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Tuesday, June 25, 2024

Ducking the hard choices

The BBC reports on the conclusions of an Institute for Fiscal Studies (IFS) study that the UK's main political parties have “ducked” addressing stark choices over public finances in their manifestos and that it will be a "considerable surprise" if taxes are not increased over the next five years.

They say that the IFS have accused Labour and the Conservatives of engaging in a "conspiracy of silence" and ignoring "painful choices":

It said the UK has the highest debt level for more than 60 years, taxes are near a record high and spending has swelled - but public services are "visibly struggling".

While the government is paying huge interest on debts and welfare bills have grown, spending on health is likely to rise because of an ageing population while defence funding will have to increase.

Meanwhile, economic growth is subdued.

Paul Johnson, director of the IFS, said: "These raw facts are largely ignored by the two main parties in their manifestos."

He said that "huge decisions over the size and shape of the state will need to be taken, that those decisions will, in all likelihood, mean either higher taxes or worse public services".

Whoever wins the election in less than a fortnight faces a "trilemma", said the IFS.

"Raise taxes by more than they have told us in their manifesto. Or implement cuts to some areas of spending. Or borrow more and be content for debt to rise for longer," it said.

"What will they choose? The manifestos have left us guessing."

Mr Johnson also criticised both Labour and the Conservative Party for ruling out increases to income tax, National Insurance and VAT.

“Despite a damaging rush to rule out increases in all sorts of tax rates, it will be a considerable surprise if no other taxes are increased over the next five years," he said.

They add that the IFS has condemned a lack of transparency over plans to keep thresholds on income tax frozen for a further three years, which will raise £10bn a year:

The Tories, Labour and the Liberal Democrats would keep the measure in place.

The IFS also questioned if parties could raise £5bn by "cracking down" on tax evasion and avoidance.

"Maybe," said Mr Johnson, but he added that none of the manifestos "make much of the fact that on official estimates most of the shortfall in what HMRC collects is not from big, faceless conglomerates but from the self-employed and small businesses".

The think tank also examined manifestos from the Green Party and Reform.

It said the Green Party had outlined major spending plans which would be paid for by tax rises and an additional £80bn a year in borrowing.

Reform would cut taxes by £90bn and increase spending by £50bn, the IFS said, which would be "paid for" by an unspecified £150bn package of measures such as cutting welfare and "government waste".

Mr Johnson said the policies the Greens and Reform outlined in their manifestos were not going to be implemented.

"But the way they suggest that they have radical ideas which can realistically make a positive difference, when in fact what they propose is wholly unattainable, helps to poison the entire political debate," he said.

None of this of course helps voters have any confidence in what they are being told during this election, or even how to cast their ballot. 

A fear of being branded as being in favour of high taxes and losing votes is causing all the political parties to avoid telling us the truth about what needs to be done and how they will address the problems faced by the country. 

That cannot be good for democracy.

Trouble is people do not like the truth if it will affect them. To me, it does not matter who is in charge as long as services that we all use and rely on, such as the NHS down to rubbish removal are maintained. I therefore accept taxes will have to go up.The funds then should go to Councils,NHS to maintain those services.
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