Corbyn’s fantasy economics would end in poorhouse
WHO knows what more goodies Labour will have dangled before us when we finally go to the polls in six days’ time? A Christmas hamper for every household, brimming with brandy snaps and sherry? A trike for every child under four? A week’s break in Ibiza, all meals included, for every nurse and teacher?
Yesterday it was the turn of schools to enjoy Labour’s bountiful attention. Every child is going to have a free breakfast. There’s another £7billion for school buildings, and an extra 20,000 teachers.
Unfortunately, as with another white-bearded gentleman often found hanging around the high street this time of year showering children with gifts, someone has got to pay. Initially, it will be the pupils’ parents, but eventually the bill will land very heavily on the pupils’ own heads.
Two weeks ago Corbyn presented the country with what he described as a “fully costed” manifesto.Actually, it wasn’t – it omitted to make even a penny’s allowance for Labour’s vast renationalisation programme.
Forecasts for extra revenue from tax rises on the rich were spurious to say the least.
HOWEVER, Labour has now blown its own budget out of the water as it has continued to dream up yet more funding promises on top of the extra spending of £83billion a year in the manifesto. There’s a £58billion handout to Waspi women, which would be paid out regardless of their wealth.
We have had a promise to slash rail fares by a third, as well as free rail travel for the under-16s. There’s a promise to take a million NHS patients off waiting lists – for which the party’s health spokesman, Jonathan Ashworth, has admitted the party hasn’t allocated a single penny. Is he proposing that all the surgeons and nurses he would have to conjure out of thin air for the extra operations work for free?
It can’t be emphasised enough how Labour governments have always brought the public finances to the point of ruin. Denis Healey, chancellor in Jim Callaghan’s government, had to go to the IMF to beg for a bailout. Gordon Brown, having inherited public finances which were nearly in balance, ended up leaving a deficit of £158billion.
But Jeremy Corbyn and John McDonnell are proposing to take fiscal irresponsibility to a whole new level. The levels of borrowing they propose are breathtaking.The trouble is that there is a generation of young voters who have never known interest rates at anything other than below one per cent.
And they won’t appreciate how a government debt crisis would bubble from nowhere if rates were to rise. And rise interest rates certainly will if John McDonnell gets into the Treasury. If you want to borrow money, you have to persuade someone to lend it to you.
International investors are not going to come swarming to his door eager to lend to him at rock-bottom rates if they have any doubts at all of his ability to repay the vast debts he is proposing to run up.
If you want to know how a Corbyn/McDonnell government would end, just look to Greece a decade ago, after that country’s government had for years spent vastly more than it collected in revenue.
The result was that deep cuts ended up being forced on the country from the outside, causing public salaries and pensions to go unpaid.
OH, and taxes had to rise sharply. That would be the other eventual outcome of a Corbyn government. Their claim that they can raise an extra £83billion a year of revenue only by taxing the rich is fantasy. If corporation tax were jacked up, companies would shift profits to lower-tax countries. The billionaires whom McDonnell so detests would be gone. Emergency tax rises would end up having to be slapped on lower income groups.
It is true the Conservatives’ spending plans are not beyond criticism. But there is a big difference between extra s pending of £3billion a year and extra spending of £83billion.
Corbyn and McDonnell seem to think that only governments are capable of stimulating the economy. But tax cuts are a stimulant in themselves, putting more money in people’s pockets to spend as they see fit.
It is a cliché to say that this election is the most important in a generation. But this time it really is true. In fact, make that the most important election in several generations.
What is at stake is our way of life: do we want to be thrust into a socialist experiment that will fail very nastily?
Or do we want a government whose instinct is to contain state spending and to trust us with our own money?
‘If you want to know how it would end up, look at Greece’