Corbyn’s promises bad policies that led to UK’s post WWII decline
AFP – Plans by Britain’s Labour party to nationalise key industries would reverse a business trend begun by Margaret Thatcher in the 1980s, while it proposes state spending not seen since the 1970s.
The right-wing press were quick to criticise the opposition party’s plans, revealed in a manifesto on Thursday that includes big tax rises and a shake-up of corporate governance.
The Daily Mail declared it a “Marxist Manifesto”, while the Financial Times said it was “blueprint for socialism” that would “turn the clock back 40 years” and lead to “terminal economic decline”.
But Labour leader Jeremy Corbyn insists the current system is not working, arguing that only shareholders have benefited from the privatisation of “obvious monopolies”.
He wants to take bus, rail, water, energy, broadband and postal services back into public hands to end the “great rip-off” and instead run them for everyone.
– Some work better than others –
Thatcher’s rise to power in 1979 came on the back of public discontent at the performance of nationalised industries, characterised by repeated strikes, perceived inefficiency and union power.
She campaigned on a slogan of “Labour Isn’t Working” to highlight rising unemployment under James Callaghan’s government and economic strife.
“Some privatisations have worked better than others,” said Jonathan Portes, economics professor at King’s College London.
“I think there is certainly a very strong case for a radical shake-up of the water industry, where privatisation has so far failed,” he told AFP.
“That doesn’t necessarily mean that nationalisation is the answer but it’s not crazy to suggest that it might be sensible.”
Portes cautioned however that other sectors were more complicated.
Britain’s rail industry has long faced criticism over its complex structure and costly fares and delays, ever since the Tories privatised British Rail in the mid-1990s.
Tracks remain in state hands but the trains are run by mostly private companies enjoying large government subsidies.
Jonathan Van Reenen, from the London School of Economics, said arguments about who was to blame and how to fix it have never been satisfactorily resolved.
On domestic energy, meanwhile, government price caps introduced to lower prices among top electricity and gas providers have reduced the excessive profits made by retailers in recent years.
– 1970s throwback? –
Labour’s commitment to nationalisation has deep socialist roots and was contained in its historic pledge to “common ownership of the means of production, distribution and exchange”.
A hard-left manifesto before the disastrous 1983 election, which Thatcher won by a landslide, was dubbed “the longest suicide note in history”.
Tony Blair took the party to a more business-friendly programme when he took over as leader in 1994, abandoning the nationalisation pledge.
Corbyn denied this year’s manifesto was a “throwback” to the 1970s.
“It won’t be top-down nationalisation with a board appointed by the government,” he said.
“It will actually be something that is more dynamic, more consumer-orientated and more community-orientated. And I think it’s… sensible and responsible.”
Van Reenen said debates between public and private ownership were often “misplaced”.
“The question is, do you want to create competition, certainly to have long-term investments?” he said.
“You can keep things in the private sector as long as you regulate them properly. This big push to nationalisation is not a particularly fantastic policy but not a disaster.”
Portes agreed: “The issue is: will a particular industry be better run in the public or the private sector for the benefit of consumers. Will consumers do better or worse?”
– Tax the rich –
Labour has also proposed hiking public spending by £83 billion by 2024, with plans including abolishing university fees, freezing the state pension age at 66 and boosting school funding.
The plan “would take total government spending as a share of the economy to levels last seen in 1976–77,” excluding the most recent financial crisis, the Institute for Fiscal Studies think tank said.
Labour said this would be paid for by an increase in income tax for top earners and corporation tax, as well as a windfall tax on oil companies and a new levy on multinationals, plus more borrowing.
But IFS director Paul Johnson warned that tax increases to fund this level of spending must be “widely shared rather than pretending that everything can be paid for by companies and the rich”.