Labour manifesto proposes 'fat cat tax' and renationalising water companies

Days after its controversial leak, the Labour Party manifesto will be officially launched outlining more free childcare, a levy on high salaries and the nationalisation of England's water companies.

Labour will be the first major party to launch its manifesto on Tuesday (16 May) which will pledge to nationalise the Royal Mail and the railways while the BBC reported there are also plans to bring into public ownership England's water companies.

This would mean an end to companies paying dividends to shareholders and could see, through the creation of nine new public bodies to run the water and sewage system in England, bills per household go down by around £100.

Labour will also promise to provide 30 hours of free childcare for all two to four-year-olds and will reiterate its pledge to increase corporation tax by 19% to 26% as well as a "Robin Hood" tax on financial transactions.

It will also ask companies that pay staff more than £330,000 to pay a 2.5% surcharge while salaries above £500,000 will be charged at 5%, with money from tax rises to be put back into the NHS. This "fat cat tax" would be calculated on a combination of salary, shares, bonuses and pensions, the Guardian reported.

Leader Jeremy Corbyn will say at the manifesto launch in Bradford: "People want a country run for the many not the few. For the last seven years, our people have lived through the opposite, a Britain run for the rich, the elite and the vested interests. Labour's mission, over the next five years, is to change all that.

"It's a programme that will reverse our national priorities to put the interests of the many first. It will change our country while managing within our means."

Labour says the income tax rise year will hit only 5% of earners although the Institute of Economic Affairs said the party's tax plans, including reports of increasing taxes of those earning above £80,000, may not raise as much as promised.

Its director, Julian Jessop, told the Telegraph: "The revenues from income tax hikes are likely to fall well short of these estimates. The bigger the increases in marginal tax rates, the greater the disincentives to work hard or take risks. The temptation to game the system to avoid tax will also be higher."

David Gauke, the Chief Secretary to the Treasury, said: "It's ordinary working people who will pay for the chaos. Jeremy Corbyn has made so many unfunded spending commitments it is clear that Labour would have to raise taxes dramatically because his sums don't add up."