The Labour Manifesto – Some Good Ideas But Ideological and Financial Questions

The Labour manifesto – all 128 pages of it – contains some ideas that in themselves will appear very sensible and even desirable to many UK citizens, including the Spend Matters team here. Rail privatisation has hardly provided a ringing endorsement of private sector genius – and we would all like to pay nurses a little more after years of a pay freeze.

There are some good forward-looking goals too – “create an innovation nation with the highest proportion of high-skilled jobs in the Organisation for Economic Co-operation and Development by 2030. We will meet the target of 3 per cent of GDP spent on research and development by 2030”.

And on most pages there is something that will make most people nod in agreement – what about this? “We will reduce the maximum stake on Fixed Odds Betting Terminals from £100 to £2. Labour will also legislate to increase the delay between spins to reduce the addictive nature of the games” The growth in FOBTs is one of the most disgraceful legacies of the last two governments.

There are, however, two big “buts”.

The first is simply the question of where the money will come from to pay for all of the Labour promises. We have to keep reminding ourselves that the UK is still spending £50 billion a year more than it gets in via taxes. That is debt which our children and probably children’s children will take on. Personally, I don’t feel very comfortable with that. The Blair / Brown years, exacerbated by the 2008 crash, led to us as a nation living way beyond our means and that is still being slowly unwound.

Labour says all the new cash can be found through taxing “the rich”, or firms, and ideas like a financial transaction tax. But apart from some questions on their basic maths (they seem to have ignoredg the huge cost of re-nationalising the rail and water industries or the cost of the new bank holidays, for instance), they make no allowance for changes in behaviour.

One thing we as procurement people know is that if you change incentives, you change behaviour – we see that in our KPIs or risk / reward contracts all the time. So if you change personal or corporate tax levels then that will drive different behaviours. For instance, a financial transaction tax is not a bad idea in itself – if every country in the world does the same thing. If not, you can guarantee that on day one, the number of transactions going through London will drop like a stone as work moves elsewhere.

The second issue is more philosophical. The whole ethos of the Labour manifesto is a genuine socialist view that the State – the government – knows better than the individual and certainly better than businesses. So the state will decide – on CEO salaries, how people are employed (no zero hours contracts or unpaid internships), which bank branches can close, and the state will run the railways, new utility firms and bus companies, regional development banks, and so on.

Apart for the cost of all this (see above), it is worth considering whether we really think Corbyn, Abbot, McDonnell et al are up to the task. The models for this approach are not too promising – Venezuela hasn’t done too well – and while I don’t have any great fondness for the big utility firms, or their CEOs making millions, there is a question as to whether the voters will feel that Corbyn and friends are capable of running huge chunks of the economy in any sort of effective manner. The manifesto perhaps inevitability is short on the “how” many of the goals will be achieved in any case.

Capitalism stinks in some ways. But it does manage the organisation of an economy in a way that (sort of) works and overall provides the goods and services that citizens want and need – with the government playing a key role of course in critical areas such as defence, health etc. Will the public be convinced that a “Jeremonomy” would work anywhere near as well or as efficiently?

And some of us are old enough to remember the days of nationalised industry. The waiting for months to get a new phone line. Unhelpful staff, regular strikes and so on. The ’70s really weren’t a golden age (even if I was young and thin then – and Sunderland won the Cup!). Consumer choice and customer interests are not really factors in the manifesto.

So unfortunately, some of the good ideas are therefore going to be lost as part of an overall unacceptable picture as it will be painted by the other parties. And very few people we suspect are going to believe that the money is available for all the proposals – so they might all get ignored, which as Polly Toynbee said (in one of her better articles) would be a shame. “The long-term danger is that good policies in this manifesto will wrongly go down in history as “rejected” by voters – when all they will have rejected was Corbyn” she said.

What about public procurement under Labour? Well.. let’s come back to that in part 2.

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Economy, General