The above list, of Labour’s policies and how they would supposedly be paid for, looks like it was put together by a 14 year old who isn’t studying economics. The whole thing is a financially and economically illiterate farce. Mostly based on politics of envy and mostly going to cause real harm to the poorest in society. I will destroy their points, one by one.
- Corporation tax is the worst tax, it removes from the economy the money used for investment and job creation. Which is why nearly every government in the world, regardless of their politics, is minimising it. Not only that, the amount of corporation tax collected by the Treasury goes UP when the rate is decreased, as every economist knows. The Conservatives have steadily reduced the rate from 30% in 2008 to 19% today. The government received £56bn from corporation tax during the 2016-17 financial year, a 21 per cent increase from the previous year and a new record. So Labour’s proposal would REDUCE government income.
- Free school meals. If they put VAT on private school fees then many parents, unable to afford the extra 20%, will transfer their children to the public sector. Massively increasing the burden on the taxpayer. And reducing Working Tax Credit will hit the poorest working people in Britain, many of who will find work uneconomic so will move to the benefits system.
- £10 minimum wage for 5.5 million workers. This will export jobs. Companies will move to where the labour is cheaper. Many businesses will become uncompetitive and will shed staff. This is a policy to increase unemployment, especially among the low paid. Businesses with captive markets will just pass the costs on to their customers, making everything more expensive and hitting the poorest the most.
- Reversing inheritance tax cut. This tax is easily avoided, increasing it makes people more likely to do so. This will reduce government income.
- Renationalise the railways. Everything the government runs it runs badly, just look how execrable the nationalised BR was and how woefully useless the nationalised Network Rail is. Privatised rail has been an immense success, with traffic more than doubling. A state run railway would see a sharp reverse.
- Halting NHS outsourcing. Labour seem to be ignorant of the fact that outsourcing makes services a lot cheaper. Getting rid of outsourcing will add to NHS costs. So less money for new hips and for cancer drugs.
- Building 200,000 homes a year. 100,000 paid for by government borrowing, back to Labours complete financial mismanagement. And anyone who thinks that government is good at building and renting out houses is deluded. There is £784,000 of rent arrears to Newcastle council alone
- 4 new public holidays. That’s 120 million lost working days at a cost of about £16bn a year. Which the public will have to pay for in higher prices and more tax. This must be glaringly obvious.
- Ending zero hour jobs, despite many workers preferring them. Zero hours makes the economy more flexible and so more efficient, so removing them will have huge costs, which once again the public will have to pay.
- Banning companies bidding for contracts reduces competition, putting prices paid by the taxpayer up. Once again glaringly obvious.
- Halting free schools. This is just ideological and has no financial significance. Labour want to maximise their political control over education, despite their proven failures when doing so (look at the Pisa scores).
- Banning deals between HMRC and companies. This is impossible, in the days of global companies they can choose where to declare profits and we can’t stop them. These deals ensure that the UK gets fair revenue.
- Eradicate gender pay gap. Many economists argue that there is no gender pay gap, or that it is minimal. If the government control wages like this then employers will just employ the most productive staff for the money, so women (who are less productive) will lose jobs.
- Cutting business rates. Good idea to tax businesses less, but where is the £1.5bn coming from, not corporation tax, as we already know. As for credit payment terms, this is just interfering in the market. Lefties trying to say they know how capitalism works, when they obviously don’t.
So there you go. A bright A level economics school student could do better. Labour saying their spending plans are costed is an obvious and blatant lie. If these policies were implemented in the UK it would be a financial disaster that would cost hundreds of thousand of jobs and which would hit the poorest most.
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Yes, utterly insane. The min wage hike will devastate social care paid for by the State via councils. It’s so high already it’s causing big problems now, let alone put up higher.
If they are like the rest of the establishment, so dumb they think the measure called ‘pay gap’ is meaningful in any way, they are not fit to run a car boot stall.
The biggest flaw is they have no ideas. Nor does any party though. Political class all just grasping the vast pay. Game playing. Incompetant or deliberately malign.
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What’s the source of the costings image? Is it official?
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You accuse Labour of not understanding economics, then proceed to demonstrate only your own ignorance of it.
1. Corporation tax is paid on profits, it has nothing to do with reinvestment which is a cost. Tax receipts only increased in the UK following the cuts because profits were delayed until a later return to take advantage of the new rate, resulting in a one-off spike.
2. The amount raised by the VAT on private schools exceeds what is required to pay for the free school meals; it would take huge movement to result in any loss.
3.1. Any company that can afford to shed jobs, can also afford to downgrade hours; go out and ask any workers you like if they’d accept working fewer hours for the same pay and see what they say, I’d wager all of them would accept.
3.2. The £10 minimum wage is also not a policy in isolation; the companies in the UK that are relying on the UK’s appalling low wages are not businesses that anyone should want here. This is why Labour’s strategy includes investments in new jobs across the UK.
4. Non-payment of inheritance tax is an argument on tackling avoidance/evasion, not on lowering the rate.
5. If you want to cherry pick results, try looking at East Coast Rail, which in five years made £1 billion in profit for the taxpayer, at lower fares and higher punctuality than Virgin East Coast has ever attained since. And BR was not actually badly run, it was systematically starved of resources until it began to fail, this is exactly what is right now being done to the NHS. Besides which, something like 50% of our rail routes are currently run by national railways; just not our own.
6. You seem to be ignorant of the fact that outsourcing NHS services cannot make them cheaper, at least not without sacrificing something. Private companies seek profit, which means they immediately need to either do less or do it less well; most fall into the latter category, and those in the former actually end up costing more because they leave the most complex cases for the NHS to handle anyway. The NHS also spends a considerable amount on correcting botched private operations.
7. Regardless of difficulties, social housing does make a profit; we’re not talking about spending here but investment. A properly built social house should last 40-50 years with minimal cost, paying for itself in rent almost the entire time. And that’s not to mention the effect of fiscal multiplication, which for social housing is particularly high.
8. Extra public holidays won’t cost even anywhere near that in the worst case; in fact they are an opportunity for retail businesses and others that can simply remain open and capitalise on increased public spending on those days. Other businesses can… oh, I dunno, pay their workers to come in? It’s not hard is it?
9. Zero-hours and temping are not the same thing; zero-hours contracts are used in place of proper, fixed hour contracts to avoid paying as much (or any) holiday and sick pay. They are purely exploitative. What Labour are proposing is not actually a ban anyway, but more like the New Zealand model which enhances the right of workers to demand a proper contract, which even then is short-term, since improved collective bargaining will eradicate these exploitations over time.
10. Blocking companies from bidding if they don’t meet standards is a basic and very common practice. Government contracts are lucrative and highly sought after, the actual impact will be companies adapting to remain able to continue bidding, which is the whole point.
11. Halting free schools is just good economic sense; the commons select committee on the subject found that nearly 50% of money invested in free schools is wasted, and that they not only offer poor value for money but do not improve outcomes. By any measure they are a bad investment, and a huge mistake to begin with.
12. You say companies won’t pay tax without sweetheart deals; this is no justification for the deals, it is justification to tackle tax avoidance. Why are you so opposed to making companies pay their taxes?
13. You seem to misunderstand what the gender pay gap is and to think women aren’t productive; it’s not just about pay but opportunity, and the ability to return to careers after giving birth and similar issues. It is also about sectors that employ women most commonly also paying less for the same levels of work as other sectors that more commonly employ men. It is indefensible if similar work across sectors can pay radically different amounts, the gender issue is almost secondary, but still highly relevant.
14. The cuts to business rates are to favour small business; it is to offset the cost of raising the minimum wage.
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You prove my points. Thank you.