Owen Smith’s new policies sound brilliant, except for this one crucial detail

Owen Smith
Bex Sumner

This is a guest post submitted by Ben Morris.

Labour leadership challenger Owen Smith’s major announcement of 20 policy points on Wednesday gave the impression of a man with fresh, innovative ideas. Yet on closer inspection, it seems that his proposals merely echoed those which Labour leader Jeremy Corbyn and/or his shadow chancellor, John McDonnell, have already either articulated, or clearly implied.

  1. A pledge to focus on equality of outcome, not equality of opportunity

This is a positive announcement by Smith. Yet it is a conceptual point, and is not a policy proposal as such. It is an idea that should be at the heart of Labour, yet it has taken Corbyn’s leadership of the party to drag it back onto the table. It is almost impossible to conceive of the Labour party of a year ago talking in such socialistic terms, which entail the idea that ‘individuals have some share of goods, not merely a chance to obtain them without the hindrance of some obstacles’. This point should fundamentally underpin Labour policy, and Owen’s announcement shows the incredible impact that Corbynism has had on the party.

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  1. Scrapping the DWP and replacing it with a Ministry for Labour and a Department for Social Security

This was a proposal made by Corbyn last year, who said at the time: ‘[I’d] also recreate a Ministry of Labour so that we have a specific government department whose job it is to deal with work, working conditions, and the issue[sic] that go with that. We’d actually create a more secure, better trained workforce.’

Shadow chancellor John McDonnell also suggested resinstating such a department last month.

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  1. Introducing modern wages councils for hotel, shop and care workers to strengthen terms and conditions

This is a good idea from Smith. Wage councils were set up in the UK 1930s but were mostly scrapped by the Tories under Thatcher. Some countries, such as Germany and Sweden, still have them. Whilst Corbyn has not directly proposed this, he has been a passionate advocate of the introduction of a living wage. He is also a staunch supporter of workers’ rights, evidenced throughout the EU referendum campaign, and in the massive support he enjoys from the union movement.

  1. Banning zero hour contracts

This is a Jeremy Corbyn policy, and the Labour leader has been one of the most outspoken critics of zero-hour contracts, having called for them to be banned and questioning former prime minister David Cameron about their prevalence. The contracts – in which employers are not compelled to provide minimum working hours to a worker – were banned in New Zealand in March, a move which Corbyn celebrated.

  1. Ending the public sector pay freeze

This is a Corbyn policy through-and-through.

  1. Extending the right to information and consultation to cover all workplaces with more than 50 employees

Whilst this is a constructive policy idea by Smith, and it has not yet been expressed by Corbyn, the Labour leader’s dedication to protecting and ensuring workers’ rights is unquestionable, which was channelled mainly through his vocal opposition to TTIP during his support of the ‘remain’ camp during the EU referendum campaign. He has also shown a desire to help small businesses thrive, backing increased investment by reversing Conservative cuts to the skills budget.

  1. Ensuring workers’ representation on remuneration committees

Corbyn has previously said that executive pay should be capped, although he has not specifically stated that workers should have a role in deciding on an executives’ pay. This is a positive, progressive idea in order to secure fair wages and workplace treatment in certain sectors.

  1. Repealing the Trade Union Act

Corbyn has several times vowed to do this if Labour is elected.

  1. Increase spending on the NHS by four per cent in real terms in every year of the next parliament

The budget for the NHS in England in 2015-16 is £116.4bn.

Tax revenue lost through tax debt, avoidance and evasion was estimated in 2014 to total £119.4bn (pdf).

Corbyn has proposed closing these loopholes, suggesting that doing so could double the annual budget for the NHS in one fell swoop – a massive increase on Smith’s proposal, which would only increase spending by around four per cent per year.

Even by conservative estimates, tackling the problem of outstanding tax debt, avoidance and evasion in order to fund the NHS would be more productive than the incremental annual increase Smith suggests.

  1. Commit to bringing NHS funding up to the European average within the first term of a Labour Government.

The King’s Fund found in January that, at the current rate of investment in public health services, by 2020, Britain will have fallen £43bn per year behind the average. In this regard, in order for Britain to regain equilibrium with its European neighbours solely by increasing spending, Professor John Appleby suggested:

…assuming that health spending in other UK countries was in line with the 2015 spending review plans for England, by 2020-21 it would take an increase of 30% – £43bn… taking total NHS spending to £185bn.

As suggested by Corbyn, the more radical approach outlined above (funding the NHS through clamping down on unpaid tax) would, if implemented, put Britain far beyond that, past the £200bn mark. Post-Brexit referendum, these projections will no doubt be altered, but Corbyn’s idea promises far greater financial reward, even if combined with incremental increases in NHS spending funded by other means.

  1. Greater spending on schools and libraries.

For his entire career, Corbyn has supported investment in public services. Over the last few years, he has been vociferous in his opposition to Conservative austerity measures, condemning them at every opportunity. On May 18th of this year, he told the House of Commons:

When you slash the budgets of local authorities then leisure centres close, libraries close, children’s centres close.

