IEA reacts to Jeremy Corbyn's party conference speech
On Jeremy Corbyn’s speech, IEA Director General Mark Littlewood said:
“Jeremy Corbyn is right to highlight that parts of the establishment have far too much control over Britain’s economy. Westminster’s elite should not be picking winners and losers in business, or deciding whose jobs have guaranteed funding from the taxpayer.
“Yet his proposals today – including the creation of 400,000 green energy jobs and increased centralisation of the National Health Service – imagine a Britain in which consumer choice is further limited, and more services are controlled by a select few in Whitehall.
“The Labour Leader should consider extending his criticisms of bail-out policies beyond the banks, to include the steel industry, car plants, and other industrial businesses that may need to innovate as technology develops, markets move, and demand shifts. He should also consider, when discussing instances like Carillion’s collapse, that increasing state involvement in services makes it harder for businesses to fail when they should.”
On the proposal to increase investment in the green energy sector, amounting to 400,000 new jobs by 2030, the IEA’s Director General Mark Littlewood said:
“Inefficient green policies have caused electricity costs for households in England and Wales to increase by 50% in real terms since the early 2000s.
“If government can’t get the regulatory policy right, how can it be trusted to centrally plan the number of jobs needed in the energy sector?
“Rather than the state favouring certain businesses in the energy sector over others, meaningful efforts to tackle anti-competitive regulations should be undertaken.
“This could include the Climate Change Levy, the Energy Company Obligation and the Carbon Price Floor being phased out in favour of a single-market based mechanism such as a cap-and-trade scheme which would apply to all CO2 emissions. This would help to achieve the strategy of reducing carbon emissions, whilst keeping the sector competitive.”
On the proposal to increase childcare subsidies, the IEA’s Associate Director Kate Andrews said:
“Increasing subsidies will do nothing to address the underlying causes of extortionate childcare costs. The only way to tackle these costs is to cut off the vicious cycle of state funding that keeps the dysfunctional operation afloat.
“Childcare provision in the UK is amongst the most expensive in the developed world, as families earning roughly the national average can now be spending more than a third of their net income on out-of-pocket costs.
“Ofsted’s excessive regulations keep costs high; particularly strict staff-to-child ratios. Relaxing or abolishing ratios – to reflect a system more like Denmark’s or Germany’s – would go a long way to bringing down the cost of childcare.
“In addition to liberalising the industry, universal offers of ‘free care’ should be abandoned, and provisions should be targeted towards disadvantaged families who need it.”
Commenting on the proposal for an ‘inclusive ownership fund’, the IEA’s Chief Economist Julian Jessop said:
“This proposal assumes that companies are a magic money tree. If it costs nothing to boost workers incomes by £500 in this way, why not set the target at £5000? In reality, firms are likely to find offsetting savings elsewhere, including in the wage bill.
“Many firms already recognise the benefits of employee shareholder schemes. But requiring all but the smallest of companies to provide them on terms dictated by the government would be a clumsy intervention that would only deter investment in the UK.”
On the 2008 financial crash, the IEA’s Director General Mark Littlewood said:
“In 1979, there was one government regulator for every 11,000 people employed in finance. At the start of this decade, it had rocketed to one regulator for every 300 workers. If this trend continues, by 2070 there will be more regulators than people working in the financial sector.
“While there are a variety of important lessons to be learned from the banking crisis of 2008, it is nearly impossible to conclude that a lack of regulation or insufficient state control was the cause of the crash. The fact that so many leading politicians seem wedded to such an analysis makes a future financial services catastrophe more likely, rather than less.”
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