Winner of the New Statesman SPERI Prize in Political Economy 2016


Showing posts with label General Election 2019. Show all posts
Showing posts with label General Election 2019. Show all posts

Friday, 13 December 2019

Who to blame for Johnson winning?


When I wrote this in July I desperately wanted to be wrong. (Of course I was wrong about a lot of the details but alas not the main point.) But it soon became clear that, compared to 2017, the press had had two more years to paint Corbyn as marxist, unpatriotic and racist, and for enough people that would be a reason not to vote Labour. Among others who supported Brexit, they really did believe that Johnson was the man to get Brexit done.

Many will say that Labour lost badly because they had a left wing manifesto. They always do after each election defeat. I doubt that has much to do with this defeat, although the large amount of giveaways to the wrong people was probably a factor. The problem was Corbyn, not Labour’s manifesto. And while many voted against the media image of Corbyn more than anything else, it has to be said that Corbyn’s past and his failures over the last three years made the media’s job very easy.

We should of course blame the media. The right wing press became part of the Tories propaganda war. The Tories lied like never before, just as some of them did in 2016. The BBC was even more careful not to do anything that might upset the government, and it has a real problem when ‘accidents’ keep advantaging one side. But the moment the BBC played a key role in electing Boris Johnson was very specific, and it goes back to the day Johnson got his deal with the EU.

What the media should have asked at that moment is why Johnson had accepted a deal that was essentially the first the EU had proposed, but which he and other ERG members had said at the time was unacceptable. Why had he capitulated? Was it all just a ruse so he could become Prime Minister?

Nobody thought a deal was possible, gushed Laura Kuenssberg, repeating one of CCHQ’s lines to take. No sense from her of what had actually happened. As I noted here, the BBC’s Brussels correspondent got it about right, but the tone of the reporting was set by Kuenssberg. Whether this misrepresentation of Johnson’s deal was deliberate or the result of ignorance I don’t know, but it was critical.

Of course the Tory and Brexit press also took CCHQ’s lines to take. The BBC is the only chance most voters have to get a check on what their newspapers say. It did not provide any such check on this occasion. And it is critical because it allows Johnson to say, as he has, that it was his unique abilities that helped him achieve a deal that everyone said was impossible. No doubt he will say the same when he refuses an extension in July next year because the EU have refused to give him the deal he wants.

Voters who still believe in leaving the EU were left with the impression, thanks to the BBC (and of course the Brexit press), that Johnson was the person who could deal with the EU and get Brexit done. They were not told the truth that he was the person who had helped waste almost a year in squabbling in part so he could get to be Prime Minister. So Leavers are left with an image of competence rather than the reality, which is that Johnson is quite prepared to damage the economy and the workings of democracy just for his own personal gain.

But there is little that Labour or the Liberal Democrats can do about media bias while they are out of power. Undoubtedly a key reason Johnson won was because the Remain/anti-Johnson vote was split. It is depressing and very worrying how many people voted for Johnson, our own Donald Trump, but while the Electoral College gifted Trump his victory despite losing the popular vote, so First Past The Post (FPTP) gave Johnson his victory. A lot of people voted tactically, but not enough.

Both Labour and Liberal Democrats are to blame for not cooperating. While Labour’s failure was not a surprise, I had hoped the Liberal Democrats would take the opportunity to seize the moral high ground and not put up candidates in Labour marginals like Canterbury. It didn’t, and instead it spent too much of its time attacking Labour in the futile belief that this would win over some Tory voters. I suspect they would have been much more successful if they had been honest that the best way to stop Brexit was through a minority Labour government dependent on LibDem votes.

The ultimate responsibility for the split vote must nevertheless rest with Jeremy Corbyn.


The big surge in the Liberal Democrat vote from below 10% to over 20% at its peak began in the Spring of this year, and it coincided with a collapse in Labour’s vote. This quite remarkable change in fortunes cannot be put down to a biased media, but is obviously a Brexit effect.

Throughout 2018 Labour had managed to stay the obvious choice for Remainers, as it had been in the 2017 election. But as soon as May finalised her Withdrawal Agreement it was clear triangulating would no longer work, and Labour would have to take a position. The polls suggested Labour would lose votes by not supporting Remain, but as I noted in December last year too many within Labour were in denial.

