NO wonder Jeremy Corbyn doesn’t want a general election just now.
The Government is falling apart before our eyes, but according to the opinion polls Labour is on just 22 per cent of the vote. It is a pathetic showing for a main opposition party at a time when it should be sailing ahead.
Corbyn — branded a chicken by Boris Johnson for blocking a snap election — is doing so much worse than he did in his unexpectedly strong 2017 election campaign.
That’s because voters have seen so much more of this unreconstructed Marxist than they had then. And the more they see, the less they like it.
Gradually it is dawning on the country that the economic policies advanced by Corbyn and his even more left-wing shadow chancellor, John McDonnell, would not so much redistribute national wealth as obliterate it.
Earlier this week McDonnell came up with his latest wheeze for robbing the rich and — as he sees it — giving to the poor.
He promised to give private tenants a “right to buy” their homes at a discount. I can see why this policy might initially seem attractive to young people who have been priced out of the housing market — a group with whom I have a lot of sympathy.
Notionally, the policy may seem little different from Mrs Thatcher’s right to buy which enabled a generation of council house tenants to become homeowners for the first time.
But there is every difference. If private investors were forced to sell their properties at a discount it would crash the housing market. Who would want to buy a property, knowing that the Government could come along at any moment and confiscate it?
VALUE OF PENSIONS WOULD PLUMMET
If you crash the housing market, you crash the mortgage market, too. Private tenants might in theory gain the right to buy their homes, but that will not be much use if banks refuse to lend them any money.
Confiscation is a thread which runs through so much of Labour’s programme.
McDonnell has already announced a plan to snatch ten per cent of the shares of all private companies with more than 250 employees.
He wants to put these shares into what he calls an inclusive ownership fund, invested on behalf of the workers.
The workers shouldn’t get too excited, though. They would be allowed a maximum of £500 a year in dividends — and that only if their company was able to pay a dividend.
Meanwhile, the value of ordinary people’s pensions would plummet by far more than £500. According to an analysis by law firm Clifford Chance, workers would gain £1billion — but overall, investors would lose £300billion as share values crashed.
Labour’s plan would dilute a company’s shares, effectively confiscating wealth from existing shareholders.
Corbyn and McDonnell promote a fantasy that shareholders are a bunch of capitalist fatcats.
Yet the reality is that almost everyone who works in the private sector is indirectly a shareholder. Share investments form the bedrock of the pension funds on which we will rely in old age.
Even if McDonnell was only helping himself to ten per cent of company shares initially, he could be sure to come back for more when his tax revenues failed to match his vast spending plans.
These include spending £306billion nationalising utility companies — that is £185billion for gas and electricity firms, £86billion for water firms, £30billion to buy out Private Finance Initiative (PFI) contracts for schools and hospitals and £4.5billion for the Royal Mail.
Labour claims this will save householders an average of £220 a year on the basis that these firms will no longer have to pay shareholders.
But he overlooks the poor record of nationalised industry. Lower efficiency could well lead to higher prices.
How is McDonnell going to bring in the revenue for his massive spending plans?
He seems to live under the delusion that if you raise taxes by x per cent, revenue, too, will rise by x per cent.
Thus he claimed, in Labour’s 2017 manifesto, that reversing corporation tax cuts would raise £19billion. But tax doesn’t work like that. In fact, cuts to corporation tax made by George Osborne increased revenue as multinationals diverted profits to, rather than away from, Britain.
So it is perverse for Labour to claim jacking up rates again will raise extra money. On the contrary, McDonnell would likely end up with LESS revenue.
As for individuals, McDonnell has promised to increase income tax for the top ten per cent of earners, which means anyone on more than £80,000 a year. The top rate of income tax would go up to 50 per cent.
But the real damage could come from a wealth tax — an annual levy on the value of homes, shares, bonds and all other assets.
Although not yet Labour party policy, McDonnell has previously expressed approval for a whopping 20 per cent levy on the wealthiest ten per cent of the population.
‘WEALTH TAX WOULD HIT ORDINARY PEOPLE’
It wouldn’t be the super-wealthy who paid — they would quickly be off.
In the 1970s, a high-tax Labour government caused a brain drain which led to net outwards migration of 500,000 people over a few years.
It would be worse now, as wealthy individuals and businesses are much more mobile compared with the 1970s.
The real victims of a wealth tax would be ordinary people who have spent years saving to buy a home and build themselves a half-decent pension. To qualify for McDonnell’s wealth tax you would only need to own a home, and to have a pension with a combined value of £380,000.
With Labour on just 22 per cent in the polls, of course, the nightmare of a Corbyn government — or at least a Corbyn majority government — is at the moment unlikely.
But no one should be complacent.
We could all too easily end up with a Labour-SNP coalition with the Scottish Nationalists happy to inflict pain on English, Welsh and Northern Irish voters in return for the promise of a second independence referendum.
Over the past couple of years we have had endless attempts to blame Brexit for every economic woe. Actually, over that period, employment has risen to an all-time high and the economy, except for the last quarter, has grown.
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But international investors, have been shy of Britain.
The uncertainty over Brexit doesn’t help but talk to wealth managers and they tell you a very different story.
What really strikes terror into investors is the prospect of Jeremy Corbyn arriving at the door to No10.
- Ross Clark is a columnist for The Spectator.
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