LABOUR’S political opponents are in a bind over the party’s manifesto because they know that there is mass popular support for the policies outlined by Jeremy Corbyn.
Returning our railways to public ownership has been a majority demand for years, but there was for long united parliamentary front-bench opposition to it because renationalisation wasn’t “serious” politics.
Major parties concurred that a capitalist austerity agenda was essential to lower the annual deficit by reducing government expenditure.
This meant a freeze on public-sector pay while boardroom salaries and bonuses went through the roof, a clampdown on public spending, mass lay-offs, attacks on benefits and, as a consequence, reduced living standards for the vast majority of working people.
Austerity, which was touted as the only sensible way to lower public borrowing and indebtedness, had the fortunate by-product — if you were rich and powerful — of widening the gap between the haves and have-nots.
Its major drawback was that it didn’t work, even by its own criteria. Imminent eradication of the deficit is always another five years away and government borrowing is as high as ever.
Corbyn has stood this bankers’ received wisdom on its head and proposed borrowing to provide investment to develop the economy out of trouble, building the infrastructure, creating well-paid jobs and increasing the minimum wage to £10 an hour by 2020.
The Tories and their Liberal Democrat hangers-on are forced to recognise the popularity of Labour’s policies, so they assert that they are unaffordable.
Shadow chancellor John McDonnell has identified areas where, alongside bespoke government borrowing, taxation can be increased to provide investment capital and — guess what? — the mouthpieces of those who have done very nicely out of austerity don’t like it.
Centre for Policy Studies (CPS) small-state zealots don’t like the proposals to increase income tax on those paid £80,000-plus a year, reverse cuts in corporation tax and extend the existing 0.5 per cent Stamp Duty Reserve Tax to cover derivatives and other speculative financial transactions.
CPS director Tim Knox claims: “High earners are the geese that lay the golden eggs,” warning that raising income tax could cause the geese to fly away or stop laying golden eggs.
In contrast, CPS head of economic research Daniel Mahoney says that the tax rise “is unlikely to raise a significant amount of revenue.”
Make your minds up, lads. Either it’s a grave threat or insignificant. It can’t be both.
Similarly with corporation tax, Knox declares that expecting a rise to generate more revenue is “economically illiterate” because cutting the tax rate has brought in more income.
He must be aware that this counter-intuitive conundrum was achieved through corporate creative accounting and it will not be a long-term reality. The idea that cutting taxes encourages companies to pay more tax is a fallacy.
The CPS director raises the spectre of a flight of the golden geese once again over the financial transactions tax as though those making millions from banks and other institutions through speculation are rootless but stay in Britain as a kindness to the rest of us.
Decisions about where to site financial operations, take up residence or establish family homes depend on a lot more than taxation.
Every election in Britain is marked by a number of wealthy individuals asserting that, if Labour wins, they’re for the off. Most are still here.
Tory media allies will dream up fresh “unaffordable” yarns to discredit Labour’s manifesto, but this shows they are running scared.