The caricaturing of Labour and Tory economic policies is an insult to the public’s intelligence

What if you’re the kind of person who prefers to base a decision about which party to support on something other than tribal political loyalty or content-less labels?

Theresa May's election slogan was 'strong and stable' - but what are the policies behind slogans like this? (Getty)

For those who decide what party to support on the basis of tribal labels, the past week has been a dream of clarification. They’re either on the “socialist” team of Jeremy Corbyn and John McDonnell. Or they’re on the “capitalist” and “free market” team of Theresa May and Philip Hammond. The two major parties have revelled in that distinction between them, making the choice easier than it has been in decades.

But what if you’re the kind of person who prefers to make a decision on something other than tribal political loyalty or content-less labels? What if you’re less interested in ideology than in new ideas? What if you’re interested in fresh policies that might raise living standards and make the economy work better for everyone? What lessons does the past week contain for you?

At its Brighton conference Labour reiterated its plans, first laid out in its June general election manifesto, to nationalise various utilities, such as rail, electricity, water and the Royal Mail. There were also new policies from McDonnell to take contentious PFI (private finance initiative) contracts “in house” and to cap peoples’ credit card debt repayments. In his leader’s speech Corbyn again pledged to “control rents” and to scrap student fees.

The Conservatives’ response at their Manchester conference to Labour’s offer to students was to pledge to freeze student fees at £9,250 and increase the debt repayment earnings threshold for graduates from £21,000 to £25,000. The two other prongs of the Tories’ policy response were a pledge from Hammond for £400m of extra state transport infrastructure investment for the North and Midlands and a £10bn extension of the Government’s Help to Buy subsidy for house buyers.

On tuition fees the Conservative move has been widely dismissed as tinkering. To some extent this is unfair. As the Institute for Fiscal Studies has calculated, the increase in the repayment threshold move will actually save middle earning graduates up to £15,700 in repayments over their lifetime and the cost to the taxpayer will be £2.3bn a year. Yet the fee freeze is an implicit admission that the goal of creating a competitive market in higher education, with a variety of differently priced courses, has simply not materialised and is now unlikely to.

The danger from Labour’s total abolition plan lies less in the cost, some £8bn a year according to the IFS, than the question of what will happen to university funding once the fees disappear. Will Labour guarantee its sustained replacement with money raised from taxpayers? If not, there is a genuine risk these institutions of learning and research will suffer, harming an export powerhouse, a major productivity driver and a font of British soft power in the world.

There may also be less to Labour’s radical renationalisation agenda than meets the eye. The detail of the new PFI policy released by the party pledges only a “review” of contracts and to “look at” taking control of them. And Labour’s plans on rail, as outlined in its manifesto, were to bring train-operating franchises back into public ownership as they expire, rather than a sudden and wholesale renationalisation.

Labour can legitimately point to major failings and a consumer rip-off culture among retail energy companies and regional monopoly water firms. But when it comes to explaining how the state will run these utilities without the serious problems that have attended government control of utilities in the past there has been no substance. Labour offers no ideas, for instance, on a new framework of operational independence for the managers of these services to ensure they are not unduly influenced by government ministers. Labour’s leadership seems to believe that turning the clock back on ownership represents a magic bullet for performance and efficiency.

With rent control it’s also the detail that really matters – and also something we haven’t had from Labour. A loose cap on increases, to prevent the egregious gouging of tenants, could conceivably be beneficial. But tight restrictions could be very damaging if it discourages new rental property supply or dissuades landlords from renovating tenants’ homes.

The idea of interfering in market prices tends to set many on the right foaming at the mouth and ranting about Venezuela. But it really depends on which market one is talking about and the degree of interference. The prices charged by privatised water companies, for instance, are already tightly controlled by the state regulator. There are also more than 50 Conservative MPs (who presumably don’t consider themselves Marxists) demanding that Theresa May deliver on her election pledge to cap energy price rises. The energy regulator already caps the bills of those with pre-payment metres, acknowledging the technological reality that these families cannot switch energy companies to get a lower tariff.

And if Tories truly despise state interference in markets then their own Government’s Help to Buy scheme ought to be driving them wild. With housing supply in the UK so chronically unresponsive to rising prices the strong likelihood is that this loan scheme has pushed up prices, hurting the very first-time buyers it purports to assist.

Perhaps the most economically significant policy divergence between the two parties lies in public investment. Hammond’s £400m of “extra” money for Northern transport this week turns out to have been money that was already announced or is not due to be spent until after 2020. But Labour’s fiscal rule, very sensibly, carves out state capital investment from its deficit targets, allowing some £250bn more public investment spending over the next decade than the Conservatives have pencilled in.

Sensible people can disagree about the merits of all these policies, place different weights on them, and also harbour doubts over the competence of the politicians proposing them. But sensible people will also recognise that the crude caricatures and labels bandied around this week are truly an insult to the public’s intelligence.