IFS: Tories And Labour Not Being Honest About Election Manifesto Plans

Experts say voters are not being offered a clear choice.
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Neither Labour nor the Conservatives are properly spelling out the consequences of their economic plans, experts say.

The Institute for Fiscal Studies analysed both parties’ manifestos in detail and said neither set out ‘an honest set of choices’ to voters ahead of next month’s election.

Among the key findings were:

- Labour’s spending plan would see the biggest investment in services since the 1970s - but the party has overestimated its £49 billion of tax increases and its suggestion that only the rich and big businesses would bear the brunt of additional spending is false.

- The Conservatives few spending commitments will put the NHS and other public services under ‘serious pressure’, with tight health budgets at risk of being undeliverable and putting the quality of services under threat.

- The Lib Dems are the only party who have pledged to reverse majority of planned welfare cuts - under both Labour and the Tories most would still go ahead.

- Plans to raise the national minimum wage could hurt the economy and put job opportunities for younger people at risk.

Labour's John McDonnell has overestimated the party's tax rises, the IFS says.
Labour's John McDonnell has overestimated the party's tax rises, the IFS says.
Neil Hall / Reuters

Carl Emmerson, IFS deputy director, said Labour should not bank on their tax increases raising more than £40bn in the short term - due to errors in the party’s calculations - and that big increases in corporate tax would make ‘a broad group of people worse off’.

He added: “When businesses pay tax, they are handing over money that would otherwise have ended up with people - not necessarily rich people.”

He said in the longer term, the cost of Labour’s plan to hit big business and top earners would filter down to workers through lower wages and higher prices.

The research also showed that the Tories, despite setting out a ‘steady’ approach to the economy, are putting another five years of austerity on the table, with large cuts to welfare, schools and services.

“It is not clear that this plan would be deliverable,” Emmerson said.

“Barely two months after the 2015 general election they announced spending plans that were less tight than set out in their manifesto. Maybe they would do that again. I would also not bet against a Conservative government finding some additional tax raising measures.”

Tory austerity 'could put public services at risk'.
Tory austerity 'could put public services at risk'.
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The Tories were also accused of having performed an ‘O-turn’ - a U-turn on a U-turn - over their controversial ‘dementia tax’, which could see elderly people having to pay for care in their own home if they have total assets of £100,000 or more.

The IFS said the party’s social care policy still remains unclear - although a cap on social care costs is set to be introduced.

It also echoed warnings from experts about the effects of the government’s 100,000 net migration target - which risks harming the economy if the skills gap is not plugged.

IFS director Paul Johnson said: “In one sense the two main parties have rarely offered the British such a clear and substantial choice. One is promising relatively low levels of spending, tax and borrowing, while the other is promising a much bigger state. But neither is being really honest with the public. It is likely that the Conservatives would either have to resort to tax or borrowing increases to bail out public services under increasing pressure, or would risk presiding over a decline in the quality of some of those services, including the NHS.

The NHS could be at risk of further cuts.
The NHS could be at risk of further cuts.
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“Labour’s commitment to a much bigger public sector would require higher taxes that affect many of us. A bigger state than the one we have been used to is perfectly feasible as many countries have demonstrated, but Labour should not pretend that such a step-change could be funded entirely by a small minority at the very top. In particular the large increase in company taxation that they propose would undoubtedly affect a far broader group than that.”

In their reponses, both parties accused the other of putting the economy at risk - Labour through raising taxes to the highest peacetime level and the Tories by risking public services.


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