Labour entering into talks with May to get Brexit done was I suspect the final straw for many Remainers. They didn’t go to the new and short lived Remain party but the Liberal Democrats and the Greens. The European election was a disaster, but shifting Labour’s policy seemed like trying to get blood out of a stone. I really think if they had moved at the beginning of 2019 to where they ended up things would have been rather different. Instead the Labour leadership single-handedly created the revival of the Liberal Democrats. That, as well as his failure to deal with antisemitism and some of his intolerant supporters, are major factors behind this defeat.

Easy to say in hindsight? Not really. I said these things in 2016 in the second Labour leadership election that Corbyn won. I said it throughout late 2018 and early 2019 was the Remain vote became disenchanted with Corbyn. But the behaviour of Labour MPs made an alternative to Corbyn impossible in 2016 then, as it had been in 2015, and after the 2017 general election result he was never going to be removed.

Could we have stopped Johnson if Labour had not allowed the Remain vote to split. To be honest I don’t know. That is how negative the media’s image of Corbyn has been. Some Lexiters will say it is all Remainers’ fault, but that is a nonsense position. As a result of this defeat we have reached the end of the line for the Remain cause. It has been three years of experts and people who made themselves experts trying to explain why Brexit was such a bad idea, but nothing we could do was able to counteract the propaganda of the Brexit press and the knowledge as opinion attitude of the broadcast media, and particularly the BBC. The really striking finding after three years when the truth about Brexit became crystal clear to anyone wanting or able to see it is that the number of people wanting Brexit changed only a little, and that is what gave Johnson his majority.

Now that we have elected our own Donald Trump, I’m reminded of a talk Paul Krugman gave after Trump won. At the time I wrote a post about it, and I ended it like this:
“We can, and should, continue to rage against the dying of the light. What is difficult, in this time of crazy, is being able to put that rage aside, and engage in a form of quietism, a retreat from the here and now of political discourse. Not a retreat into any kind of acceptance of where we now are, but instead into asking what and why, and from the answers to those questions to planning for the time when facts get back into fashion. But more than that. Using the answers to the what and why to prevent us lapsing back into our current post-truth world.”

I will continue to rage, but not quite as often as I have done since the blog began almost exactly eight years ago. It is time for deeper thought about how we get back to the light and ensure that we never again lapse into a post-truth world.



Tuesday, 10 December 2019

Why you should vote tactically, and how to do it.


In this election we have a choice. We can choose a party led by an inveterate liar, which is happy to appeal to the racist or xenophobic vote, happy to take us out of the EU with no deal with all the consequences for public services that entails, happy to see ever longer waiting times for GPs and A&E, happy to see more homeless people on the streets and more food banks.*** Instead we can choose a hung parliament with a Labour minority government that may not even be led by Corbyn, with their power curtailed by the smaller parties, including the Liberal Democrats, that can actually do something about the problems we face. But we can only make that choice by voting tactically.

But I have an ethical problem with voting tactically

There is one serious argument against tactical voting. It is the idea that if you have a choice between voting for a good party, a not so good party and a terrible party you should always vote for the good party. (The ranking is what matters here, not my description.) The argument is that if you vote for the not so good party, you are in some senses endorsing the bad things that party or its leaders have done in the past.

That argument applies to those who prefer to vote Liberal Democrat because of Labour’s antisemitism problem, or those who think they cannot vote Liberal Democrat because they were part of the austerity Coalition. Both arguments are wrong, because they simply do not apply in a FPTP system when the only two possible winners in the constituency you live in are the not so good party and the terrible party.

In a FPTP system your vote for the good party will simply have token value. However you could have done something towards preventing the terrible party coming to power, but you chose not to. In that way you become responsible, in a small way, for what happens when the terrible party comes to power. By your inaction, you will have contributed to the terrible party coming to power.

If you vote for the not so good party, will you be responsible for the not so good things happening if that party wins? No, because all you could have done differently is let the terrible party win. There is no way your voting for the good party will influence anything. It is a wasted vote because you will have wasted an opportunity to make the world a better place. The Kantian ‘do no evil’ idea does not apply because doing no evil actually means allowing more bad things to happen.

You may say this is a consequentialist argument, and your philosophy is different. You might think about the fact that your philosophy would allow tyranny to come to power, just because you had some problems with the opposition to tyranny. If you think that is far fetched, you need to note that part of their manifesto gives the Conservatives a mandate to change our constitution so that the executive has complete control over parliament.

