Both the Conservatives and Labour have failed to put forward a “properly credible prospectus” for their spending plans, a leading economic think tank has said.
The Institute for Fiscal Studies said it was “highly likely” a Tory government would end up spending more than planned, while it cast doubt on Labour’s promise to “ramp up” investment levels by £55bn a year.
Chancellor Sajid Javid said the assessment showed a Labour government would mean “taxes for the many, not the few” and declared: “We know that our numbers add up.”
Labour’s shadow chancellor John McDonnell said: “The IFS assessment of Labour’s plans is that we are too ambitious – we accept that with pride.
“We are ambitious for our country and will be investing on the scale needed to end austerity, tackle climate change and build our country’s future.”
Presenting the think tank’s analysis of the election manifestos, IFS director Paul Johnson said the choice between the two parties could “hardly be starker”.
“The implication of the Conservative manifesto is that they believe most aspects of public policy are just fine as they are,” he said.
“Little in the way of changes to tax, spending, welfare or anything else.
“Yes, there are some spending increases for health and education already promised, but essentially nothing new in the manifesto.
“Labour, by contrast, want to change everything.
“Their vision is of a state with a far greater role than anything we have seen for more than 40 years.”
He added: “For good or bad five years of Labour government would involve enormous economic and social change.”
The IFS said it was “highly likely” that a Labour government would have to introduce further tax rises – beyond those it has already announced for big business and the better off – in order to raise the extra £83bn a year in additional revenue it wants.
“In reality, a change in the scale and the scope of the state that they propose would require more broad-based tax increases at some point,” Mr Johnson said.
Addressing this point, Labour leader Jeremy Corbyn said he was “very confident” his agenda could be delivered without tax rises for anyone earning less than £80,000.
When it came to the Tories, Mr Johnson said, their proposal to keep spending down over the course of a five-year parliament appeared to be a “remote” prospect.
He said: “Why have they been so immensely modest in their proposals?
“Because to do otherwise would either mean resiling from their pledge to balance the current budget or would mean being up front about the need for tax rises to avoid breaking that pledge.”
Overall, the IFS said the plans outlined by the Tories would leave public spending – apart from health – still 14% lower in 2023-24 than what it was when the party came to power in 2010.
“No more austerity perhaps, but an awful lot baked in,” Mr Johnson said.
Labour, the IFS said by contrast, would increase spending and taxes to peacetime highs, with the national debt set to rise by around 3% of national income.
However, Mr Johnson said the party’s promise to abolish in work poverty within the next parliament was “not achievable”.
The IFS also queried Labour’s £58bn compensation payout for the so-called WASPI (Women Against State Pension Inequality) women, who claim they have lost out due to recent pension changes.
Mr Johnson said the pledge – which was first announced after the publication of Labour’s manifesto – would benefit a group that “is relatively well off on average”.
“To believe the whole group should receive compensation is a recipe for complete stasis in policy,” he said.
“Clearly some suffered hardship and there may be scope for much more limited compensation.”
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