I wake up this morning to an online blast of claim and counter-claim with a nostalgic whiff of the post-war era about it. A Labour manifesto promising a radical transformation of society for the majority and a Conservative warning that it will lead to bankruptcy, higher tax bills for all and a Big Brother state destroying individual rights. Proper Project Fear indeed.
One aspect of this morning’s headlines differs from all previous versions of this hoary old High Spend v Low Tax saga. Paul Johnson of the Institute for Fiscal Studies (IFS) has come out with language which is unequivocal and unprecedented in its dismissal of Labour’s spending and tax plans. “Impossible to overstate how extraordinary this is … these are vast numbers, enormous, colossal …(tax plans) are simply not credible ..” and more. This probably should not have surprised me. But it has since I had sloppily assumed that Labour would set its numbers at just below the tipping point for such a full scale IFS attack.
The IFS holds a powerful reputation as the outstanding and independent analytical voice on fiscal and public spending projections. The IFS would not put that lightly at risk so it must have thought hard about the tone of its language this morning which is at (or even beyond) the top end of the scale. A gift for the Tories who will no doubt be retweeting Paul Johnson’s interview furiously. The Labour Party analysts must have thought equally hard about the likely reaction from the IFS and, unlike myself, cannot have been entirely surprised by its scale and intensity. Interesting therefore that they proceeded anyway.
Was that just the will of the Corbynistas to put out a truly radical package? Or a careful calculation that in today’s post-modern, post-expert, post-truth era of public debate the value of endorsement or condemnation from the IFS at the ballot box has been diminished to low or negligible?
If so, they got it wrong – well, at least for this unrepresentative sample of one in metropolitan London. Okay, so I am not a natural Labour voter but in a genuine Tory-Labour marginal where the Lib Dems have no chance and the Labour candidate represents the moderate Remain wing of the party I could be tempted to vote Labour despite the consequences for my own wallet. Yet such an overwhelming dismissal of the Labour proposals by the independent IFS would stay my hand. I am influenced by this expert view, despite my long held scepticism about all macro-economic projections of fiscal deficits. The most telling IFS criticism applies to the claim that the £89 billion annual tax revenue can be raised from corporates and the top 5% personal tax payers. That is more easily measurable and provable. And intuitively stacks up, i.e. you cannot raise that scale of additional tax revenue from corporates and the top 5%.
I suspect that this particular IFS criticism will run and run through this election and get more traction with middle income tax payers than Labour has anticipated. Oddly enough, these fiscal numbers are not (and never have been) my greatest concern over a Corbyn-led government. I am attracted to the arguments of MMT (Modern – or Mad, according to others – Monetary Theory) that in an entrenched low-inflation and low interest rate global economy sovereign states such as the UK can fund vastly higher deficits than historically were possible. But the greater threat from yesterday’s Labour manifesto comes from the slippery slope back to a world of work dominated by trades unions rather than individuals. More on that another time. Meanwhile, expect the IFS broadside to go viral through the social media airwaves.
View from the Clapham Omnibus 