Labour manifesto has £58bn black hole, claims Conservatives

Written by Emilio Casalicchio on 17 May 2017 in News

Jeremy Corbyn says nationalisation of water, the railways and the national grid would not count towards borrowing figures

Corbyn manifesto launch - Danny Lawson/PA Wire

The Conservatives have accused Labour of having a £58bn spending "black hole" at the heart of its manifesto.

Jeremy Corbyn yesterday unveiled his blueprint for government which pledged to set up national energy firms and “transition to a publicly owned, decentralised energy system”.

It also promised to “replace our dysfunctional water system with a network of regional publicly-owned water companies” and bring rail franchises back under public ownership.


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Labour’s day-to-day spending was accounted for in a separate costings document which also featured plans to borrow £250bn for infrastructure investments. But borrowing figures for renationalisation were absent.

Economists have argued they can have no net effect on borrowing and therefore should not be included in the ‘tax and spend’ sheet.

But in a counter-dossier, the Conservatives insisted borrowing would hit almost £58bn by 2021-22 under Labour’s renationalisation and other investment plans.

Chancellor Philip Hammond said: “There is a £58bn black hole in Jeremy Corbyn’s manifesto – and it will be paid for by every single family in the country with higher taxes and more debt.

“Jeremy Corbyn’s numbers simply don’t add up, and he can’t be trusted to run the economy or negotiate the right deal for Britain.”

According to the Tories, plans to renationalise energy would add £7.8bn to borrowing in a year, while water would add £6.4bn, rail £1.7bn and setting up a national investment bank £10bn.

Andrew Gwynne, Labour’s election campaign co-ordinator, said: “This is absolute rubbish from the Tories and yet another wholly cynical ploy to try and avoid scrutiny of their own spending plans.

“That a Conservative Chancellor can't tell the difference between capital spending and revenue spending is extremely worrying.”

Economist Richard Murphy argued the renationalisation plans could cost “next to nothing” or even less if funded through the printing of more money.

In a blog post he explained: “Issue bonds for fair value. Make them redeemable in not less than thirty years, and maybe longer.

“Make the interest rate the very low ones on offer now. In net terms these are likely to be negative throughout that thirty year period.  

“And what is the net cost of renationalisation? Next to nothing. Or less.”

Corbyn said Labour’s nationalisation programme would not cost the public purse anything overall, since any expenditure would be balanced by the value of the assets purchased.

“We don’t know what the share price will be at the time that we do it [nationalise the water companies],” the Labour leader told the BBC.  

“As I’ve said in the case of rail, there is a neutral cost on it. I believe in the case of water the same will apply in exchange for the bond issue."

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