If John McDonnell thinks he can pay for all of his fantasy pledges then he is utterly deluded

The spending he promises may be desirable, but how he will fund it all is yet to be scrutinised

John Rentoul@JohnRentoul
Monday 23 September 2019 20:22
John McDonnell promises to reduce working week to 32-hours within a decade under Labour government

John McDonnell is the Martin Luther of his day. He set out one of the most ambitious programmes of change for a party of potential government in Britain in his speech today.

“That means completely transforming the way our economy works,” he told the Labour conference in Brighton. That has been said before, not just by him but by Ed Miliband and probably by Tony Blair too.

But today’s speech was different in the scope, scale and detail of the changes he proposed. And it was striking for its conclusion. “I believe our time is coming,” he said. He set out his vision of the “new world” of the future, ending homelessness, poverty and climate change. “And when they ask, ‘How did you do that?’ you can tell them: ‘I supported Labour; I joined Labour; I voted for Jeremy Corbyn. That’s how.’”

In other words, salvation by faith alone.

The principles of the new economy are clear, if broad brush: “Equality through democracy.” But the precise mechanisms are not so obvious.

McDonnell promised to “reduce average full-time hours to 32 a week”. That would not be achieved by legislating for a 32-hour working week, his advisers explained to journalists afterwards. It would be achieved by appointing a quango called the Working Time Commission, modelled on the Low Pay Commission, that would recommend things such as how many bank holidays the country could afford.

The new world also includes strong trade unions and collective bargaining, which will “allow unions and employers to decide together how best to reduce hours for their sector”, which would be set out in “legally binding sectoral agreements”.

But what if workers democratically decided that they would rather work longer hours for higher pay? McDonnell crashed through the contradictions in his speech. He went straight from the shorter “average” working week to Labour’s plan to ban zero-hour contracts – that is, his plan to increase the working week for people who want to work longer hours.

Most of the other elements of the shadow chancellor’s vision of paradise were more credible in the sense that they could be delivered by the application of large sums of money.

McDonnell had an ingenious ploy to fend off the utopians at his door lobbying for a universal basic income, which was to launch a document about “Universal Basic Services”. A plan for basic services free at the point of need, extending the principle of the NHS to housing, culture and recreation, could be easier to define and deliver than one for a basic income paid to all citizens, but it is still potentially expensive.

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The more specific the New Jerusalem became, however, the more expensive it was. Labour’s plan for social care – free personal care for over-65s – is wholly admirable, and the promise to pay for it out of general taxation, rather than a complex state-run insurance scheme, is sensible.

But it wasn’t in Labour’s manifesto last time. In 2017 the party promised to spend an extra £2bn a year on social care; now it seems to be committed to an extra £20bn a year. Some of that might be recouped from lower NHS spending, but not much.

This week, the Labour Party has been spending money like there is no tomorrow. The last manifesto set out increases in public spending adding up to £50bn a year – and the party forgot to include the cost of reversing cuts in working tax credits. That’s several billion; now there’s several billion more for free prescriptions; plus the social care promises on top.

All of the spending is desirable, but the religion of socialism is the language of priorities, as Nye Bevan said. The means for raising the money to pay for McDonnell’s plans were not well scrutinised at the last election, and the means for raising the even greater sums now have not even been set out yet.

How is it to be done? By faith alone. By believing in Jeremy Corbyn. That’s how.

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