General election: Labour’s spending plans backed by more than 160 economists and academics

Corbyn’s party has ‘serious programme’ to deal with Britain’s problems, say leading experts

Ben Chapman
Tuesday 26 November 2019 13:54 GMT
Jeremy Corbyn confirms he will remain neutral in a second Brexit referendum

Labour has received the firm backing of 163 prominent economists who say the party understands the nation’s deep-seated problems and has devised a “serious programme” for dealing with them.

In a letter published in the Financial Times, the group said Labour’s plans to invest in homes, schools and infrastructure make “basic economic sense”, partly because borrowing costs are at a historic low.

They called for a Labour government to urgently reform Britain’s economy which has, for too long, prioritised consumption over investment, short-term financial returns over long-term innovation, rising asset values over rising wages, and deficit reduction over the quality of public services.

The group, which includes professor David Blanchflower, a former member of the Bank of England’s Monetary Policy Committee, and Victoria Chick, emeritus professor of economics at University College London, savaged the record of the Conservative and coalition governments.

“We have had 10 years of near-zero productivity growth,” they wrote.

“Corporate investment has stagnated. Average earnings are still lower than in 2008. A gulf has arisen between London and the South East and the rest of the country. And public services are under intolerable strain – which the economic costs of a hard Brexit would only make worse.”

The government must step in to invest where the private sector has failed to, directing capital towards the rapid decarbonisation of energy, transport, housing, industry and farming, they said.

“As the IMF has acknowledged, when interest payments are low and investment raises economic growth, public debt is sustainable.

“At the same time, we need a serious attempt to raise wages and productivity. A higher minimum wage can help to do this, alongside tighter regulation of the worst practices in the gig economy.”

While some sections of the media have portrayed Jeremy Corbyn’s plans as radical, the 163 economists who signed the letter pointed out that a number of Labour’s proposals are considered orthodox in other wealthy social democratic countries.

Germany has a successful national investment bank, for example, and most European countries – unlike the UK – give workers some form of representation on boards and a stake in their employer.

The UK’s low rate of tax on corporate profits, which the Labour party has pledged to raise back to where it was in 2010, is an “outlier”, the economists wrote.

“As economists, and people who work in various fields of economic policy, we have looked closely at the economic prospectuses of the political parties.

“It seems clear to us that the Labour party has not only understood the deep problems we face, but has devised serious proposals for dealing with them.

“We believe it deserves to form the next government.”

(Statista (Statista)

The letter was published as a report from the Resolution Foundation concluded child poverty would soar to a 60-year high under the Tories’ plans.

The organisation forecast that a government led by Boris Johnson would take the number of children living in relative poverty from 29.6 per cent last year to 24.5 per cent in 2023-24.

By contrast, Labour’s planned £9bn increase in social security spending would lift 550,000 children out of poverty, the think tank said.

It calculated that since the last Labour government, social security spending has been slashed by £34bn more than would otherwise have been the case.

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