Everybody was on the lookout today for changes in the Labour manifesto from the version leaked to the press last week. There were very few, overall – perhaps a reminder that while one motive to leak can be to discredit ideas, another is to try to force a Party to stand by whichever version of a document has been leaked, bouncing any malcontents into accepting it as a fait accompli.
What was more interesting was the financial basis for this “fully costed” manifesto. A variety of big ticket items are, we are told, going to be paid for from tax rises. There are a few problems, however.
First, only some of Labour’s sums make any effort to take into account the dynamic effects of tax rises – people leaving the country, higher taxes killing off investment, and other behavioural changes. Labour, which tends not to accept the idea that higher taxes depress growth, has conceded the principle by including a contingency of £3.9 billion to account for it. That’s an interesting concession in itself, but it is also entirely arbitrary. Now that they accept that raising taxes can reduce revenues, how do they justify judging the negative impact of £52 billion of tax rises to be only seven per cent of the hoped-for revenue?
Second, the basis for their calculations is itself quite dubious. The amount they expect to raise through their heavily trailed proposal to levy VAT on private school fees is sourced only to a Fabian Review article from 2011, for example. Their Offshore Company Property Levy numbers are based in part on what their footnote describes as “Private Eye calculations”. In the words of the Eye: Er. That’s it.
Third, and most importantly, there’s not a penny set aside for their mass nationalisations. That’s right – while the manifesto offers the flagship policy of nationalising rail, energy, water and the Royal Mail, the “fully costed” document doesn’t put any figure at all on how much it will cost to do so.
It’s not that they intend to seize these industries without payment (though given that Jeremy Corbyn’s new campaign chief is a self-declared communist, perhaps we shouldn’t speak too soon). The official excuse is that because nationalisations would be capital expenditure, they don’t count towards the balance sheet for normal incomings and outgoings. But the careful arrangements of Brown/Osborne accounting don’t really justify the fact that the whole Labour manifesto can’t put a price on its central policy.
Don’t people deserve to know how much it will cost to take over these large companies – even before we take into account the losses that would arise from them being mismanaged by a Labour Party that can’t even manage its own manifesto process successfully? If it’s such a good idea, why the reluctance to simply tell everyone how much they and their children will have to borrow to do it?
This isn’t just unreasonably opaque, it’s deeply unwise on Labour’s part. Not only will voters demand to know the bill, but if Corbyn and McDonnell won’t put a figure on it then you can be sure that May and Hammond will.
One possible explanation for this half-baked pitch to run the country is that they are simply completely, horrendously, one-foot-in-a-bucket-and-tread-on-a-rake incompetent. It’s not impossible. Indeed, after recent events, it’s quite plausible.
But the other view should be factored in, too. Everything Corbyn does is more about his “movement” than about the actual electorate. Yes, he’s presented a manifesto full of bad and unaffordable ideas. But he doesn’t care, because it makes his loyal followers very happy indeed. It’s almost like he isn’t really fighting a general election, he’s fighting a leadership election.