Corbyn’s plans are certainly eye-catching but Johnson’s are straightforwardly destructiveby Jonathan Lis / November 22, 2019 / Leave a comment
You may have noticed some negative headlines this week about Labour’s spending plans: that they are too expensive, require too much state interference, or risk damaging our economic reputation. You may have heard that the party is irresponsible or hostile to business. They are legitimate questions recognisable to anyone who has witnessed an election campaign in the last 40 years. The unusual element this time around is that they are originating from a party which has pledged to cripple trade with its closest international partners and whose central policy will reduce future prosperity by up to 7 per cent.
It is useful to remind ourselves of a few key facts. The government spent over £8bn on preparing for a no-deal Brexit. Given that we always had the power to revoke Article 50, that money was entirely voluntary. It was used to buy favourable headlines in the right-wing press, and no more. The reality of the deal is even worse. The respected economic think tank NIESR has estimated that it will cost the country up to £70bn over the next ten years, compared to staying in the EU. That equates to around £1,100 per person. Nobody knows precisely how many investment plans might otherwise have been made or how many jobs created, because they will never exist. The government, of course, knows Brexit will be damaging, which is why it has refused to produce full economic impact assessments.
The Conservatives always ask how we can afford a Labour government but never, ever ask the most basic question: how can we afford Brexit? We have, in effect, reached the point where the economy only matters when it is being weaponised against the Labour Party.
Labour’s top lines are certainly eye-catching. Alongside the abolition of tuition fees and the introduction of universal broadband, the party will implement a 5 per cent pay rise for public sector workers, spend £75bn on new council and social homes and create a new National Care Service.
It may well be that Labour has over-reached in its spending plans (even though, as the Times itself pointed out, government spending as a share of GDP would still be lower than in Sweden, Denmark or Finland). The fundamental point, however, is that citizens are not separate from the economy. Labour’s plans will lift people out of poverty. This is a deliberate rebalancing based on a model which stimulates demand and promotes growth.
The Conservatives claim that Labour is anti-business. And yet only last week Tesla confirmed that it would not invest in the UK because the government won’t commit to staying in the customs union—Labour’s minimum requirement. It was only two months ago that parliament had to pass the Benn Act to restrain Boris Johnson from crashing the pound, industry and our national infrastructure overnight.
The point about the Conservatives is that their central policy will puncture the economy in all circumstances. Ministers push out boilerplate lines about responsible fiscal policy, while totally neglecting the reality that they are about to make us all poorer. Even David Gauke, a man who served in the cabinet until four months ago, is warning voters of an economic disaster in the event of Conservative victory and encouraging people to vote against his former party.
The government is not just ignoring the economic impact but actively lying about it. In the leaders’ debate this week, Johnson literally declared that “our inability to fund the NHS is because of our failure to get Brexit done.” It is hard to overstate the sheer scale of dishonesty, repeating the naked falsehood that Brexit will free up money for the health service. He is still trying to convince the British people, against every scrap of credible evidence and the government’s own forecasts, that we might find some economic benefit from leaving. We are not just through the looking glass here. We are smashing it over our heads.
The entire election campaign is rooted in fantasy. The Conservatives (and indeed Labour) are campaigning as though we are living in entirely normal times. Yet while we are discussing the NHS, education and tax reform, we are also balancing on the edge of the Grand Canyon on one leg. The Conservatives only want to discuss Brexit in terms of “getting it done.” Labour only wants to discuss it in terms of renegotiating a deal and offering a referendum. The Lib Dems only want to discuss it in terms of ending it altogether. A detailed scrutiny of what Brexit actually means is entirely absent from the debate.
The graver hypocrisy is that the Conservative Party is discussing our economic future as though it would retain control over the economic landscape. The truth is in fact the direct opposite: our economy at the mercy of international competitors. The EU, US and China may all come knocking for a trade deal but each will wield vastly superior leverage and demand a price. It cannot be stated too often that trade deals will never compensate for the loss of EU membership.
If we do retain regulatory alignment with Europe, we will be following rules over which we have no say. If we don’t, we will be destroying our most profitable industries.
That also supposes that we get a trade deal. If Johnson wins the majority he craves, he will face none of the checks and balances of the last parliament. It will, indeed, gift him carte blanche to leave the transition period in December 2020 with either the most skeletal trade deal or none at all—both of which would precipitate much of the border and economic chaos of a no-deal scenario now.
We can argue over increased investment in public services and the feasibility of Labour’s plans. But it is not going to ruin the economy. WTO trade terms in one year will.
The government wants to have it both ways. For the last three years it has insisted that some things are more important than the economy. Brexit is about sovereignty, laws, migration, a global outlook. Everything is about control. That was why the party dropped the policy it had for 300 years: to increase prosperity. But the problem is that it knows people don’t actually want to get poorer.
Johnson could lay his cards on the table. He could concede that his Brexit policy will harm free trade, business and jobs, and warn people that they could suffer. He could justify it by advancing a case for added sovereignty or control, no matter how tenuous or flawed. He could, in essence, be honest. But he will not be. The Conservatives cannot pick and choose. Never mind Labour: either the economy matters or it doesn’t. If it does, we must abandon the destruction of Brexit.
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