It’s not news that the Labour Party under Jeremy Corbyn, an unreconstructed Trotskyite, is far more radically left-leaning than under any of his predecessors — but what’s not as well understood is the actual financial impact of the sweeping reinvention of the British economy and society envisioned by Corbyn and his hardline inner circle, including shadow chancellor John McDonnell. Until now, that is: with it looking increasingly certain that Conservative Prime Minister Boris Johnson is planning a snap election in the next few months, the Financial Times partnered with law firm Clifford Chance to assess some of the costs associated with Labour’s bolder proposals. No surprise, the sums involved are quite considerable.
Most spectacularly, Labour’s proposal to force companies with more than 250 employees — including foreign owned businesses — to transfer 10% of their shares to workers would cost these corporations a sweet £300 billion, FT and Clifford Chance calculate. It would also constitute a “stealth tax” since the Exchequer would keep all dividend payments from transferred shares over £500 per person.
Labour also has 2.6 million British landlords in its sights, with a proposal extending the “right to buy” for renters from council flats to privately owned property, with prices to be set by a government mechanism explicitly separate from the market.
McDonnell supports the creation of a National Investment Bank to democratize banking and investment, requiring £250 billion of capital, as well as a financial transactions tax raising £5 billion per year.
Labour is additionally proposing a sweeping nationalisation (or re-nationalisation) of British rail, water, electricity, and postal services.
Also under consideration are a four-day week, major increase in minimum wage, executive pay caps for any company accepting government contracts, abolishing bonuses for bankers, and a universal basic income.