With the polls seemingly reluctant to move in their favour, Labour have set out their stall very clearly: they hope to win the election by pledging perhaps the biggest increase in government spending in living memory. Billions have been promised for students and the health service. Under Corbyn, there will be free broadband for all, free personal care for the elderly and the planned increase in the state pension age will be scrapped. Economists dismiss the reasons why Britain couldn't possibly afford such measures without a dramatic hike in tax. But it would be a mistake to ignore the very real attraction to some of Corbynomics.
Early signs suggest Labour’s manifesto spending pledges have done little to shift opinion polls. This almost certainly explains the sudden post-manifesto offer to compensate women born in the 1950s who have been most affected by the way equalisation of the pension age was implemented. The fact that the £58 billion cost of the move was not mentioned in Labour’s “fully costed” manifesto is likely to do nothing to alleviate the suspicion among voters that Labour’s spending plans are simply not credible.
That does not mean, however, that the general thrust of Labour’s economic approach will prove to be unpopular with key sections of the electorate. Part of the appeal to leave voters in 2016 was the EU being seen to be on the side of crony capitalism and big business, a feeling reinforced by the huge sums of money big banks gave to the remain side. Much of Corbyn’s economic pitch this time around is designed to tap into these feelings and to target parts of the electorate who feel their communities have been left behind.
For example, at the heart of Corbynomics is bringing key parts of the country’s economic infrastructure back into public ownership. The 2017 pledge to renationalise the railways was popular with a public fed up with high ticket prices and poor service under private ownership. Corbyn’s advisors have taken notice of this and extended the scope of nationalisation to energy, water, the Royal Mail and, most notably, broadband.
Voters may be sceptical about the credibility of Labour’s spending plans but the targeting of inefficient big businesses, who are often more accountable to shareholders based overseas than to the their customers, is likely to be a big electoral plus.
In a similar vein, the newest proposals to intervene in the rental market will resonate for people struggling at the margins of society and who feel the existing government does little to stand up for them against the forces of business.
On the other side of the coin, plans to fund Labour’s spending ambitions by squeezing corporations rather than via personal taxation are also likely to cut through to the electorate. Putting to one side the question of whether higher tax rates for business will actually result in higher revenue rather than encouraging more corporations taxes to divest from the UK, the impression that businesses will be forced to fund a bigger share of public spending is likely to prove popular with fed-up voters.
More risky is Labour’s proposal to lower the threshold for inheritance tax. It is difficult to overstate how upset people get at the thought of the government getting their hands on hard-earned money (on which tax has already been paid once) which has been saved with the intention of giving your children a better start in life.
The key to electoral success of Corbynomics though, is in diverting focus away from the Brexit question. Corbyn’s approach to Brexit is toxic amongst large sections of traditional Labour voters, especially in the Midlands and the North. That is why Labour strategists will be quite happy with headlines proclaiming that Corbyn is “neutral” on Brexit.
At one level, of course this is nonsense. Corbyn’s proposal of holding another referendum but without a realistic leave option on the ballot is anything but neutral. In effect it is no different to the Lib Dems' proposal of cancelling Brexit altogether. However, the shiny packaging of a “neutral” approach to Brexit may well be enough to tempt a good number of voters who favour leaving the EU but who are also attracted to Labour’s economic pitch back into the fold.
There is a deeper irony inherent in Labour’s Brexit-economic policy axis. Many of their economic proposals will be difficult, if not impossible, to implement if the UK stays subject to EU single market and state aid rules. Oddly, Corbyn’s economic pitch would be much more viable under Boris’s Brexit policy with its ultimate destination of a looser UK-EU trade agreement.
Many voters in working-class areas who want Brexit to happen will be attracted to parts of the Labour manifesto which promise to shift the balance away from big business. The danger for Labour is if these voters realise that Corbyn coming into power will not only mean that Brexit does not happen in any meaningful way, but as a direct result of staying under EU regulation, many of his economic promises will also come to nothing.
David Paton is professor of industrial economics at Nottingham University Business School. He tweets at @cricketwyvern