‘Corbynomics’, aka Jeremy Corbyn’s plans for the UK economy, has entered the Westminster lexicon today. It appears to consist of the work primarily of one man, Richard Murphy. The director of TaxResearch UK, who advises various charities and trade unions on tax matters, has taken credit for the handful of economic policies Corbyn has announced so far, which have been attacked by Labour’s shadow chancellor Chris Leslie today.
Jeremy Corbyn has acknowledged that I am the author of much of his economic policy. Not a single journalist has called me about it
— Richard Murphy (@RichardJMurphy) August 3, 2015
In case you missed the birth of Corbynomics two weeks ago — the launch event was closed to the media — here is a summary of what we know so far. The details of these proposals have come from Murphy’s blog and Corbyn’s pamphlet:
1. Quantitative easing for people
This is essentially letting the Bank of England print money, which would be used for investment into public services — something Leslie thinks would lead to high levels of inflation:
‘One option would be for the Bank of England to be given a new mandate to upgrade our economy to invest in new large scale housing, energy, transport and digital projects: Quantitative easing for people instead of banks. Richard Murphy has been one of many economists making that case.’
2. Strip out tax reliefs and subsidies to the corporate sector
Another one of Murphy’s idea that Corbyn has borrowed, which amounts to increasing taxes for businesses:
‘Another option would be to strip out some of the huge tax reliefs and subsidies on offer to the corporate sector. These amount to £93 billion a year – money which would be better used in direct public investment, which in turn would give a stimulus to private sector supply chains.’
In his speech last week, Corbyn explained this a little more about why the money is needed:
‘You just cannot cut your way to prosperity so Britain needs a publicly-led expansion and reconstruction of the economy, with a big rise in investment levels. Under these plans Labour 2020 will make large reductions in the £93 billion of corporate tax relief and subsidies.’
3. Collect £120 billion in ‘missing’ tax revenues
Murphy’s research into ‘fair tax’ has resulted these proposals for a ‘progressive tax system’, which concludes the government is missing is ‘missing out’ on the following revenues (all figures are approximate): £20bn in tax debt, £20bn in tax avoidance and £80bn in tax evasion. Corbyn suggests this can be solved by:
- The introduction of a proper anti-avoidance rule into UK tax law.
- The aim of country-by-country reporting for multinational corporations.
- Reform of small business taxation to discourage avoidance and tackle tax evasion.
- Enforce proper regulation of companies in the UK to ensure that they file their accounts and tax returns and pay the taxes that they owe.
- Lastly, and most importantly, a reversal of the cuts to staff in HMRC and at Companies House, taking on more staff at both, to ensure that HMRC can collect the taxes the country so badly needs.
Murphy has written a long response to Leslie’s criticisms, explaining why he has misunderstood Corbynomics. On the World at One, Murphy argued that his ideas have ‘already gone mainstream in Europe’:
‘It is realised that without government action, the investment our economy needs to get people back to work in well-paid jobs and paying decent levels of tax will not happen.’
Corbyn will be announcing more details of his ‘2020 vision’ this evening, fleshing out more of these economic ideas. But the question is whether this will help or hinder his popularity. According to William Hill, the odds of him winning the leadership contest are slipping: he’s now in 6/4, while Burnham has moved up to first place on 11/8, Cooper on 11/4 and Kendall on 50/1.