Probably my favourite I-wish-I’d-thought-of-that political headline belongs to The Economist, which back in 2017 summarised Labour’s economic policy as ‘Old McDonnell has a plan. He eyes IOUs’.
The ditty sprang to mind today, watching the Shadow Chancellor present his latest plans for the economy, which are intended to ‘lay the foundations of a new society’. A new society, of course, does not necessarily mean an improved society, though the terms might mistakenly be used interchangeably.
Revolutions reliably produce change, but not always – indeed, not often – for the better. Just ask the Venezuelans about their experience of the ‘new society’ ushered in by the Corbynites’ allies there.
The headline measure in today’s speech was the proposal to move to a 32-hour working week with no loss of pay – a four-day week.
The key element in assessing this is the rider: “with no loss of pay”. The Shadow Chancellor is pledging we could all work for a fifth less time, for the same income. Assuming he means real terms pay – the same value of income, after tax, delivering the same standard of living – that is quite the promise. If he could do such a thing, it’s not clear why he would limit this boon to just an extra day off a week. Why not carry on, and go to half a week working? Or half an hour?
Even the 32-hour pledge would require a massive improvement in productivity, with very little explanation of how McDonnell would deliver such an uplift. His other policies make it even harder to envisage it happening. Each worker will already have to bear the higher tax rates necessary to fund Labour’s many additional spending plans, not least the huge nationalisations they like to talk of. Labour’s proposed share seizure will leave a big hole in pension pots, which will have to be filled, too. And then there are the wider negative economic effects of, for example, pursuing the wholesale seizure of people’s property, and penalising successful enterprises for making a profit.
And this policy in itself would produce a major increase in the costs of every public service – equivalent staff numbers would have to rise by a fifth, impacting salary bills even before you consider employer pension contributions and the HR costs of managing a larger workforce.
Employees are already the NHS’s biggest cost – with the pay bill coming in at over £50 billion a year. Raising that by 20 per cent means spending £10 billion annually just to stand still, which is a huge cost to apply to taxpayers. To look at another public service, Boris Johnson’s proposal of 20,000 additional police officers wouldn’t even be enough to plug the gap a four-day week would leave in police numbers.
It’s McDonnell’s greatest gift to sell gravity-defying illogic in a tone that implies that what he is saying is simple common sense. Work less but earn the same. Spend far more just to keep public services as they currently are but simultaneously avoid any tax rises for ordinary workers. Even for the 2019 Labour Party this tests the outer limits of voters’ willingness to suspend disbelief.