With less than a week to go before voting closes in polls for Labour’s new leader, the potential implications of a victory for Jeremy Corbyn are beginning to crystalise.
Corbyn only squeezed into the leadership context by achieving the required support of 36 MPs when enough backed his position to broaden the debate.
But with polls closing at midday on 10 September, bookies are continuing to mark the Islington North MP as their favourite for a stunning victory.
A self-described socialist, Corbyn’s election could see the Labour party lurch deeper into the left of British politics.
Key promises from the Corbyn camp so far have included the nationalisation of energy companies and railways as well as the scrapping of the Trident nuclear deterrent, but what could his election mean for the world of financial services?
While Corbyn is yet to reveal a complete pensions policy, only this week he wrote in the Telegraph to suggest a flexible age of retirement, arguing that increases in the state pension age allowed those with well-paid jobs to take early retirement, while those with the least savings are forced to work into old age.
“We need a flexible pension age that allows people to work for as long as they want to, while also recognising that for many people the nature of their work, their health, or their disability may not allow that,” he says.
However, figures from Hargreaves Lansdown suggest slashing the state pension age could double the value of benefits some people receive in retirement.
Based on an assumed flat-rate state pension of £155 per week, Hargreaves estimates that if a person started to receive their state pension at 60, this would cost £303,463.
By contrast, if a person started to receive it at age 70 this would cost £150,260.
Hargreaves head of pensions research Tom McPhail says: “It turns out that if Corbyn wants to pay out the state pension at the age of 60 then it’s going to cost quite a lot of money.
“It does open an interesting opportunity for the Government to go to the likes of Just Retirement and ask how much it would cost to provide state pensions for a given worker, and they could then underwrite them and charge a nominal sum to pay his state pensions.
“You could use the private sector to underwrite but it would be potentially quite bureaucratic and costly and it doesn’t seem like Corbyn would want to use the sector in that way.”
Cicero director and chief corporate counsel Iain Anderson suggests Corbyn would also likely promote an agenda focused on consumer costs for the private savings sector, picking up on the lead of his predecessor Ed Miliband, who attempted to push the government to introduce a cap on drawdown charges.
Anderson says: “You could easily see a focus on charges and costs coming from a Jeremy Corbyn front bench. He has been putting forward some consumer friendly ideas.”
Corbyn has also been keen to tackle a lack of supply in the housing market, and has promised to expand the existing Right-to-Buy regime beyond the council and housing association tenants currently in remit to include those in privately rented accommodation.
The plans would see tenants offered subsidised mortgage rates, backed by the withdrawal of tax allowances given to buy-to-let landlords.
Details of discounts offered remain scarce and it remains unclear how workable any efforts would be. Economist Gary Styles suggests the policy would be ripe for legal challenge.
“It sounds like it would be pretty unworkable, but I could see that maybe large corporate landlords with thousands of units might be interested in getting involved,” Styles says.
“Other than that, I can’t see there being much appeal, and you could well end up with the same problems in the current market, where investors approach tenants to get them to buy their property, only to acquire it off them later.
“That’s already happening with public sector tenants, so it’s certainly a possibility if it gets expanded to private sector landlords.”
Underlying these policies is the divisive fundamental of “Corbynomics” – a state led investment programme that would see the Bank of England print new money for housing authorities and local councils to build infrastructure like housing and schools.
Regardless of its merits, Financial Inclusion Centre director says a Corbyn leadership would see the role of the City of London in the UK’s economy drastically adjusted.
McAteer says: “It would probably be rebalanced, because he would also try to make sure the City works for the real economy and not the other way around.
“[Corbyn] gets the point that the primary function of the City of London is to allocate savers capital to the most effective investment schemes, and he says it’s not doing that at the moment.”
Of course, in opposition, Corbyn would not be able to put any of these plans into force, but Anderson notes Chancellor George Osborne has never been slow to incorporate the most popular ideas of his rivals into Conservative policy.
Most recently, Osborne seized upon Miliband’s proposal to ban non-dom status, putting it at the centre of his July Budget.
“However extreme these ideas are, what we have seen is a tendency from those in government to steal some of the most popular ideas,” Anderson says.
“Since the election George Osborne has taken huge amounts from Labour for the Budget, so the backdrop of a left leaning Labour front bench doesn’t necessarily mean that all of those ideas will end up on the cutting room floor.”
Mark Sands is politics reporter for Money Marketing.