Forget the Past, I Struggle to Trust Labour With the Future

They say our economy and system of government are failing people. But it strikes me that the party, which according to poles has 34% of the public vote, have an economic plan that might 'fail people' in just the same way.

When I was young and I'd done something I regretted, my father would tell me that the past is the past and what matters is what I do from now on. In the same way, this election should be judged upon plans for the next five years. On what parties intend to do. The question we should be asking our prospective leaders is how they will ensure the drudgery of recession is a past time.

I've found myself in a place where I am either right about one thing, that Labour's economic rule is something we ought to share concern for, or that I need a swift change of university degree. They say our economy and system of government are failing people. But it strikes me that the party, which according to poles has 34% of the public vote, have an economic plan that might 'fail people' in just the same way.

Mr Miliband's party state they will ensure that "we live within our means" if they get into power. Except Labour's plan to balance the books doesn't add up. I was excited when I heard about Andrew Neil's 'Paxo' interview with Lucy Powell on the Sunday Politics, because I thought I'd have an occasion for clarity. I'd hoped to understand Labour's fiscal policy. Lucy duly explained that Labour has a three-pronged approach and identified cuts in ministerial pay and a freeze in child benefits. But she was left struggling for words when an analysis by the Sunday Politics figured that the total amount of cuts under labour would amount to £1bn, when the deficit she'd be intending to cut stood at around 5.8% of GDP in 2013. Lucy protested, she maintained her party line, but her defence was weak. Partly because she couldn't say what her proposed cuts would add up to.

She did confirm that Labour proposes only one tax change though. I find it one of their most disappointing ideas. Over the past year, a Marx-esque wave of anti-establishment, anti-rich feeling has washed over the country, ridden gleefully by the likes of Russell Brand. Owen Jones even wrote a book about it. Banker's bonuses', politician's expenses and the property buying of Russian Oligarchs have created a class tension, which Labour has caught on to. They've decided to increase the top rate of tax.

I worry they are playing a game of populism with issues that will affect people's lives. The problem isn't that it targets the rich, the recession should be burdened across both shoulders, rich and poor, but evidence doesn't suggest it will raise revenue. The 50p tax trial was introduced at the end of the labour premiership in 2010. George Osborne scrapped the tax in his 2012 budget and HMRC income tax figures showed that when the rate was cut revenues increased because the rich resided in the UK to pay tax, and there was less incentive for 'creative accounting'. Many claimed their income instead of using financial tax channels. It's true that the same trend may not reflect in 2015, but the Institute for Fiscal Studies added that this policy was likely to raise "little revenue and make, at best, a marginal contribution". It seems bizarre to introduce a policy that sounds good but will do us harm.

It all goes back to 1962, doesn't it? That was the year that John F Kennedy labelled tax revenues rising with a cut in rates as 'the paradoxical truth'. This truth that played out in 2013 has not been fully confronted. The Labour party maintain their policy will raise more tax, but don't explain why this time will be different.

Another problem that has been continually flagged is the issue of London rents. It is the bane for Londoners living in "Generation Rent" and has gone unsolved under Cameron's government. Labour has responded with socialist panache. Rent controls alongside house building are the remedy, they say.

The latter proposal rightly tackles a supply-side issue in the market, though the former is mired in controversy. The idea of fixing housing markets is historically discredited. The US experience in New York and Cambridge found it reduced investment. This is in line with a report from the House of Commons in 2013 which stated that historically rent control has been "widely identified" as a factor that reduces investment, a dire need for the UK housing market, due to its "effect of reducing possible rent returns". Labour will build 200,000 public houses by 2020 in an effort to reduce rents and reduce houses prices. Sadly, their efforts may be in vain if they suffer a fall in the rate of supply from the private sector, meaning the impact on prices could mitigate if demand keeps increasing at its current rate.

But the Shadow Chancellor, at the head of these policies, is no fool. Mr Balls has studied at the most prestigious institutions in the world and he appreciates that politics is often more about image than reason. Policies that are friendly on the surface appear attractive to voters. Another example is in oil, where labour proposes a freeze on energy bills to aid, cue the cliché, working families. The policy runs against the grain of the free market, once again with that tinge of collectivism.

It's likely that the loser in fixing this market will be the consumer. Since the 18th century, it has been accepted that price falls are often the result of improvements in technology rather then intervention, as better technology correlates with increased efficiency. The danger is that the market will zombify as energy providers take a hit on their margin and cut budgets for research and development rather than let stakeholders suffer. In the longer term, this will lead to higher prices as the market's dynamism suffers.

Tony Blair does not have a great reputation in politics. The Iraq War tainted his legacy, but rebranding Labour with a 'business-like' approach was the right move for his party. It must be remembered that the Blair-Brown economy achieved the longest uninterrupted period of growth in 200 years. He also showed that bar a shortcoming in the international banking system, Labour could effectively manage the economy. This was because it placed the right economic decisions, dragging old Labour into the modern era, above party principle.

The shadow cabinet would do well to remember this. Their manifesto appears to place political motivation above economic rationale, and yet this is a party that has a real shot of getting into power. The figures don't add up. 100 business leaders declared their fear of the party. There are major holes in their manifesto. For those intending to vote red in May, this should be a point of caution.


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