There is a weaker argument for voting for the good party, and that is thinking about your vote as part of a repeated game. The argument suggests that by voting for the not so good party, you are encouraging it to remain not so good. But this fails for the obvious reason that if you do not do everything you can to stop the terrible party coming to power, you are encouraging the terrible party.

And if all that doesn't convince you, use https://www.swapmyvote.uk/ where you can actually help the party you prefer win something. 

But who should I vote for. It’s so confusing.

For most people its not. Have a look at this website, for example: https://tactical.vote/compare or https://dontsplittheremainvote.com/You will see in most cases there is total agreement about who to vote for tactically. Of course some constituencies are such safe Tory or Labour seats that your vote is highly unlikely to achieve anything. But my rough list of constituencies were tactical voting matters (England and Wales only I’m afraid) is as follows (with the party to vote for in brackets). It is a long list because I have been deliberately pessimistic about what the two parties could lose and optimistic about what they could gain, because there are always surprises in any General Election.

Why did I bother doing this you might ask. It is just a by-product of some work I did out of my own curiosity looking at marginals, and I thought I might as well share it. I have waited until now to make these suggestions because I think a lot of confusion has been caused by sites that have made calls earlier on in the campaign and then had to revise them. Many a LibDem bar chart has been based on that misleading information. Fine if the polls don’t move, but they were always going to move to the two main parties in this election.

Aberconwy (Lab)
Alyn and Deeside (Lab)
Ashfield (Labour)
Barrow and Furness (Labour)
Bassetlaw (Lab)
Bath (LibDem)
Battersea (Labour)
Beaconsfield (Independent - Dominic Grieve)
Bedford (Lab)
Bermondsey and Old Southwark (Lab)
Birmingham Edgbaston (Lab)
Birmingham Northfields (Lab)
Bishops Auckland (Lab)
Blackpool North (Lab)
Blackpool South (Lab)
Blyth Valley (Lab)
Bolsover (Lab)
Bolton North East (Lab)
Bolton West (Lab)
Bradford South (Lab)
Brecon and Radnorshire (LibDem)
Brentford and Isleworth (Lab)
Bristol North West (Lab)
Burnley (Lab)
Bury North (Lab)
Bury South (Lab)
Calder Valley (Lab)
Camborne and Redruth (Lab)
Canterbury (Lab)
Cardiff North (Lab)
Carlisle (Lab)
Carmarthen West and South (Lab)
Carshalton and Wallington (LibDem)
Cheadle (LibDem)
Chelsea and Fulham (LibDem)
Cheltenham (LibDem)
Chingford and Wood Green (Lab)
Chipping Barnet (Lab)
City of Chester (Lab)
Clwyd West (Lab)
Colne Valley (Lab)
Copeland (Lab)
Corby (Lab)
Crawley (Lab)
Crewe and Nantwich (Lab)
Croydon Central (Lab)
Dagenham and Rainham (Lab)
Darlington (Lab)
Delyn (Lab)
Derby North (Lab)
Dewsbury (Lab)
Don Valley (Lab)
Dudley North (Lab)
East Devon (Independent)
East Worthing and Shoreham (Lab)
Eastbourne (LibDem)
Eastleigh (LibDem)
Enfield Southgate (Lab)
Esher and Walton (LibDem)
Filton and Bradley Stoke (Lab)
Gedling (Lab)
Gower (Lab)
Great Grimsby (Lab)
Guildford (LibDem)
Halifax (Lab)
Harrow East (Lab)
Hastings and Rye (Lab)
Hazel Grove (LibDem)
Hendon (Lab)
High Peak (Lab)
Hyndburn (Lab)
Ipswich (Lab)
Keighley (Lab)
Kingston and Surbiton (LibDem)
Lewes (LibDem)
Lincoln (Lab)
Loughborough (Lab)
Mansfield (Lab)
Middlesbrough South (Lab)
Milton Keynes North (Lab)
Milton Keynes South (Lab)
Montgomeryshire (LibDem)
Morecambe and Lunesdale (Lab)
Moreley and Outwood (Lab)
Newcastle under Lyne (Lab)
North Cornwall (LibDem)
North Devon (LibDem)
North East Derbyshire (Lab)
North Norfolk (LibDem)
Northampton North (Lab)
Northampton South (Lab)
Norwich North (Lab)
Oxford and West Abingdon (LibDem)
Pendle (Lab)
Penistone and Stocksbridge (Lab)
Peterborough (Lab)
Plymouth Moor View (Lab)
Portsmouth South (Lab)
Preseli Pembrokeshire (Lab)
Pudsey (Lab)
Putney (Lab)
Reading East (Lab)
Reading West (Lab)
Richmond Park (LibDem)
Rossendale and Darwen (Lab)
Rother Valley (Lab)
Rushcliffe (Lab)
Scarborough and Whitby (Lab)
Scunthorpe (Lab)
Shipley (Lab)
Shrewsbury and Atcham (Lab)
South Swindon (Lab)
Southampton Itchen (Lab)
Southport (Lab)
St Albans (LibDem)
St Ives (LibDem)
Stevenage (Lab)
Stockton South (Lab)
Stoke-on-Trent North (Lab)
Stoke-on-Trent South (Lab)
Stroud (Lab)
Sutton and Cheam (LibDem)
Telford (Lab)
Thurrock (Lab)
Totnes (LibDem)
Truro and Falmouth (Lab)
Uxbridge and South Ruislip (Lab)
Vale of Clwyd (Lab)
Vale of Glamorgan (Lab)
Wakefield (Lab)
Walsall North (Lab)
Warrington South (Lab)
Warwick and Leamington (Lab)
Watford (Lab)
Weaver Vale (Lab)
Wells (LibDem)
Welwyn Hatfield (Lab)
Westmorland and Lonsdale (LibDem)
Winchester (LibDem)
Wirral West (Lab)
Wolverhampton North East (Lab)
Wolverhampton South West (Lab)
Worcester (Lab)
Workington (Lab)
Wrexham (Lab)
Wycombe (Lab)
York Outer (Lab)

