Support 100 years of independent journalism.

  1. Politics
4 August 2016

How would Jeremy Corbyn pay for his spending pledges?

The Labour leader says £500bn of new spending would be funded by "expanding the economy and driving down tax evasion". 

By George Eaton

Jeremy Corbyn resembled a socialist Father Christmas at his speech this morning, promising a £500bn investment fund, a million new homes (including half a million council houses), universal childcare, the renationalisation of the railways and more publicly-controlled bus services. But when asked how he would fund this largesse, the Labour leader was strikingly vague. “You pay for it through an expanding economy and driving down tax evasion,” he said. He added that “we are not proposing cuts in top rate of taxation or corporate rates of taxation”. But short of running up the largest deficit in history, Corbyn’s plan would necessitate significant tax rises.

Yet while vowing to “reconfigure our tax system to create a more equal society”, Corbyn had remarkably little to say on the subject. He did not match Owen Smith’s pledge of a wealth tax on the top 1 per cent or his promise to restore the 50p tax rate. Nor did he repeat his past promise of “people’s quantitative easing” (even as economists rush to endorse the idea). The only revenue-raising measures he announced were tightening corporation tax reliefs (saving £10bn) and restoring headline rates to the levels in George Osborne’s first term. Corbyn rightly argues that increased investment would raise growth but that alone would not fund his cornucopia of promises. Smith, who published costings for his 20 pledges, will aim to capitalise on Corbyn’s vagueness in the first leadership hustings tonight. 

Corbyn’s lack of detail is unlikely to do him much harm in the contest. Party members wield banners, not calculators. But should Corbyn lead Labour into the next general election, as he pledged to do today, he will need to offer a far better answer to pass the IFS test. 

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. A weekly round-up of The New Statesman's climate, environment and sustainability content. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.