Wednesday, 25 September 2013

Ed Miliband's Policies

So, we finally have some detail from the Labour Party about what it would do in the event of it being elected in 2015. We have some major policy announcements from it's leader, Ed Miliband, which leave no doubt as to Labour's direction for the foreseeable future. And that direction is Left.

Miliband has proudly stated that he wants to bring socialism back to Britain. I imagine many people are meeting that declaration with raised eyebrows. For anyone who's old enough to remember, it didn't work out particularly well last time. Price controls, power cuts, strikes, record-level interest rates and inflation, three-day weeks, riots, rubbish piling up in the streets and bodies going unburied. Such was 1970s Britain. It took the most radical and determined Prime Minister since Churchill to turn the country around - Margaret Thatcher.

But Ed has pressed ahead with that theme, and put some meat on the bones. His speech at the Labour Party Conference contained several major policy announcements:
  • Cutting business rates for small businesses to the tune of £800m per year, funded by an increase in Corporation Tax for larger firms;
  • Changing planning laws so that local residents have less say in major developments. Seizing property from developers which the Government feels are not using their land banks properly;
  • Reform of the energy market, by breaking up the larger firms, instituting a new, more powerful regulator and most importantly, the introduction of price controls for at least 2 years.
I will now explain why all of these policies are utter rubbish.

Whilst I agree with the notion of cutting business rates for smaller firms, there is a major problem with the approach of this. Firstly, this is not an attempt to reduce the burden of taxation, it is simply shifting it from one element of the business community to another. Given that the problem with our public finances is that we are spending too much, entailing a chokingly high tax burden, we shouldn't just be shifting taxes around, we should be cutting them.

Next, the effect of this policy is a shift in taxation of £800m per year. Given that total business tax receipts were £66billion last year, this change in policy represents 1.2% of total business taxes. In other words, the square root of fuck all. The difference it will make is negligible to the overall business economic situation. It's a token gesture designed to create an emotional response in voters, not a serious attempt to make a difference.

In terms of reform to planning laws, this desperately needs doing. Our Soviet-style planning system where you have to apply to the local council in order to put up a fence across the front of your property verges on the ridiculous. However, watering down locals' ability to object to major developments on their doorstep is the wrong thing to do. If anything, locals need a greater say in such developments - they, after all, will be affected by them the most. The reforms need to take the form of less State involvement in planning, not more.

In terms of Ed's proposal to seize private land if the Government deems it is not being used by property developers in the way it should be, this constitutes a primal and vicious attack on the concept of private ownership. It is utterly disgraceful. What makes Ed think the State is best-placed to utilise land banks effectively? Especially when a recent investigation by the Office of Fair Trading found no evidence that property development companies were restricting the supply of development land to drive up prices. He's trying to solve a problem that doesn't exist and creating a load of new ones in the process.

Whilst I cautiously agree with the proposals to break up the major energy companies and introduce a tougher regulator, price controls are a ludicrous proposal. They have never been proven to work, and are more likely to backfire, resulting in company closures, scarcity, rationing, brownouts, blackouts and eventually, nationalisation of the energy industry in order to prevent complete chaos. The solution to the energy problem is increased competition, transparent pricing and practical steps to allow customers to move suppliers easily.

It's also interesting to note that Labour still haven't announced anything on subjects like education, defence, health (apart from a throwaway line to 're-nationalise' the NHS - newsflash guys, it's not been privatised), benefits, tax or... THE DEFICIT. That giant black hole which THEY CREATED that inconveniently won't disappear.

But there we have it. Labour have provided an alternative (a bit) at last. Not exactly what I'd hoped for. In fact, the prospect of Ed actually enacting some of these proposals scares me a bit. The only thing now standing between Ed Miliband and No. 10 Downing Street seems to be David Fucking Cameron.

God help us.