If I have made any mistakes or bad judgements in this list, do let me know.

There are a few marginal seats which are so safe that you get a choice. In Arfon, or Carmarthen East and Dinefwr, you can vote Plaid or Labour without any fear of letting the Tories win. In Ceredigion the same applies between Plaid and the LibDems. In Bermondsey and Old Southwark, or Cambridge, or Leeds North West, or Sheffield Hallam you could vote for Labour or the LibDems.

Then we have eleven difficult seats, all in England, where both Labour and the LibDems have a claim to be the party to vote tactically. It is important to remember here that over the last months the national polls have been moving from LibDems to Labour, so polls or recommendations made in early or even mid November should be treated with caution. However the latest poll of polls suggest Labour are still below their 2017 total, and the LibDems are significantly above, with little movement over the last few days.

One issue I found it hard to assess was the finding in some local polls that Labour voters are more open to tactical voting than Liberal Democrats. I would hope this does not apply to any Liberal Democrat voters who might take any notice of what I say, because if it does they have not been reading my other posts. An argument that should have equal weight is that, if Johnson is not to romp home, the polls need to be a little biased against Labour because they underestimate the youth vote.   

Berwick-upon-Tweed A poll at the end of November had LibDems slightly ahead of Labour (which makes sense given 2017 result and subsequent national movement) but the Tories winning easily. More recent B4B MRP poll puts Labour ahead. TV sites split. So Recommendation Labour

Broxtowe (Lab) Anna Soubry was the Tory candidate, now running as an Independent with the Liberals not standing. But this is a Tory/Lab marginal, so Recommendation Labour

Cities of London and Westminster TV sites are split. A poll on 23 November had Chuka Umunna ahead of Labour. However although B4B are suggesting voting for the LibDems, their polling shows Labour ahead. Jon Worth suggests LibDems. So close to call. Recommendation Labour but watch out for any new information. Postscript - new poll has LibDems slightly ahead, so my Recommendation is now LibDem.

Colchester All the TV sites are recommending Labour, So Recommendation Labour.

Finchley and Golders Green I think the large Jewish vote here makes this impossible for Labour, and the TV sites and local polls agree. So Recommendation LibDem

Kensington Narrowly won by Labour last time. A poll in mid November had LibDems a bit ahead of Labour, but the national polls have moved since then. TV sites split, and B4B are on the fence. Too close to call, so I would go for sitting MP. Recommendation Labour but watch out for any new information. Postscript - new local poll has Labour in the lead. 

St Austell and Newquay Both Labour and LibDems have a strong presence here. B4B’s MRP poll puts Labour ahead here in a Leave voting constituency. Recommendation Labour

These two Cambridgeshire seats are similar.

