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Over the next week, the Financial Times will be examining the impact of a prospective Corbyn government on the UK economy as memories of the financial crisis have reinforced the public’s perception of a system rigged against them – despite the ongoing exposures of the excesses of the financial services industry.
FT: “A Corbyn government promises a genuine revolution in the British economy”
It looks at the plans already announced, describing them as “breathtaking in scope”. These include:
- the nationalisation of rail, water, mail and electricity distribution companies,
- significantly higher taxes on the rich,
- the transfer of 10% of shares in every big company to workers (with a maximum annual £500 dividend,
- reform of tenant rights, including a “right to buy” for private tenants,
- borrowing to fund public investment.
- a four-day week,
- pay caps on executives,
- an end to City bonuses,
- a universal basic income,
- £250bn to fund a National Investment Bank to build 1m social homes,
- an increase in the minimum wage,
- higher income tax for those earning over £80,000,
- a new “excessive pay levy”,
- a £5bn-a-year financial transactions tax,
- a corporation tax rise from 19p to 26p in the pound,
- the break-up of the Big Four auditors,
- a ban on all share options and golden handshakes,
- curbs on the voting rights of short-term shareholders,
- the public naming of all workers on over £150,000 a year,
- the nationalisation of parts of the struggling steel industry,
- opposition to the Trident nuclear deterrent and
- delisting of companies that fail to meet environmental criteria from the London Stock Exchange.
Mr Corbyn’s supporters see rebalancing of control from shareholders, landlords and other vested interests to workers, consumers and tenants, “reorienting an economy that works for those at the top but not for the young, the unemployed or those struggling on zero-hours contracts” as “fairness”. But to political opponents, high-earners, business owners, investors and landlords, it is alarming.
On September 1st, the FT declared: “A Corbyn government is no longer a remote prospect. With UK politics scrambled by Brexit, the landscape is unrecognisable”.
Lord David Willetts, a former Conservative cabinet minister who now chairs the Resolution Foundation think-tank, comments: “Brexit is so radical and such a massive gamble, breaking a 40-year trading arrangement, that it’s hard for Tories to say to people ‘don’t gamble on Labour”. They just think: ‘who’s the gambler?’”
Brexit as an opportunity: in his speech to the 2018 Labour conference, Shadow Chancellor John Donnell noted: “The greater the mess we inherit, the more radical we have to be.”
Lord Bob Kerslake, former head of the civil service, who is helping Labour to prepare for government, believes Labour’s manifesto pledges are indeed ‘radical’ but can be delivered. He realises that there are questions about how much of the Corbyn-McDonnell policy platform can be carried out if there is a minority government and stresses the need to make significant progress on it in a first term.
As the FT wrote: “Polling data show that voters currently evince little enthusiasm for a Corbyn government. And yet the existential shock of Brexit, combined with his appeal to younger voters and families fatigued by nearly a decade of austerity, could still deliver the unexpected”.
Tags: 2008 financial crisis, Brexit, consumers, Golden handshakes, Jeremy Corbyn, John McDonnell, landlords, Lord Kerslake, Minimum wage, shareholders, steel industry, taxes, tenants, Trident, workers
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In the FT some time ago, Costa Vayenas presented the admirable Swiss political system:
- The country has no prime minister.
- There are no full-time members of parliament.
- The budget has to be balanced over the cycle.
- Taxes cannot be raised without the people’s direct consent (ballot papers, accompanied by return envelopes, are posted to the voter’s home).
Swiss citizens have become increasingly unhappy as wages of executives balloon while those of low-skilled workers lag. A referendum in March this year to give shareholders a binding say over executive pay and ban golden handshakes and parachutes was overwhelmingly backed by voters. Read more here.
The more radical “1:12 initiative for fair pay,” brought forward by the youth wing of the Social Democrats (JUSO), was not so successful.
Reuters reported on November 24th that 66% of Swiss voters rejected the proposal to cap salaries, as industry leaders in Switzerland, which has some of the world’s biggest companies, warned that the measure could harm the country’s economy by restricting the ability of firms to hire skilled staff, forcing firms to decamp abroad, and leading to a shortfall in social security contributions and higher taxes.
JUSO President David Roth told Reuters:
“Of course we are disappointed. But I also believe that we have an achievement nonetheless. A year ago, opponents were defending high salaries. Today no-one is doing that. No-one in Swiss politics would dare say that million salaries are justified.”
Other initiatives will be put to Swiss voters to try to address the widening income gap in the country – one being a vote on whether to introduce a basic living wage of $2,800 per month from the state.