Could the Labour leader’s ‘people’s quantitative easing’ kick start investment in housing and sustainable energy projects?
If a week is a long time in politics then that Labour leadership election was interminable. Labour’s conference is likely to overshadow even the Conservatives’, so fascinated is the entire political class by what Jeremy Corbyn is going to do with his party.
When Ed Miliband pondered his resignation in the early hours of 8 May, it was thought that Chuka Umunna, Andy Burnham, Yvette Cooper or possibly Tristram Hunt would be up on stage, rousing the grassroots of Her Majesty’s opposition. Corbyn wasn’t even a twinkle in the political betting market’s eye.
The veteran left-winger has demonstrated some novel thinking, however, which construction and infrastructure executives will be keen to hear more about when Corbyn makes his leader’s speech. Notably there is the “people’s quantitative easing” - which would see the Bank of England effectively print money for infrastructure and public service work.
People’s QE could well boost the construction sector and produce the legacy of top-notch infrastructure Corbyn and his team want to see given to our children
Corbyn and his adviser, the tax campaigner Richard Murphy, say that if you can have QE for those nasty banks that caused the financial crisis, then you can certainly use it for investment in housing and sustainable energy projects. Plus, they only want to spend £50bn a year, as against the £375bn handed to the banks.
Murphy has written: “What we are suggesting is a smaller programme of less than £1,000 per person in the UK a year to kick start the UK economy by investing in all those things that we would wish our children to inherit whilst creating the opportunities for everyone in every city, town, village and hamlet in the UK to undertake meaningful and appropriately paid work.”
Chris Leslie has warned, though, such a plan takes away the Bank of England’s 18-year independence, which has largely worked, and risks a big rise in lending rates that would suck money away from schools, hospitals and roads. Even Murphy concedes that the plan could be inflationary if the economy is doing well, which is why they would only use it for the first few years of a new parliament.
CBI director-general John Cridland has warned: “You can’t print money and borrow endlessly. You have to have a soundly based economic recovery.”
People’s QE could well boost the construction sector and produce the legacy of top-notch infrastructure Corbyn and his team want to see given to our children. But it is a notion that many executives feel lacks economic credibility. The plan will certainly cause a split with more centrist members of the Parliamentary Labour Party, who are so desperate to get business back on side having alienated the City during Miliband’s reign.
Mark Leftly is political correspondent at The Independent on Sunday and associate business editor across The Independent titles and the London Evening Standard