of new taxes including replacing council tax with a progressive tax payable by owners, not tenants. Of course it is also proposed to give local authorities a bigger involvement in development plans, amplifying the current planning regime’s calamitous impact on building activity. Most radically, it is proposed to remove the capital gains tax exemption for primary residences, a potential bombshell under the property market which would have far reaching implications for labour mobility, tying people to their homes to avoid a large tax bill.
But it is on the cause celebre of climate change that Labour is at its most farfetched. Labour is considering a net-zero carbon emissions deadline in 2030. Theresa May’s parting shot a Prime Minister was to set such a target for 2050. Even that is wildly ambitious and could cost £20-40bn per year, according to estimates. That’s 1-2% of GDP. Unsurprisingly, a poll suggests that the public is unwilling to incur any sacrifices, with only 8% supporting a reduction in public services to achieve the 2050 target. As Labour tries to outflank the Tory Party in eco radicalism, they may well commit to annihilate the British economy.
Labour has also been discussing to put in their next manifesto a commitment to reducing the work week to four days – but are considering to go much further than that. In a report entitled “The Ecological Limits of Work” the think-tank Autonomy suggests a 10-hour work week to address climate change. Pay would drop by 75%. Most would call this a farcical thought experiment. McDonnell calls the report ‘a vital contribution to the growing debate around free time and reducing the working week’.
The list goes on: mansion tax, taxing gifts as income, raising taxes for earners over £80k and of course foreign policy where Corbyn would upend the post WW2 order. There is plenty for ordinary voters to worry about.
Jeremy Corbyn’s 2017 election campaign charmed the public with promises of increased public spending for the many at the expense of the few. But the alarming economic illiteracy and ideologically blinded radicalism would negatively impact the lives of Britons in ways they cannot imagine. There is a word for people with plans that will ruin your life: they are plain and simply dangerous.