views

Labour and Liberals move to the left

Allister Heath
NEW Labour isn’t dead: about that Alistair Darling could not have been any more emphatic in his interview with City A.M. today. We asked him whether Labour’s manifesto – with its 50p tax, restrictions on hostile takeover bids, increases in regulation and no clear plan to reduce the size of the state – should be seen as the most socialist since 1992; he disagreed passionately. Instead, he was at pains to claim that he was aware of the importance of private enterprise, the City and the financial services industry.

It is a fascinating interview; do take a look at the full piece on p21. It is clear that Darling is an intelligent and decent man who has blocked some of the more damaging measures dreamt up by Gordon Brown and his henchman Ed Balls; he is more honest than most others in the government, even though this has not stopped him from downplaying the magnitude of the fiscal crisis or endorsing absurdly optimistic growth forecasts for 2011. Darling’s banking policy is less bad than that of the Tories, which is short-sighted, ignorant of the empirical evidence and more interested in tapping into popular hatred than building a more robust and successful industry.

But that, unfortunately for Darling, is about it: contrary to what he claims and perhaps even believes, the Labour manifesto is disturbingly collectivist. All the tax hikes, including the rise in national insurance, penalise work and damage incentives; that and the rest of his parties’ policies will continue to erode Britain and London’s competitiveness, cost jobs and over time make us a substantially poorer and less dynamic nation.

The only party that is even more extreme in its war against free markets are the Liberal Democrats, who unveiled their manifesto yesterday. It amounts to a long list of destructive ideas based around the glorification of an outsized state. It certainly finally demolishes the myth that they are a centrist, moderate and reasonable alternative, ideologically equidistant between Labour and the Tories. In truth, they are a radical leftist party: the top rate of capital gains tax will be hiked to 50 per cent (from 18 per cent), crippling investors, private equity firms and landlords; £5bn a year will be raised by restricting pension tax relief to the basic rate, which would devastate the pensions industry; £1.7bn would come from the “mansion tax”, a class-war inspired form of double taxation which would slap a 1 per cent annual tax on homes worth over £2m a year, forcing thousands to sell their homes; £3bn from increased air passenger duty, further hitting tourists and business travelers.

It is desperately important to cut the size of the deficit – and the Lib Dems, like the Tories and Labour, fail to explain how they will do anything more than slightly reduce its size – but that is not the way to do it. Most of these taxes seem to be deliberately designed to inflict greatest damage or pain to those the Lib Dems don’t like. All quoted firms will have to publish how many people they pay £200,000 a year or more – as if paying high wages is in of itself a bad thing.

So there you go: if you aspire to get on in life, if you want to live in a nice area, the Lib Dems will slaughter you. They are the most left-wing party in British politics by a fair distance yet also the closest they have ever been to power: a Lab-Lib coalition remains a very real possibility in the event of a hung parliament. All of which is food for thought ahead of tonight’s crucial leaders’ debate.
allister.heath@cityam.com