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Does Labour’s manifesto add up? Here’s a ConHome series to investigate – named, of course, in homage to the Shadow Home Secretary’s policing plan.

The Policy: Raise £19.4 billion through raising Corporation Tax

Let’s return once again to the by now well-thumbed pages of Funding Britain’s Future, the special document Labour have released alongside their manifesto outlining their tax and spending intentions (at least, those they care about).

The Problem: It’d be a bad enough idea during Brexit, even withou

When the FT examined this policy, they also threw in the Opposition’s (deeply regressive) tuition fee policies, presumably because the one is meant to pay for the latter. But questions of what this is meant to pay for, and whether it’s desirable, is really beside the point.

More serious is that this policy would likely not raise anything like the money its intended to. Worse, it would likely harm the economy and slow growth, reducing the job opportunities of the very generation Labour’s Great Leap Backwards in education funding is meant to help.

The obvious concern is that businesses will reduce investment in the UK as a result of a hike in Corporation Tax. Labour make some concession to this (apparently £19.4 billion is not the “full tax receipts” of the measure, on paper). But they leave out a couple of things.

First, Ireland. Both the chart in the FT piece and this Labour graphic circulating on Facebook show the UK still low-to-middling on corporate tax rates, even after the Opposition’s increase. But neither include the Republic of Ireland, which is right next door and enjoys a headline corporate tax rate of just 12.5 per cent – that’s half Labour’s eventual goal.

Of course there are other factors which drive international investment, but it’s hard to see Labour shifting things like labour market flexibility and wage levels in a direction likely to woo capital to these shores, especially during the uncertain period as we leave the EU.

(Indeed, another part of manifesto is full of plans for more unionisation, thrusting full ‘rights’ on different sorts of staff to reduce employer and worker choice, a complete ban on zero-hours contracts, and reintroduce1970s-style sectoral collective bargaining.)

Labour may argue that their long-term investments will somehow balance this (assuming they ever raise enough cash to pay for them), but again the manifesto shouldn’t fill us with confidence. Most of the new infrastructure fund looks to be tied up in big new passenger rail projects, a decidedly second-order issue for global competitiveness.

Worse, the university section runs to less than one page and is all about making things free, with nothing on driving up quality or helping steer would-be students towards economically valuable courses of study – the sort of changes actually likely to deliver long-term growth and employment prospects.

7 comments for: Abbott’s Arithmetic 6) Wishful thinking on Corporation Tax

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