  1. Re-instate the 50p top rate of income tax.

Corbyn has already proposed this.

  1. Reverse the reductions in Corporation Tax due to take place over the next four years.

McDonnell has described the Tories’ cuts to Corporation Tax as ‘appalling’, and last year actually advocated increasing Corporation Tax by 2.5%.

  1. Reverse cuts to Inheritance Tax announced in the Summer Budget.

McDonnell has already promised that Labour would reverse the Tories’ March announcement that the Inheritance Tax threshold would be raised from £325,000 to £500,000.

  1. Reverse cuts to Capital Gains Tax announced in the Summer Budget.

McDonnell called for the Tories’ proposed cuts to Capital Gains Tax to be scrapped back in March, saying:

These figures show the priorities of George Osborne. He planned to fund this £3,000 giveaway to 0.3% of the population by taking over £3,000 from hundreds of thousands of disabled people.

  1. Introduce a new Wealth Tax on the top 1% earners.

Richard Murphy, one of the original architects of ‘Corbynomics’, recommended a ‘Wealth Tax’ before the Labour leader was even elected last summer, which Corbyn went on to describe as a “prospect worth doing”.

It seems possible that Murphy, who has since become an outspoken critic of Corbyn and McDonnell, may have since advised Smith to take up this proposal.

  1. A ‘British New Deal’ unveiling £200bn of investment over five years.

Shadow Chancellor John McDonnell asserts that more would be needed than Smith’s catchily-headed proposal. McDonnell announced only last week plans to mobilise £500bn worth of investment – £350bn of which would come from the public purse. He also declared that Labour would create a national investment bank to help stimulate the post-Brexit economy and deliver infrastructure investment.

  1. A commitment to invest tens of billions in the North of England, and to bring forward High Speed 3.

Smith described the economy as:

far too London-centric. And this is in part because both our existing transport infrastructure, and new investment, are all concentrated on London.

Yet Smith’s effort to portray himself as a defender of the North against the capital’s establishment represents another attempt to outmanoeuvre Corbyn and espouse a position which the Labour leader had already expressed way back in March. At the time, Corbyn said that High Speed 2 should have been between Birmingham and the North, and decried the government’s London-centric focus, calling for massive investment in northern rail lines and the announcement of HS3 as a number one priority above the new Crossrail 2 development in London.

  1. A pledge to build 300,000 homes in every year of the next parliament – 1.5 million over five years.

Smith’s plan here is ambitious, but positive. Corbyn’s suggestion was an annual target of 240,000 homes per year, the difference being that councils would be given the power to build. Crucially, Corbyn’s focus is on building affordable homes, as laid out by his pledge to build 100,000 council and housing association homes a year. Smith does not specify what percentage of the houses in his plan would be affordable, and thus how they might affect the social cleansing and gentrification of certain areas is unclear.

  1. Ending the scandal of fuel poverty by investing in efficient energy.

Corbyn has previously spoken of his promotion of efficient energy, and pledged to use the proposed National Investment Bank to invest in renewable energy. He has also gone further than this, suggesting that Labour should break the monopoly of the ‘Big Six’ companies which control a 95% stake of Britain’s energy market, bringing them back into public hands in order to aid energy efficiency. Whilst this proposal has been put on the back burner for now, there is no doubt that Corbyn’s instincts in this area are far more radical than Smith’s, with the potential results vastly more democratising than his challenger’s.

***

It would be disingenuous to suggest that some of Smith’s points – such as the focus on the equality of outcome and increased investment in schools and libraries – represent anything other than positions Corbyn already espouses.

Nevertheless, Smith does put forward three ideas which Corbyn would do well to take up:

  • the introduction of modern wages councils for certain workers
  • an extension of the right to information and consultation to cover smaller workplaces
  • ensuring workers’ representation on remuneration committees.

Yet whilst the Labour leader may not have specifically articulated these plans, they are consistent with Corbyn’s ideology and do not by any means represent any type of significant difference between the two candidates.

There are also many things that Smith has failed to touch on.

  • a cap on private sector rents which would be linked to local average earnings
  • a guarantee that new homes be made affordable
  • a plan to tackle tax avoidance and evasion, and how this might be used to fund the NHS
  • any mention of nationalisation or the establishment of a National Investment Bank

Corbyn has put forward these ideas, and changed the entire tone of British political discourse. Undoubtedly, the Labour leader remains the more radical of the two leadership candidates, and is categorically more supportive of a truly egalitarian society than his rival.

Smith’s announcement is a transparent attempt by a man with both a dubious voting record and occupational history to politically outmanoeuvre an opponent who has – throughout his entire career – stood in resolute defence of the working classes and consistently fought against rampant financial exploitation and social injustice.

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Featured image via Wikimedia Commons.

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