South Cambridgeshire
South East Cambridgeshire

They are Tory seats where Labour were second, but LibDems had a significant vote as well. B4B’s MRP puts LibDems in front, and the only positive recommendations from TV sites are LibDem. Recommendation LibDem

Wimbledon

Polls for Wimbledon show LibDems ahead, but there has been a movement away from LibDems towards Labour nationally since then. TV sites split. B4B MRP poll has LibDems ahead. Recommendation LibDem

Wokingham

Polls for Wokingham show LibDems ahead, but there has been a movement away from LibDems towards Labour nationally since then. TV sites that make a positive call all say LibDem. B4B MRP poll has LibDems ahead. Recommendation LibDems.

Again happy to be corrected on any factual errors. If you want to swap your vote use https://www.swapmyvote.uk/

Other useful sites

***Postscript: Not a complete list. I should have added "that is happy to see climate change increase unchecked".















Wednesday, 4 December 2019

Some thoughts on Labour's campaign


The importance of this election cannot be overstated. Voters have a choice between re-electing a government that since 2010 has done untold damage to this country and which will be led by someone totally unsuited to be Prime Minister, or giving a minority Labour government a chance to do better for a few years. The fact that the polls suggest the public want more of the same illustrates how close we are to becoming an authoritarian, populist (in the Jan-Werner Müller sense) right wing state where it becomes very difficult for any opposition to break through.

This post looks at some key aspects of Labour's campaign so far, in I hope a helpful fashion.

Tax and spend


One of the dangers Labour faces is that they appear to be promising too much. Voters are skeptical of manifesto promises at the best of times, even though evidence suggests that in the past most manifesto pledges are fulfilled. If you promise so much it is possible voters will just not believe you can do all this.

In contrast the Tory manifesto is positively frugal. But there is a reason for this, and neither Labour nor the Liberal Democrats have emphasized enough why that is. Labour are not used to trumpeting the results of IFS election analysis, but on this occasion they really should. That analysis shows that one economic issue alone dominates the future of the public finances: Brexit. Here is the key chart


What this chart shows is that all these give-aways do not come close to matching the amount of tax we will lose if Johnson keeps his pledge not to extend the transition period. The reason the Tory manifesto is frugal is they cannot afford to do anything with any fiscal cost and implement a hard or no deal Brexit. Both Labour and the Liberal Democrats can afford much more, because they are not planning a hard Brexit. 

Perhaps Labour and the Liberal Democrats are reluctant to talk about this because it is going over ground covered in the referendum, and most Leavers just do not believe the economic consequences of Brexit will be negative. Yet the IFS has considerable credibility, particularly in the media. Furthermore the sparse Tory manifesto is a tactic admission that, whatever they say, the Tories believe the economy will take a hit from Brexit. Labour and the Liberal Democrats should make more of this. 

Protecting minorities


Labour should not just be defensive on charges of antisemitism. These attacks on Labour over the small amount of antisemitism among members distract not only from the more extensive racism in the Tory party and its actions, as Jonathan Lis describes so clearly here. It also distracts from the rise of right wing hate-crime. That the problem is growing is pretty clear. Attacks mostly involve race and sexual orientation, but it includes attacks based on religion: mainly Muslims but also Jews. Commenting on the steady rise in ethnic or religious hate crimes Dr Chris Allen said:
“The statistics show that for the third year in succession, religiously motivated hate crimes have not only increased in number but have again reached record levels. While some try to explain this as a result of better reporting procedures, doing so is over simplistic. From our research at the Centre for Hate Studies, one cannot underestimate the impact of Brexit and the divisive rhetoric employed by politicians and others in the public spaces. Affording permission to hate a whole range of ‘Others’ – especially Muslims and immigrants – it is likely that the upward trajectory of hate crimes numbers will continue for the foreseeable future.”
The police say that the alt-right is the fastest growing terrorist threat in the UK. A third of all terror plots to kill in Britain since 2017 – seven out of 22 – were by those driven by extreme-right causes.There is nothing comparable on the left. One Labour MP was tragically killed by a far-right terrorist during the Brexit campaign, and at least one serious plot against another has subsequently been foiled. The alt-right is well organised at an international level

What has that got to do with this election? The rise of the far right did not come from out of the blue. Campaigns against immigration, and particularly for Brexit, have encouraged racists into the open. So has over the top language used by Brexiters. It has mainstreamed xenophobia, and maxed out on crude nationalism. The media, particularly the right wing media, are happy to give a voice to anti-Muslim writers.

