In a speech this morning from the new Shadow Chancellor which was rather longer on rhetoric than concrete policy, one measure stood out.
True, it stood out was because it was the only concrete policy announced. But it also stood out for its wrongheadedness.
McDonnell called for this:
But in the Summer Budget, the Conservatives had already promised to introduce exactly this measure:
What certainly is different is the proposed yield. The Conservatives predicted a steady state yield from their proposals of about £170m per annum.
John McDonnell seems to be promising a yield of up to a staggering 7,600% of this. Indeed, as David Pegg of the Guardian has pointed out, the expenses claimed (in 2012/13) by individuals for property repairs, maintenance and renewals was just over £3bn – and the value of the ‘tax breaks’ on those expenses is a maximum of 50% (the then top rate of income tax) of that, or £1.5bn. On any view £13bn is fantasy forecasting.
The list of Labour’s tax bloopers since the General Election defeat is already a long one.
The mathematically impossible £5bn of yield from a 50% rate; the promised £120bn receipts from tackling tax evasion and avoidance (now downgraded, according to McDonnell on Today, to an equally illusory £20-25bn); £93bn of savings from tackling corporate welfare (now downgraded to unspecified “cuts“); and the shambles around Labour’s position on cutting the rate of corporation tax (where, in a single day, McDonnell called on Question Time for the Tories’ cuts to be reversed whilst in Parliament, Labour supported them).
But even with such worthy competition, this measure really stands out.
Michael in the comments section following has pointed out that McDonnell can be read as promising savings of less than £13bn. In other words, that he’s again (c.f. the £120bn tax gap and £93bn corporate welfare) performing a kind of fiscal dance of the seven veils – tempting his audience with the suggestion of a yield greater than that he knows is possible. This reading would not, however, explain why McDonnell mentions the £13bn figure if what he means is something closer to HM Treasury’s £170m estimate, or how £13bn hugely overestimates the scale of possible savings given the cost of the relief.