There is something of a consensus in the press that the Labour manifesto has opened up “clear blue water” between the Labour and Conservative parties. The UK voter, says absolutely everyone, has a real choice to make here. That’s true – but only, I suspect, to a degree. Jeremy Corbyn’s manifesto is interventionist, extremely expensive and a bit silly. But you could say that of almost all manifestos. And the truth is that over the last few months all UK politics has shifted firmly towards interventionism.
Corbyn clearly doesn’t trust the market: he would like to nationalise everything in sight. But Theresa May doesn’t trust it much either: she often says that she is prepared to step in when the market “isn’t working” – her plan to cap utility bills shows that she is no less prepared to force state control on industries than her rival. They’ve identified similar villains in the last few months as well.
Corbyn’s pretty down on companies: under him, they get to pay lots more tax. But May reckons they can carry a bit more of a burden too: witness her plans for the extension of workers’ rights. Corbyn will tax companies up front to finance everything from whopping spending on the NHS to social care. May won’t be the middle man for the cash, but by asking companies to offer workers long periods off to look after relatives for example, she’s shifting the burden of social care in the same direction.
I’ve written here before about our expectation that the next government will be endlessly interfering. Voters clearly want to see a newly powerful state acting to make the unelected-but-powerful behave better – hence the talk of worker representatives on boards (May wants one non-executive director on each board to be a workers’ champion). Witness also the opening salvos against the big tech firms and the price-cap chat. Like it or not, there is much more of this to come. The combination of Brexit and May seems unlikely to give us the small-state, low-tax Britain we hanker after.
There is, however, some good news. We have wondered previously if May might have a go at capping fees in the financial industry, too – after all, the regular super-profits made in fund management tell us the market isn’t working here (competition should push fees down). What better way to make everyone richer than to cut the cost of saving? But this might be starting to take care of itself.
This week saw Vanguard, the leader in low-cost investing, launch an online service in the UK. Use it and you will pay an annual administration charge of 0.15% a year on an individual savings account. Hargreaves Lansdown, the UK’s biggest retail broker, charges 0.45%. There should be a glorious price war ahead – one that shows the market working so well there is no need for intervention. Fingers crossed.