Labour’s £30bn hole in spending plans
JEREMY CORBYN has an “unprecedented” £30billion black hole in his spending plans, it was claimed yesterday, as leading economists warned that he would impose a level of state intervention not seen since the Second World War.
Labour’s draft manifesto, which was leaked to The Daily Telegraph, includes up to £90 billion worth of spending commitments that will cost every household in Britain the equivalent of £4,000 each.
Economists suggested that Labour’s plans for borrowing and tax rises will only raise £60billion, leaving a huge gap in spending plans.
Economists said there would be a “huge” rise in tax and borrowing to fund the spending, which includes renationalising industries, investing £35 billion in infrastructure and a sharp rise in funding for schools and the NHS.
They said his spending commitments outstripped even those of Michael Foot, the former Labour leader whose manifesto in 1983 was described as the “longest suicide note in history”.
Julian Jessop, chief economist at the Thatcherite think tank the Institute for Economic Affairs (IEA), said: “This is a whole new order of magnitude, it’s the kind of spending that you would only expect during an existential crisis like a war. This is a massive increase in spending and a massive increase in tax and borrowing to with it.
“Even adjusting for inflation this is far more ambitious than Michael Foot’s manifesto. They are getting involved in almost every aspect of life.
“It’s like they are trying to reverse all the post-war liberalisations in one go. It’s unprecedented.”
Paul Johnson, head of the Institute for Fiscal Studies, said the manifesto would result in more state intervention in the private sector than at any point since the Forties.
“What’s planned is a very substantial increase in the size and the role of the state,” he told The Guardian. “There are very substantial spending commitments and you would end up in a world where we have significantly higher taxation, borrowing and spending than we have currently and is planned.
“It’s important to be clear it’s not just about tax and spending, this is about the state getting deeply involved in much more of the private sector than it has been since the 1970s and 1940s.”
The 43-page manifesto includes more than 30 spending commitments in nearly every area of Whitehall, but provides little detail on how they will be met.
Labour has suggested it will borrow up to £35 billion a year to invest in transport and other infrastructure, including a new National Investment Bank.
Industry estimates suggest that taking the energy network back under national control will cost up to £12billion a year while renationalising the railways could cost £1.8billion.
Labour has committed to boosting school funding by more than £5billion, an extra £6billion of funding for the NHS and £1.6billion a year extra for social care. In total the spending commitments
‘This is a whole new order of magnitude. It’s the kind of spending you would expect during a crisis like war’
cost an estimated £93 billion. John Mcdonnell, the shadow chancellor, has suggested that he will fund investment in infrastructure by borrowing more money.
The IEA estimates that his borrowing and tax rises, including increasing income tax for people earning over £80,000 and raising corporation tax by 40 per cent, will raise £63.5billion.
A spokesman for Mr Mcdonnell said: “Both the Tories and the IEA have form on producing reports with skewed analysis and dubious figures. Labour has not published our manifesto yet, but when we do we will set out our plans in full.”