Government and Institutions

IEA: Shadow Chancellor rejects free enterprise, promotes “tried and failed socialist ideology”


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IEA responds to Shadow Chancellor's speech at Labour Party Conference

Commenting on John McDonnell’s speech to Labour Party Conference, the Institute of Economic Affairs’s Academic and Research Director Prof Syed Kamall said:

“The Shadow Chancellor has proposed a vast array of areas where he would increase spending and expand state intervention. But from housing to welfare, John McDonnell’s rejection of free enterprise has led him to advocate for flawed public policy initiatives, rooted in tried-and-failed socialist ideology.
 
“Government control and restrictions over the housing market have failed on many counts, with the UK now experiencing some of the highest housing costs in Europe. The Shadow Chancellor is right to identify the need for more new homes to be built, but this can best be achieved through removing restrictions on planning and building faced by private house builders – not by promoting the state as the only provider of low-cost homes.
 
“The social care system is also overdue for reform, but funnelling more taxpayer money into the current pay-as-you-go system won’t do enough to solve the long-term funding gaps, as the UK faces demographic shifts and as the ratio of people in retirement age to people of working age rises further. Pouring un-costed billions of pounds into a broken system could result in worse rationing, poorer quality public services, longer waiting times and make it more difficult to access essential services.
 
“On Universal Credit, John McDonnell is right to criticise its management and roll-out to date; but replacing it, rather than fixing its errors, would likely cost the taxpayer more and increase the dependency of vulnerable individuals and families on the state. As well, restricting employees to a four-day working week is unlikely to liberate workers, but instead force many into looking for more work, in addition to their main employment, in order to pay their bills.
 
“Like most socialist policy proposals, big government interference tends to result in stagnation and unintended consequences, rather than the Utopian outcomes promised. Such faith in central planning is fundamentally flawed, and overlooks the role markets play in solving economic and social problems.”

Notes to editors:

For media enquiries please contact Emma Revell, Communications Manager: 07931 698 246

For further IEA reading on socialism, click here.

For further IEA reading on housing, click here.

For further IEA reading on social care, click here.

For further IEA reading on Universal Credit, click here.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.



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