Thursday, November 28, 2019
Neither Tories nor Labour have credible spending plans
Hot on the heels of research by the Resolution Foundation, who compared manifestos and found that Liberal Democrats policies would mean 600,000 fewer children in poverty (see diagram below), we now have the Institute for Fiscal Studies hitting out at the spending plans of both Labour and the Tories.
As the Guardian reports the Institute for Fiscal Studies believes that neither of the two major party's election manifesto “is a properly credible prospectus”:
Paul Johnson, the director of the respected thinktank, noted that the Conservatives’ election manifesto in 2017 pledged more austerity and spending cuts, but in reality public service spending has gone up, and is due to be around £27bn higher next year than implied by the manifesto. In fact, he said, it is closer to the 2017 Labour pledge than the Tories’ own manifesto.
This time, the Conservatives are not promising any more spending cuts but are not predicting any spending increases beyond those set out in September either. Their plans would leave public service spending excluding health still 14% lower in 2023-24 than it was in 2010-11. “No more austerity perhaps, but an awful lot of it baked in,” Johnson said.
The Conservatives have pencilled in few tax changes beyond a small cut in national insurance contributions.
“If you think things are pretty much OK as they are, then you will like the Conservatives proposals for tax and spend. If you want big increases in taxation and spending then Labour and the Liberal Democrats have plenty to offer,” Johnson said.
Turning to the Labour manifesto, he said Jeremy Corbyn’s party had doubled down on its current spending plans, raising them to £80bn from £50bn in 2017. On top of that, there is a £58bn promise to Waspi women (Women Against State Pension Inequality), which he described as “extraordinary”.
Johnson said this spending pledge, to a group who are relatively well off on average, would far outstrip the additional sums earmarked for the “much bigger group of much poorer working age benefit recipients”. Under Labour, investment spending would rise by £55bn a year, up from £25bn in 2017, and taxes by £80bn, up from £50bn. Both taxes and spending would rise to peacetime highs, and the national debt would increase by around 3% of national income.
With the Conservatives, the risk is that their promise to exit the Brexit transition period by the end of 2020 could mean something rather like a “no deal” outcome. “That would harm the economy and of course increase the debt and deficit.”
As ever with these manifestos, people take from them what they wish. It is always useful to have this sort of analysis however.
Paul Johnson, the director of the respected thinktank, noted that the Conservatives’ election manifesto in 2017 pledged more austerity and spending cuts, but in reality public service spending has gone up, and is due to be around £27bn higher next year than implied by the manifesto. In fact, he said, it is closer to the 2017 Labour pledge than the Tories’ own manifesto.
This time, the Conservatives are not promising any more spending cuts but are not predicting any spending increases beyond those set out in September either. Their plans would leave public service spending excluding health still 14% lower in 2023-24 than it was in 2010-11. “No more austerity perhaps, but an awful lot of it baked in,” Johnson said.
The Conservatives have pencilled in few tax changes beyond a small cut in national insurance contributions.
“If you think things are pretty much OK as they are, then you will like the Conservatives proposals for tax and spend. If you want big increases in taxation and spending then Labour and the Liberal Democrats have plenty to offer,” Johnson said.
Turning to the Labour manifesto, he said Jeremy Corbyn’s party had doubled down on its current spending plans, raising them to £80bn from £50bn in 2017. On top of that, there is a £58bn promise to Waspi women (Women Against State Pension Inequality), which he described as “extraordinary”.
Johnson said this spending pledge, to a group who are relatively well off on average, would far outstrip the additional sums earmarked for the “much bigger group of much poorer working age benefit recipients”. Under Labour, investment spending would rise by £55bn a year, up from £25bn in 2017, and taxes by £80bn, up from £50bn. Both taxes and spending would rise to peacetime highs, and the national debt would increase by around 3% of national income.
With the Conservatives, the risk is that their promise to exit the Brexit transition period by the end of 2020 could mean something rather like a “no deal” outcome. “That would harm the economy and of course increase the debt and deficit.”
As ever with these manifestos, people take from them what they wish. It is always useful to have this sort of analysis however.
