Matthew Lynn

Labour’s nonsense about the cost of the state

Labour's nonsense about the cost of the state
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Less than the cost of a Spotify subscription. Less than Netflix charges you every month. True, you might not be able to get the latest Taylor Swift remix or episodes of Stranger Things, but the Labour Party is trying to reach out to the streaming generation with the claim that the state costs you less than either your music or TV fix. According to its Twitter feed, someone earning just £82,000 a year has to pay only £8.33 a month for ‘free healthcare, free education, properly funding the NHS, lifting children out of poverty, ending the climate crisis, and ending homelessness.’

Wow, that sure sounds like a bargain, although it would have been nice if they could have thrown in Amazon Prime membership and a couple of extra gigabytes of mobile data. Still, it sounds better than even the best Black Friday deal. There is one small problem, however. It is complete nonsense.

Labour’s campaigners are using figures so dodgy that it's hard to believe Alastair Campbell isn’t back in his old job. Of course, the state costs everyone far more than that. Someone earning £82,000 a year will be paying around £1,691 a month in income tax, and £467 in National Insurance – which comes to £2,158 a month. And then of course, assuming they occasionally buy something, they will be paying 20 per cent in VAT. And council tax. And stamp duty if they get around to buying a home or some shares. And duty on beer, wine, spirits and cigarettes. And air passenger duty if they get a flight anywhere, and road tax and fuel duty if they have a car. And capital gains tax if they make any money on their investments, corporation tax if they own a business, and inheritance tax if their parents die. Add it all up, and it comes to a lot more than £8.33. The real figure will vary from person to person. But it will be a somewhere around £2,500 to £3,000 per month. Or in other words, 360 times more than the Labour Party claims. It is hardly a minor difference.

Click through to the small print and it turns out that Labour has slightly covered itself. Although you would hardly guess it from the tweet, the £8.33 figure refers to the increase in tax someone on £82,000 will pay under Labour. But even that turns out to be questionable, to put it mildly. The impact of abolishing the married couple’s allowance will mean anyone with a spouse will pay more. Corporation tax rises will be passed on to consumers in higher prices, and workers in lower wages, as it always is. Investment allowances will be cut and no doubt by year two or three, when the sums stop adding up, there will be more tax rises further down the income scale.

True, there are always misleading claims in any election. But this campaign the Labour Party is taking twisting the truth to new levels. It is trying to persuade everyone the state can provide tons of free stuff at virtually no cost. It simply isn’t true. Anyone with any sense will stick to their Spotify and Netflix subs. Like most private companies, although much demonised by Labour’s hard-left ideologues, they offer a clear and transparent product at a fair price and if you don’t like it you can always cancel. It is a far better deal than Labour’s phoney offer.

Written byMatthew Lynn

Matthew Lynn is a financial columnist and author of ‘Bust: Greece, The Euro and The Sovereign Debt Crisis’ and ‘The Long Depression: The Slump of 2008 to 2031’

Topics in this articlePolitics