Jeremy Corbyn’s plans risk harming the people they’re designed to help

Andrew Harrop

Looking at the Corbyn insurgency through the prism of policy risks misunderstanding its essence. Corbynmania, at its heart, reflects a yearning for a different way of doing politics – a departure in tone, mindset and organisation from the orthodoxies of mainstream Labour. But people also voted for Jeremy Corbyn because of his radical policy agenda – and following his election, he now has a mandate to pursue it. So what does the Corbyn platform look like and how should the non-Corbynite left react?

Corbyn stood on a left-populist platform which succeeded because it sounded distinct from the mushy managerialism of other Labour voices: an end to austerity, scrapping university tuition fees, capping rents, renationalising the railways, cancelling Trident renewal, rejecting a North Atlantic trade deal. A list like this pulls at the heartstrings of the political left. Some of it is popular with the public too, with rail renationalisation the standout example. But even when it is not, it has the characteristics of populism – it is simple and emotional.

This is not necessarily a criticism because, after New Labour and the failure of the technocratic Miliband project, the left needs to be wary of too much equivocation and complexity. For example, Corbyn’s humanity and compassion when talking about immigrants and benefit claimants compares favourably with the painful contortions of the Miliband era. But this case also illustrates how much distance there is between the emotions of the Labour selectorate and broader public opinion.

Typical voters, while potentially sympathetic to individual items on the Corbyn shopping list, are likely to feel that collectively it amounts to an extreme agenda. After all, the public has just rejected Ed Miliband, even though they liked most of his specific policies. This was both because they feared a leap into the unknown and because of Labour’s past record on spending, immigration and welfare. The Corbyn platform is unlikely to induce a different response.

The same is true when it comes to foreign policy, the area where Corbyn’s views were best known before this summer. While some of his ideas will attract public sympathy, in particular his commitment to the Palestinian cause and his scepticism regarding military interventions, his stance on nuclear weapons and NATO will not. And even when people agree with the positions Corbyn takes on individual issues, they may soon detect that these are bound together by a polarised 1980s worldview, based principally on antagonism to the United States. This is not an outlook that most British people share, and it also leads Corbyn to some views which are disturbing even for many on the radical left. For example, while Corbyn has championed justice and self-determination for oppressed peoples across the world, he backs an imperialist ‘spheres of influence’ approach when it comes to Russia and Ukraine.

There is more to the Corbyn platform, however, than left-populism at home and anti-Americanism abroad. During his campaign he shone a spotlight on issues which have often been neglected, including the arts, lifelong learning, mental health and harassment of women. If Corbyn can draw such forgotten issues into the mainstream, then he will leave a lasting and welcome legacy whether he is leader for five months or five years.

There is also more continuity with Labour’s recent past than initially meets the eye. Across whole swathes of domestic policy, his platform represents supercharged Milibandism: like Ed, Jeremy wants to champion public investment and establish a National Investment Bank, crack down on tax avoidance, dash for zero-carbon electricity, build hundreds of thousands of new homes, re-regulate buses, hold a constitutional convention, extend free childcare and challenge zero-hours contracts. Even on austerity, their views are not as far apart as they first seem, because Ed Miliband’s fiscal plans actually gave him a lot more room for manoeuvre than he dared admit during the election.

In most of these cases, Corbyn wants to travel down the route Miliband charted, but go further and faster. Sometimes that is for the good. There was often an insipid caution to Miliband’s micro-scale policies, with Labour politicians struggling to shed the mindset of former ministers. For example, Labour made little progress with its exciting plans to integrate social care into the NHS, and never committed the money for building the homes its own numbers said were needed.

But sometimes the Miliband caution was correct, where the practicability of a policy was in question. For example, the Corbyn campaign has promised action on tax abuse and tax reliefs on a scale which most experts think is unachievable. And in some areas Corbyn’s policies risk hurting the very people they are designed to help. Take Corbyn’s call for all private rents to be capped relative to local earnings, which goes far beyond Miliband’s proposal for controls on rent inflation during the life of a tenancy. The charity Shelter has warned that this will reduce housing supply and make it harder for people to find affordable housing.

It’s the same story with employment. Corbyn has called for a £10 per hour national minimum wage, with no reduced rate for young people or apprentices. If implemented rapidly this would be certain to reduce employment, especially among the young. Other Corbyn policies might have the same result, for example the introduction of ‘day one’ protection from unfair dismissal, banning all zero-hours contracts, scrapping welfare-to-work conditions and significantly increasing benefit payments for young people. These aren’t all necessarily bad ideas, but they pose risks, so they should only be introduced incrementally, with robust piloting and evaluation. The left must cherish the Fabian tradition of evidence-based policy.

Poorer families would be the first to suffer if Corbynomics were to lead to fewer jobs and affordable homes. They might also be victims of his proposals for monetary policy, which are likely to fuel inflation. During the leadership election, Corbyn proposed that the Bank of England should create money for public investment, seemingly on an ongoing basis. While some variant of this scheme might have been a sensible option in the depths of the financial crisis, as a permanent policy it is not. If pursued on a sufficient scale this ‘people’s quantitative easing’ would inevitably drive up prices. Corbyn is right that the UK needs a permanent, structural increase in investment, but printing money to spend on infrastructure can only be a temporary, cyclical intervention before it triggers inflation.

