Yvette Cooper attacks Jeremy Corbyn's plan to renationalise industries

Yvette Cooper

Yvette Cooper has accused Jeremy Corbyn of giving anti-austerity policies a bad name in a detailed attack on his plans for the renationalisation of public assets and quantitative easing.

The shadow home secretary criticised the Labour leadership favourite’s proposal not to compensate investors in privatised industries returned to state control by a Corbyn-led government, which she said would affect pension funds and market confidence. 

Cooper claimed the Islington North MP’s policy to print more money at a time of growth would lead to spiralling inflation and unemployment and would destroy confidence in the pound.

It comes a day after 41 economists sought to boost Corbyn’s chances of winning next month’s leadership election by claiming that his opposition to austerity was “actually mainstream economics”. His economic policies – nicknamed Corbynomics – have come under sustained attack in recent days, including by members of his own party.

Cooper’s decision to attack Corbyn while praising some anti-austerity policies will be seen as an attempt to woo new party members who have been attracted by his leftwing agenda.

The Observer revealed that public assets sold off by the Conservative government face being renationalised with “no compensation” if Corbyn wins the contest. The chancellor, George Osborne, intends to sell off £31bn of public assets in 2015-16.

Cooper said the plan not to compensate investors “would hit pensions and would hit investment confidence more widely”. She said: “You can’t confiscate assets and you can’t print money to pay for things because that has a much wider impact on the economy and confidence in the British economy. It would have an impact on inflation as well.”

In a blog for the Guardian, Cooper claims Corbyn’s plan for quantitative easing (QE) for infrastructure could have dire consequences for the economy.

She said: “It’s one thing to use QE to boost liquidity when the economy has completely crashed. But if you try it when the economy is growing, you push up inflation, destroy confidence in the currency, lose us jobs and investment and create a cost of living crisis too.

“Nor can you just make endless promises to be paid for by extra borrowing or printing money we haven’t got. Because ultimately, all this would be pulled apart before we even got to the election, undermining our credibility ... Promising to print money gives anti-austerity a bad name – and will drive people back into the Tories’ arms. We have to oppose George Osborne’s 40% cut in public services. But we have to be credible.”

The plan to withhold compensation to investors in privatised industries was also questioned by Chris Leslie, the shadow chancellor.

Leslie said Corbyn needed to explain his policy because of the enormous impact it would have on thousands of investors. He said: “We have a right to know and, so far, I have not received an explanation.”

John McDonnell MP, Corbyn’s campaign agent, said privatisation had been “a confidence trick”. He said: “If any of these assets are sold by Osborne under their value, a future Corbyn-led Labour government will reserve the right to bring them back into public ownership with either no compensation or with any undervaluation deducted from any compensation for renationalisation.”

Cooper’s words follow similar warnings against Corbyn’s policies. Andy Burnham has told the party not to forget the lessons of the general election about the importance of economic credibility.

A spokesman for Corbyn’s campaign said: “The UK is crying out for public investment in housing, rail, energy and digital infrastructure – and we have put forward options to make that happen. One of these options, known as People’s QE, has prompted significant debate, and received backing from Lord Skidelsky, Ann Pettifor and many other noted economists.”

A spokesman for Corbyn’s campaign said: “The UK is crying out for public investment in housing, rail, energy and digital infrastructure – and we have put forward options to make that happen.”

In an interview in the Financial Times on Monday, Corbyn rejected claims that the party would split if he was elected as he set out plans to take on bankers, media moguls and the corporate world.

Rupert Murdoch’s empire would be broken up to dilute his media influence, while banks must wake up to Britain’s gross inequalities, he said. Corbyn warned the corporate world he was going after high pay levels. “I do think the salary levels and the bonus levels again have got to be looked at,” he told the newspaper. “I am looking at the gap in every organisation between highest and lowest levels of pay.”

Liz Kendall, who is believed to be trailing the other candidates in the polls, said she would fight on in the contest despite having an awfully long way to go.

She told LBC: “There are lots of people already writing this election off. I don’t believe that is the case. There are lots of people who are still undecided. I admit I have an awfully long way to go, but you don’t ever stop fighting for what you believe in.”

Powered by Guardian.co.ukThis article was written by Rajeev Syal, for The Guardian on Sunday 23rd August 2015 22.00 Europe/London

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