Labor is plotting a devastating economic blow – and its pension experiment is just the start

For a party leading by 20 points in the polls. Labor attracts unusually little scrutiny. There is a general perception that Sir Keir Starmer is a dull, safe and obscure Playwright. Didn't he kick out Corbo? And get rid of the anti-Semitic party? Didn't he cancel the £28 billion green investment plan that was the centerpiece of his economic plan until this week?

I admit this was my view until I started reading some of the Labor policy documents. True, Starmer had a serious past. In his twenties, he edited the Trotskyist journal Socialist Alternatives. He stood to the left of every Labor leader from Neil Kinnock to Tony Blair. In late 2020, Corbyn assumed the party leadership, saying the 2017 manifesto was „our foundational document”. But of course, I reasoned, the combination of economic and electoral interests would push him to a more centrist position.

I saw right through some of the promises of the Labor Party then. As I scrolled, I felt what remained of my crown begin to sprout, and, as old Hamlet says, each particular hair stood up like quills in angry bourbontine.

Why, I wondered, did these precious pledges go almost unheralded? Even right-of-centre newspapers are more interested in railing against the current government's failings (and those failings are real) than dissecting exactly what's to come under Labour.

I suspect many Sunday Telegraph readers are in the same place. Not looking too hard at Sir Gair allows us to compare the Ministry of Sunak to our idealized alternative rather than to a practical, real-world alternative. But if you want to understand what Starmer will do, take a quick read of Angela Rayner's paper last month, almost entirely ignored by the media, entitled „A New Deal for Working People.”

Paragraph after paragraph contains a commitment to discipline or spend. Britain, finally pulling itself out of the hole dug by the lockdowns, will be pushed back down again under the weight of greater union powers, workers' rights and industrial demands.

READ  S&P has kept India's FY24 growth forecast at 6%, citing global economic slowdown and rising monsoon risks.

Employees have the right to switch off outside of work hours and employers will tell them not to contact them. Employers will have a legal obligation to tell their employees they can join unions, and union activities will be funded on company time. Collective bargaining will be extended.

Does Reiner imagine that this is the moment to make our companies less competitive? The pandemic and the war in Ukraine were a double blow to our economy. Taxes are at a 70-year high, debt is nearly 100 percent of GDP and public sector productivity has plummeted as civil servants refuse to return to office.

With neither party daring to bring back spending in early 2020, the only alternative is to grow faster. The private sector can have the muscle to pull us back to prosperity. But not if we keep stacking the weights.

Labor weighs in on a few more: higher statutory sick pay; Completion of eligibility period for extended employment rights; banning zero-hours contracts; Additional maternity leave and maternity leave and bereavement leave; long time-limits for bringing cases to industrial courts; removal of caps on compensation limits; new health and safety laws; Additional provision for stress and mental health; greater awareness of neurodiversity; equal pay comparisons across different employers; Gender Pay Monitoring for Outsourced Workers.

The list goes on and on. Each of these projects will cost money, and worse, time. Labor leaders don't know what it's like to run a company within tight profit margins. Many employers already offer their employees terms that go beyond these rules. But they now have to deal with the added hassle of keeping records, insurance against nuisance claims, and days off to prove to inspectors that everything is in compliance.

Consider Labour's promise of a new racial equality law, which would require companies to show they don't pay people differently based on race.

READ  Ministry of Technology and Economy collaborates to boost industrial innovation

There is no suggestion that employers are currently doing this, and for good reason. Besides being immoral and bad for business, it is already illegal. An additional statutory duty would do nothing for ethnic minorities, but would be, in the words of Kemi Patenok, a „bonanza” for „activist lawyers.”

After all, it was the creative interpretation of the 2010 Equality Act that led in part to the bankruptcy of Britain's second city. Birmingham City Council is paying staff the same wages for the same jobs, but rubbish bins and gravediggers are getting bonuses that chefs and maintenance workers don't get. The local authority has been saddled with the bill for compensation and has already paid out more than £1.1 billion as the jobs were previously considered male-dominated.

Does it sound like a party with (to quote shadow chancellor Rachel Reeves) „a serious plan to grow the economy”?

The essence of Blairism is to ensure that the private sector continues to generate revenue that ministers can then redistribute to groups of their choice. But Starmer doesn't understand that first bit. Time and again, he offers policies designed to appease a particular pressure group or make a good headline, with no thought given to the long-term costs.

For example, getting rid of non-dom status is popular because it seems to make rich foreigners pay more of our taxes. Except they won't. We are, by definition, dealing with an unusually mobile segment of the population. The idea that they would wait to tax income with no connection in England is a fantasy; Also, when they leave, we'll pick up the tab for the taxes they pay here.

Similarly, charging VAT in private schools would bring loud applause from the Question Time audience. But not much income.

Some parents avoid fees by prepaying fees years in advance. Others, unable to afford it, will leave the sector (Labour says five per cent, independent schools reckon 25 per cent). Their children would then have to be enrolled in government schools, wiping out the gains.

READ  Dubai World Trade Center Events Stimulate Dubai Economy in 2022; Generate $3.55 billion in gross incremental economic output

Then check on private pensions. It will now, ostensibly, be enacted to „ensure the retention of public sector heads”. But the effect would be to reduce savings and reduce investment.

All of this pales into insignificance next to the huge cost of decarbonizing the grid by 2030. And don't even get me started on the risk of adopting all of the EU's social and environmental policies as part of some dynamic alignment agreement.

In labor protection, most of the policy commitments mentioned here are popular. Of course they are when voting separately. Who doesn't want new benefits or more rights at work? High taxes are popular even when people think they will fall on the rich—all new taxes are sold early, before it becomes clear that there aren't enough rich people.

The problem is that the current mood in Britain is impatient and statist. Whether it's screen addiction or our attention spans generally shrinking, today we demand instant gratification. And after months of paying to stay at home, we expect the government to pay our energy bills, set our rent, and run our transportation.

Rishi Sunak, the recipient of both a massive deficit and a subsidy-hungry country, aims to reduce taxation, spending and borrowing. Scarier for conservative commentators, yes, but more extreme for an electorate that is more left-leaning on the economy than at any time since the mid-1970s.

What triggered a change in public sentiment was, as it was now, a full-blown cash balance crisis. When Labor implements these policies, it may be inevitable.

Dodaj komentarz

Twój adres e-mail nie zostanie opublikowany. Wymagane pola są oznaczone *