A policy guide to what we can expect from Labour under Jeremy Corbyn
On 12th September, the Labour party overwhelmingly chose Jeremy Corbyn as its new leader. Policy Exchange has taken an in-depth look at the Labour party’s policy positions on a number of key issues relevant to our own research areas.
Economic and Financial Policy
It is undoubtedly the case that Jeremy Corbyn won the leadership elections on a platform for “change”, challenging the government’s plans to reduce the size of the state. Since taking control of the Party, Corbyn and his senior team have been treading a fine line between continuing their radical rhetoric and trying to demonstrate economic credibility – no easy task.
Appointing the hard left John McDonnell as Shadow Chancellor was a clear statement of intent from Corbyn. This was followed by a speech to the TUC conference that made it clear that a Corbyn Labour Party would be closely aligned with the highly combative trade union leadership teams.
As his first policy announcement, John McDonnell has committed Labour to raising the minimum wage to £10 an hour. While the rate is not significantly higher than the headline rate the Conservatives have pledged to raise the minimum wage to, it appears that this pledge is likely to apply to workers of all ages – including apprentices, who are at much greater risk of unemployment. (For reference, the current apprentice rate is just £2.73 an hour.) The scale of this change should not be underestimated.
Elsewhere, McDonnell seemed to row back on previous proposals such as a 60% or even 70% higher rate of income tax, claiming on Question Time that he only wanted to return the higher rate to 50%. Then again, he also attacked the lowering of corporation tax from 20% to 18% – despite Labour earlier that same day supporting the change in Public Bill Committee, and indeed the tax lock pledge not to raise VAT or income tax throughout the campaign.
This seems a little in opposition to proposals by the Corbyn campaign only one month ago that there should be an, in effect, top rate of 100% or “maximum wage”. Other labour market policies proposed in the campaign included: loose commitments to help the self-employed more; the banning of zero hours contracts, replaced by the possibility of guaranteed minimum hours; and the extension of equal pay audits to companies with more than 25 employees.
On financial policy, the Shadow Chancellor has touted further separating banks’ retail and investment arms, the promotion of different kinds of company ownership, and the introduction of a financial transactions tax. Some of his other ideas include the use of capital controls should City firms not play ball with rule changes, and the suggestion that the City of London Corporation be abolished.
Again, time will tell as to Labour’s policy direction, but perhaps one of the best indicators of how John McDonnell views the City (and corporates in general) is the proposal for “legislation to replace short-term shareholder value with long-term sustainable economic and social responsibilities as the prime objective of companies”.
Perhaps one of the biggest factors that will affect the future development of policy is internal party debate over just how workable some of these proposals are. For all the hype over “people’s quantitative easing”, even the policy’s supporters only see a role for it during a severe recession – and the British economy is currently doing rather well.
Even under Ed Miliband the Labour Party opposed the Government’s regional devolution programme. We should however expect this opposition to strengthen under Corbyn’s leadership. During his campaign he criticised the Northern Powerhouse idea, arguing that the devolution of budgets to Local Authorities without accompanying tax-raising powers leaves Local Authorities without the means to reject austerity.
The Labour Party thus finds itself in a peculiar position, as regional leaders strongly support the idea, even if it means compromising over government stipulations on Metro Mayors. If Labour MPs actively try to defeat the Government’s Cities and Devolution Bill, rather than make amendments to improve it, we might expect to see a rift to appear between the regional and national Labour Party.
Corbyn’s team would prefer a constitutional convention to find the best way to govern the North of England. The idea of regional assemblies, similar to Scotland, have been floated. This seems a bit idealistic: public opinion on regional assemblies does not appear to have shifted considerably since the John Prescott tried to introduce them in the New Labour era. The Labour leadership does, however, seem interested in the idea of moving more public institutions like the Houses of Parliament and Whitehall departments outside of London. Plans for reviving the regional economies are heavily predicated on the creation of a National Investment Bank, stimulating investment in infrastructure and housing. Corbyn is also sympathetic to the creation of regional state-owned banks to finance local business activity, similar to the Landesbank in Germany.
The key pillar of Corbyn’s housing policy is permitting councils to be builders and providers of affordable housing typically for social rent. This would also see a relaxation of the local authority borrowing caps (i.e. public borrowing) to invest in council housing. Other key policies include bringing back the spare room subsidy and rent controls for the private rented sector – with rents linked to local average earnings – and longer term tenancies.
Not many of Corbyn’s policies on transport are actually new. Corbyn would like to see Transport for London style powers for Local Authorities so that they can regulate their own rail, tram and bus networks and make their own decisions about charges for parking and congestion. Bringing the railways under explicit public ownership is a new policy but one with a very long history. The new Labour leadership envisages a more co-operative model of public ownership involving industry, government, passengers and workers. Both Corbyn and John McDonnell oppose expansion to Heathrow although the new Shadow Transport Secretary has not made her views public on the issue.
Energy and Climate Change
The election of Corbyn as leader has significant implications in terms of the party’s stance on energy and the environment, with Corbyn already setting out a “Protecting our Planet” manifesto on these issues. Perhaps the most significant is his commitment to “socialise our energy supply” – bringing large energy companies and the National Grid into public ownership or control, and increasing state involvement in the energy sector. Other manifesto commitments include a focus on international climate change leadership; promotion of decentralised energy (renewable and community owned) and energy efficiency; protection of ecosystems; and stronger action on air pollution. Corbyn has somewhat contradictory views on fossil fuels: on the one hand supporting a reopening of UK coal mines, and on the other hand supporting a ban on fracking, an end to fossil fuel extraction and a phase out of coal power stations. He is also opposed to new nuclear generation.
Corbyn announced that Lucy Powell will take the Shadow Education brief. As Shadow Childcare Minister during the previous government her approach was pragmatic, and focused on both the well being of children and on the economic benefits of parents being in work. She supported extending primary school opening hours to provide wrap around childcare, as well as focusing on the dual importance of value for money and quality of provision in early years settings and Sure Start centres.
This week, Powell made her first House of Commons appearance in the role. She spoke in opposition to the government’s Education and Adoption Bill which will lead to a significant increase in Academy numbers. Since being in opposition, Labour’s policy has been to continue to support the Academies programme, while giving particular policy attention to improving teacher quality or changing curriculum. Powell has made it clear that support for Academies will no longer be forthcoming. She is aligned with Corbyn in arguing that the Academies and Free Schools programme should stop and that all schools should be under the control of Local Authorities.
Corbyn’s diametric opposition to selective schools is likely to become another position which Powell advocates, and Labour may well adopt a policy that no state school should be able to select on ability. Alongside this, as universal free childcare and expanding vocational education are likely to be on her agenda, she will also almost certainly be opposed to any further cuts to early years or 16 – 18 education in the Spending Review. Outside of Powell’s brief, at the other end of education, Corbyn wants to scrap university tuition fees and build a National Education Service for lifelong learning. He is likely to push ahead with both of these; however, the biggest issue will be how they are funded.