Why you should be nervous about Labour's plans

People seem to have forgotten just how bad things were under Labour in the 1970s, says Merryn Somerset Webb. We may soon to have to relearn an awful lot of painful lessons about incentives.


Jeremy Corbyn: all-singing, all-dancing
(Image credit: 2018 Getty Images)

If the Labour conference this week didn't make you feel a little nervous, you might want to look back at some of the speeches again. They spelled out, as David Smith put it in the Times, an "all-singing, all-dancing left-wing programme for government". Think the effective confiscation of large parts of listed firms for employee benefit trusts and tax grabs; the replacing of up to a third of corporate boards with workers; an awful lot of nationalisation; and a very sharp rise in the minimum wage.

But as well as looking at the policies on the table, you might also look at the reaction to them. Business may be a bit bothered by the whole thing, but overall the response has been, as John Stepek points out in our podcast this week (listen to it here), remarkably uncritical. Why? Smith suggests a couple of possibilities but the most convincing is time much of the population has no memory of a UK in which workers and corporations are in constant conflict, or one in which the state controls telecommunications, rail, water and energy. They therefore have very little idea of "how bad it often was".

The Tories may come up with an excellent defence of capitalism next week, something for which the nation's net tax payers would be hugely grateful let's not forget that the top 10% of UK income-tax payers now pay nearly 60% of all income tax, up from under 55% in 2007-2008. But on current form we rather doubt it. It seems then that, barring us developing a time machine and taking everyone under 50 back to the 1970s for a reminder of the miseries of this kind of thing, there is a strong possibility the UK is soon to have to relearn an awful lot of painful lessons about how incentives actually work.

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One group who do have some awareness of the possible troubles ahead are our property roundtable panelists. You will see on reading our roundtable that politics looms large: pretty much everyone is convinced that there is a land-value tax, or at least a wealth tax on the way something to think about if you are on the verge buying an expensive house (there are some very nice ones in this week's magazine for those interested in paying up for a private ice rink or golf simulator, by the way).

That risk aside, the roundtable covers everything you need to know about the residential housing market in the UK today. Will house prices rise from here? Is a slow and painless decline in real (that is, after-inflation) prices really possible? Does the end of the funding for lending scheme mean mortgage rates are going to rise? Just how bad for all of us (housebuilding company executives aside) has the bonkers Help to Buy policy really been? And finally, now that prices are down 20% or so in real terms from their bubble highs, is it time to start buying in London? The short answers to these questions are: probably not, hopefully, yes, very, and maybe.For the long answers, see our cover story.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.