What will the current government, if it wins this election, do when Brexit does not lead to any improvement in people’s lives, and indeed makes them worse? The Tory manifesto has virtually nothing about redistributing opportunities in a more equal way across the country, and Brexit will not help. If the recent past is anything to go by, they will blame immigrants even more than they do now, which will only increase the threat from the far right.

Scotland

Do you remember pictures of Ed Miliband in Alex Salmond’s pocket? These came from the Tories towards the end of the 2015 election, when it became clear that Labour could only win with the SNP’s help. It wasn’t repeated in 2017, in part I suspect because no one on the Tory side believed Labour would do anywhere near well enough to make that attack line effective. I suspect they will not make the same mistake this time around.

The Tory attack was credited by some as helping Cameron get his majority, although I have no idea how true that is. But if Labour is attacked along these lines in a serious way in the final days of the campaign, what should they do? They shouldn’t do what they have done so far, and just say they will not do any deals. This doesn’t work because voters believe maths more than they believe politicians, and they remember the 2010 Coalition talks and the Tory give-away to the DUP.

What Labour should do instead is dig out one of the quotes where Sturgeon has ruled out allowing the Tories back into government and repeat it endlessly. If any interviewer asks why that is relevant simply point out in the most tactful way that the SNP only has bargaining power over Labour if they are prepared to put the Tories in power instead, and they have ruled that out because it would be political suicide for them. Not putting the Tories in power means they have no leverage over Labour.

The last week

The SNP (and of course antisemitism and law & order) are going to be part of the Tory’s lines to take in the final week, and they are likely to throw in a letter from business leaders if they can find enough willing to sign it despite Brexit. What should Labour emphasise? There is an embarrassment of riches to choose from. They could talk about

Revitalising the economy with public investment directed at the regions

Building more social housing

A Final Say on Brexit

Nationalisation and Free Broadband

Education

Revitalising bus services

A Green New Deal

Saving the NHS

And probably much more that I have forgotten about. Talk about them all and there is a danger nothing really hits home. More than ever before there will be an intense battle between the two major parties to get the media to talk about the topic they want talked about. In 2015 the media chose the SNP rather than the NHS which Miliband wanted to be the focus. In hindsight that represented terrible judgement by the media, but importance isn’t their key consideration.

What works best in getting airtime is to present something new. It could be a letter on the Tories climate change policy like this. It could be a new statistic on poor health service performance which should not be hard to find, or some gaffe by a senior Tory (like this). They can always use this. These are also the two obvious issues to focus on in the final day or two.

On climate change you can say that we cannot waste another five years before we take serious action. This is aimed, above all, at getting out Labour’s core younger vote. The NHS will have much greater resonance with the Tory core vote, and might discourage these voters from voting at all. On the morning of the election the newspapers most elderly people read will be full of scare stories about Corbyn, so Labour needs concerns about the safety of the NHS under Johnson, Trump and Brexit to counteract that.




Saturday, 23 November 2019

Is Labour’s economic plan credible?


Labour have a huge set of spending proposals, many of which are unequivocally good like extra spending on the NHS, some are open to debate like abolishing student loans, and only one that I think is foolish (keeping the state pension age at 66). It would be good if all the debate was about these spending pledges. However the standard excuse for why you cannot have these things has always been about paying for them.

There are actually two issues here. The first concerns current spending, around £80 billion each year or about 4% of GDP, and public investment, expected to rise by about £50 billion a year or over 2% of GDP. Labour's current spending increase is financed £ for £ mainly by higher taxes on corporations, capital gains and high earners, while the investment is financed through borrowing. Let me take each in order,

The figure for the increase in current spending and taxes is large. I personally would not call it colossal but it is large. I would argue that reflects the extent of the squeeze we have seen on the public sector since 2010. But what about the argument that it makes the share of government current spending in GDP the highest since the 1970s? A much better comparison is to look at other countries, as the Resolution Foundation has done here.


What Labour’s plans do is to move the UK from the bottom of the league table in terms of the size of the state to somewhere around the middle.

I think this is a key part of the Corbyn project. Under Thatcher, but particularly since Cameron and Osborne, the UK has pretended it can have a state only a bit bigger than the US. But of course the US does not have a universal health service free at the point of delivery. So a key goal of this manifesto is to move us from the bottom to the average in terms of size of states. Another way of putting it is that the UK will become closer to the European average, and further away from the US/Canada level.

