The consequence of last week’s leak of a draft Labour manifesto is that all eyes today have fallen on what was missing from the draft: the costings.
There is a very big assumption in Labour’s figures: that when you raise taxes you get all the extra revenue that you would expect to receive. The reality, of course, is that when you raise taxes you change people’s behaviour which might lead to them paying less tax. With a 45 per cent income tax levy above £80,000 and a 50 per cent rate over £123,000 higher rate taxpayers would have a greater incentive to find some way of avoiding tax – either by converting income into capital gains, shovelling more into their pensions – or by scarpering abroad. It is therefore rash to assume that these tax measures will bring in an extra £6.4 billion.
Even more doubtful is whether jacking up corporation tax would bring in an eyebrow-raising extra £19.4 billion. As for the £6.5 billion supposedly coming from anti-tax avoidance measures, good luck with them. Every chancellor tends to over-estimate how much tax can be raised from that quarter.
But disregarding these problems, does Labour’s manifesto really look like one to cheer the hearts of old socialists? This is a document which would deeply disappoint Robin Hood because while there are new tax measures aimed at the rich, many of the spending commitments would also disproportionately benefit the wealthy.
The single most expensive measure in Labour’s spending plans is abolishing university tuition fees – at a cost of £11.2 billion a year, more than twice the sum that Labour is planning to put into the NHS. The end of tuition fees would help some poor students, but it would help middle-class families more for the simple reason that their children are more likely to go to university. The same is true of the £300 million Labour is proposing to spend uprating the state pensions of Britons living overseas (along with other pension changes). This is surely a relatively wealthy, middle-class group of people.
Labour has earmarked another £6.1 billion for a school funding, which includes provision for free school meals for all pupils. Given that children from local income families already qualify for free school meals, this is a benefit which will go disproportionately to the well-off. As for lifting the pay cap on the public sector, much of the £4.0 billion allotted for this will surely disappear into the pockets of senior staff, who have a long record of awarding themselves fat pay rises while suppressing the wages of junior staff.
Labour will hose you – that is the message to the rich from Labour’s manifesto. But don’t worry too much: a fair wad of the extra tax you will be paying will find its way back into your pockets somehow. Corbyn isn’t so much interested in wealth redistribution as ensuring that we all have our fingers in the state pie.
Listen to Jeremy Corbyn's full speech: