Via Financial Times

Senior British politicians exchanged barbs over the potential cost of a Jeremy Corbyn government, as a Conservative party assessment suggested the opposition’s spending commitments could total £1tn over the next five years. 

The costings, which were produced by the Tory party not the Treasury, suggested Labour’s plans could come to £650m a day during the next parliament. The totals were based on the opposition’s 2017 manifesto, plus estimated costings for policies announced more recently. Labour said the figures were “fake news” and “a work of fiction”.

The 36-page Real Cost of a Labour government document included some policies that are relatively straightforward to price — such as free bus travel for under-25s, which the Tories state would cost £7bn over five years, or the £30bn cost for improving home insulation. 

But other claims as less certain. The £4.5bn cost for a universal basic income does not take account that Labour has only pledged to pilot the scheme. The £200bn cost for renationalisation may also be an overstatement, as Labour has suggested it would not pay market rates. The 32-hour working week, costed at £85bn, is not a compulsory proposal and would be implemented over a decade.

Chancellor Sajid Javid had intended to publish a Treasury analysis of Labour’s spending commitments, but the government was thwarted by cabinet secretary Mark Sedwill, who blocked publication. The Conservative document mirrors similar dossiers produced in past elections.

By highlighting Labour’s spending commitments, the Conservatives hope to paint their political rivals as financially reckless and untrustworthy to run the economy. But the debate may also remind voters of how much Mr Corbyn would like to invest in public services.

READ ALSO  Spike in lumber and land prices causes homebuilder confidence to fall

Paul Johnson, director of the Institute for Fiscal Studies think-tank, said that the “true scale of Labour’s stated ambitions” would not be known until the party publishes its manifesto, but the overall scope of its spending plans was clear. 

“We do know that they are committed to a very big and radical expansion in the size and scope of the state — they are quite clear about that. That’s what planning to double government’s investment spending, implement widespread nationalisations, and substantially increase current spending and taxes means.”

Mr Johnson added that the challenge for Labour would be “doing that in a way which is effective and efficient, which supports rather than hinders the economy, and which does not cause interest rates on government debt to rise.”

Mr Javid claimed that the figures represented “the true cost of Corbyn’s Labour” and said the dossier contained “the numbers that [shadow chancellor] John McDonnell did not want you to see.” 

“These are eye-watering levels of spending . . . it will be absolutely reckless and will leave this country with an economic crisis within months,” he told the BBC. 

In response, Mr McDonnell claimed the Tories’ totals were inaccurate and that cost of Labour’s spending plans would be revealed when the party publishes its “fully costed manifesto” in the coming weeks. 

“This ludicrous piece of Tory fake news is an incompetent mish-mash of debunked estimates and bad maths cooked up because they know Labour’s plans for real change are popular.” 

Mr McDonnell added that Labour’s plans would “tax the rich to pay for things everyone needs” and “use the power of the state to invest to grow our economy, create good jobs in every region and nation and tackle the climate emergency.” 

READ ALSO  American Eagle sees holiday-quarter sales dropping amid weak mall traffic

Andrew Gwynne, Labour’s shadow communities secretary, said that the dossier was a work of fiction and the party’s manifesto would be “fully costed”. He challenged the Conservatives to do the same when their policy platform is unveiled. 

Senior Labour figures will gather next weekend to sign off on the party’s manifesto — the so-called “Clause Five meeting” named after part of its constitution. The party leadership is expected to confirm some radical new policies floated since 2017, including the state seizure of about £300bn of shares over a decade.

The Conservative party’s manifesto is expected to be released towards the end of November. Mr Javid did not say whether it would be fully costed, stating that the party would “set out our plans during the course of the election campaign”.

On Friday, the rating agency Moody’s, lowered the UK’s credit outlook to negative, citing the “increasing inertia and, at times, paralysis that has characterised the Brexit-era policymaking process”.