The reason why comparisons with the UK’s past are misleading can be summed up with three letters: the NHS. For reasons I have talked about in the past, spending on health has been increasing as a share of GDP since WWII. Every time the Conservatives try to halt this we get growing waiting times. That means that the share of the state in GDP is bound to rise over time, unless there is some offsetting component of public spending. In the 90s there was - lower military spending following the end of the Cold War - but now there is nothing. So the size of the state is bound to rise over time.

Who is going to pay for getting us to the average of European countries. Under Labour’s plans it is the rich and corporations. I think Paul Johnson in his initial TV comments on the manifesto confused two things, and as a result said some things which were very open to misinterpretation. (Initial reactions to complex documents are often hard to get right,) There is no ‘black hole’ in Labour’s costings. The IFS say the corporation tax numbers are realistic, and I know Labour have tried hard to make them so. Johnson’s point is that companies are not people, and some people will pay this tax. The question is who.

On this issue it has to be said that there is no settled view from the empirical evidence. At one end you have the studies presented in a recent IPPR report (p11). This suggests that most of corporation tax changes fall on shareholders. Now some of those shareholders will indeed be pension funds, but that might influence those who hold those funds rather than those who hold none. Other evidence suggests a 50/50 split between shareholders and workers, and some suggest workers end up paying an even greater share. The honest answer is we do not know what the incidence will be.

There also seems to be a legitimate difference of opinion over the longer term impact of higher corporation tax. The IFS say it will reduce investment and therefore profits. My own view is that corporation tax plays a pretty small roll in investment decisions. The most important factor for investment in non-traded goods is the future level of demand, and here Labour’s strategy is very positive. For exporting firms that are more mobile, factors like the skill base, ease of exporting and political stability play a big role, which is why leaving the EU is so costly.

I have no doubt that a few of the tax increases proposed by Labour will not yield as much as they hope. But most analysis misses the elephant in the room, and that is Brexit. I think it is highly likely Brexit will not happen under Labour, and even if it did it would be far less costly than either the Tories plans, or the effects embodied in the OBR base numbers that many people use. For this reason the LibDems have talked about a ‘Remain bonus’ (in the incredible event they could form a majority government). Labour will also get this bonus.

As to the investment part of the programme, the key issue is once again whether the investment is needed and well spent. We should not be talking about whether it is safe to borrow it. There is virtually no chance that this money will not be available at low long term real interest rates. No one should be scared of investing in the future of our economy and the planet, whether its by adding 2% or more to the deficit.

Much more interesting than the ‘do the numbers add up’ question is thinking about the macroeconomic impact of Labour’s plans. If you read some people there will be an immediate run on sterling as capital takes its money out of the UK. Of course if enough people believe this nonsense it might happen, for a day or two. But the one area where Labour are not radical is macroeconomic policy design. We will have Bank of England independence and a solid state of the art fiscal rule. As soon as that becomes clear any depreciation will be more than reversed, and I suspect there will be an appreciation from day 1. Sterling will appreciate on the expectations of an end to a hard Brexit and rising interest rates.

Why will interest rates rise? The large increase in public investment alone represents a large fiscal expansion. So does the increase in current spending, because a lot of the tax increases will come out of personal or corporate savings. A big injection of demand in the economy will require an increase in interest rates to prevent inflation rising, although the appreciation in sterling will provide some temporary cushioning.

An appreciation in sterling is likely to raise the real wage of every worker in this country. Is an increase in interest rates a problem? For some it may be, but of course for every borrower there is also a saver. From a macroeconomic point of view an increase in interest rates is long overdue. It is a sign that that after a wasted decade we are finally getting the economy moving. You thought the economy was already strong? Just more Conservatives lies. 2010 to 2018 has been the weakest period in terms of growth in GDP per head since the 1950s.  

In the unlikely event of a majority Labour government a stimulus of this scale might lead to shortages of skilled labour that would mean some plans may be delayed. More realistically that problem would be less severe in a minority government where some of the manifesto might be blocked by coalition partners. But either way, a Labour government implementing all or the major part of this manifesto will mean the economy as a whole will end a decade of low output and wage growth that has stifled UK innovation and productivity growth.

We should ignore the tired old discourse about whether we can pay for it, and focus on the benefits each individual spending increase or investment project might bring, and on the revitalisation of the economy that this manifesto will generate.