The free-spending policies that will never leave the virtual world

Our politicians are all promising voters the world. But mostly, it is just pointless showing off, says Merryn Somerset Webb.

Liberal Democrats Launch Their Election Manifesto

Jo Swinson: her policies are never leaving the virtual world
(Image credit: 2019 Getty Images)

You can now buy a digital dress. You send a picture of yourself to a designer. He dresses you virtually, "digitally rendering" the clothes onto your body, says The Times. You can then stick pictures of the digitally-done you all over Instagram and Facebook. You'll get lots of likes. You will also never wear or touch the dress. It will never actually leave social media. That makes it just like a modern political manifesto.

The Lib Dems' one is nothing but pointless showing off. The more Jo Swinson gets out and about, the less popular she appears to get her policies aren't ever leaving Twitter. The Labour one is obviously unachievable nonsense. Its free-broadband-for-everyone policy alone will cost around 4.5% of our entire national output. The public knows this of course: a YouGov/Times survey suggests only 18% of people think Labour's ideas are remotely "realistic". Even a quarter of the few committed Labour voters left think the manifesto is "unaffordable". They are right policies that can only be financed by huge tax hikes and ludicrously large levels of public borrowing rarely begin (or end) well.

What then of the Tories? How much of their manifesto will make it off Twitter and into reality? It is definitely very much less of a digital dress than the rest. But it still involves more, not less public spending, something that assumes that the UK tax take can rise from here (mostly via loophole closing and aggressive anti-tax evasion measures). That's not ideal. Dominic looks at why in this week's magazine.

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His key point? Medieval serfs were forced to work for their feudal lords for half the week in return for the right to survive. These days, one way or another, you hand over about 47% of all you earn to the state. You get very significantly more back from your protector than the serf could have dared dream of (which is nice) but, unless you up sticks and leave the country (which he could not), you don't get much more choice in the matter of where the money you earn goes than he did. This isn't how countries get or stay rich. It also, in general, tends not to offer much in the way of real value to taxpayers: all too often state-run services cost too much and achieve too little (see our briefing on the NHS in this week' smagazine).

Sticking with the theme of value, you might not be going to get it from our digitally-dressed government contenders but you can certainly get it in the stockmarket. The valuation gap between growth stocks and value stocks is at an extraordinarily high level. That's unlikely to last much longer particularly in the UK where there is a very real possibility of a post-election "Boris bounce" (or relief bounce). Turn to this week's cover story for Matthew's take on why now is the time for value investors to shine and the stocks that might help them do so. If you want to add even more value to your portfolio, keep an eye on London's fintech scene. Right now you pay for every trade you make. You don't pay much relative to what you paid 20 years ago. But nonetheless, if you are a frequent trader, even £5 a go adds up. Good news then that free trading is on the way. Finally, I'd like to say thank you to all our brilliant speakers and engaged audience members at the MoneyWeek Wealth Summit last week. It was, I think, a huge success I had a wonderful day and hope you all did too.

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.