Corbyn should instead have called for the government to significantly increase borrowing (especially while it is so cheap) in order to create new assets, an entirely orthodox position for macroeconomists and accountants. Yet while his solution is flawed, it is to Corbyn’s credit that he is seeking a step-change in public investment. This is one of several examples of where Corbyn’s policy platform seeks to respond to big strategic challenges facing the UK.

In thinking about their solutions, the task is to eschew both unrealistic populism and tepid managerialism, by creating long-term frameworks of escalating action, of a sufficient scale to achieve radical change. Against this benchmark, his proposals for both energy and housing have much to commend. However, in places they also feel very statist, with little appreciation that such challenges need responses from both government and markets.

When it comes to energy, Corbyn says he wants community energy generation and a wide diversity of suppliers, but his main priority seems to be to renationalise the energy grid and the ‘big six’ companies, which would stall green energy investment. With housing, while his commitment to a huge programme of social housebuilding is welcome, he seems to see local authorities, rather than housing associations, as the exclusive builders of new affordable homes. Meanwhile he rejects any significant moves to free-up the land market by re-zoning a proportion of greenbelt, which many now think must be part of the solution to the housing crisis at least within the borders of London.

These are examples of where Corbyn’s platform seems out of touch with the changing face of Britain, despite his strapline ‘Vision for Britain 2020’. He seems hostile to motoring, when it now has a zero-carbon future. He says little about the evolution of work, as innovation in technology and job design transforms an economy once built around large employers. And he has not explained how he will marry people’s expectations for personal control and power with his collectivist vision for public services.

Corbyn, rightly, sees fundamental reform of taxation as another major strategic challenge. So far, however, he has willed the ends, but not the means. He has committed to ensuring that the whole tax system is progressive, but a new Fabian report Tax for Our Times shows this will entail huge upheaval. Corbyn has talked about large businesses and the super-rich paying their due. But he will need to go much further and develop a plausible strategy for raising taxes on the income and wealth of the top 10 per cent, as well as the top 1 per cent, while cutting the burden of indirect taxes for people living in poverty. He seems keenest on a 5 pence rise in national insurance on earnings over £43,000, which will certainly create waves among middle-high earners in marginal constituencies. But he has not so far presented plans for improving the taxation of property, pensions, gifts or capital gains.

Cynics might argue that tax reform is so politically deadly that it should only be attempted by stealth, when ensconced in government. But there is something to admire in Corbyn’s appetite for championing important but unpopular structural changes and he should press ahead with a detailed plan for tax rebalancing.

However, Corbyn’s candour on tax needs to be consistent. He has made a series of major spending commitments, while also promising to eliminate the current deficit. He therefore needs to publically accept that his proposals will lead to ordinary families paying more tax: his pledges cannot all be paid for by big companies and the wealthy (or by Corbynite defence cuts).

Some of these spending plans are very worthwhile, but together they will cost many billions of pounds. The Fabian Society hasn’t put a price tag on them all together, but you can bet that a Conservative party researcher is on that job right now. And there will be other spending priorities which a 2020 Labour government will not wish to ignore. For example the OBR projects that spending on pensions and health could rise by around 1 per cent of GDP during the next parliament, and working-age social security will be on the brink of collapse by 2020.

Bevan said ‘the language of priorities is the religion of socialism’ and Corbyn must recognise there are choices and trade-offs. Even if a huge and sudden increase in tax-funded public spending was politically achievable, it would significantly reduce the disposable incomes of typical working families. Most of Corbyn’s spending promises may one day be achieved, but that does make it desirable or practical to bring them all about at once. Jeremy Corbyn may not like to hear it, but his plan for Britain needs an injection of Fabian gradualism.

Andrew Harrop is general secretary of the Fabian Society. This piece is published in the Autumn Fabian Review. 

1 comment:

  1. George Talbot

    I welcome this thoughtful review of the politics and policies of Jeremy Corbyn. But Fabians are stymied by the financial and economic systems. Nor would Corbyn’s reforms work without major changes that require international support.

    I agree with Corbyn that austerity was a choice not a necessity. So why does he intend to eliminate the budget deficit? And he has said it grew under the Tories although it fell to £88bn last year. But the current account deficit grew to 5.9% of GDP; a little more than the budget deficit.

    Given government’s emphasis on deficits and debts, their global sources should be discussed. These are: Too much saving due to low real wages: Too much saving from incomes, in China, for example: AND Current account surpluses, often in fossil fuel exporting nations though Germany currently has the largest surplus since China raised its wages and the price of fuel fell.

    The dire state of the planet should help socialists to design a supportive international framework within which they could develop policies to minimise inflation, unemployment and inequality. Life demands top down restraints justified by our dependence on the planet and the destructive power of envy. And respect for subsidiarity would ensure that power is delegated to the lowest level so people have as much freedom as possible to manage their affairs.

    Andrew Harrop mentions the North Atlantic trade deal. But TTIP covers Trade and Investment, i.e. trade and capital. From October 2014 to 2015, a self-organised European Citizens’ Initiative against TTIP and CETA collected over three million signatures challenging further benefits for trade, business and capital. See https://stop-ttip.org/

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