Video report by ITV News Business and Economics Editor Joel Hills
Warning: Read the Labour and Conservative manifestos with extreme caution.
The considered, settled, expert view of the Insititute for Fiscal Studies (IFS) is that “neither is a properly credible prospectus”.
Both parties are complaining bitterly but criticism as devastating as this is hard to shake-off.
The IFS decides Labour’s pledge to raise an extra £78 billion a year in tax for better public services, without anyone who earns less than than £80,000 a year paying more is “clearly not true”. Labour’s tax polices are certainly progressive but they don’t just hit high earners.
More than two million people outside the top 5% will be directly affected by Labour’s plans to increase the Dividend Tax rate and scrap the Married Persons Allowance. Almost everyone will be impacted indirectly by the party’s plans to raise Corporation Tax.
The IFS also thinks Labour will struggle to spend the extra £55 billion a year it proposes in capital investment.
Labour’s promise to hold the state pension age at 66 is unfunded and expensive, as is Labour’s decision to compensate more than three million women who lost out when the retirement age rose.
The Conservative manifesto is less ambitious than Labour’s but also fails the IFS’ credibility tests.
The IFS calculates that outside Health and Education budgets (which are promised massive investment) other government departments face the prospect of cuts beyond next year.
Local government budgets have seen big cuts since 2009/10. The IFS says councils will have to make further cuts to service under the Conservative current plans, even if they raise council tax by 4% for every year of the parliament.
The IFS says that after 2021/22 there would be a return to austerity for some public services, unless the Conservative spend more than they are currently suggesting.
The Conservatives too have made unfunded commitments on railway projects in the north of England, hospitals and schools. The IFS calculates only half of the 20,000 extra police officers are funded.
If Boris Johnson serves-up something that resembles a “no-deal” departure from the EU in December 2020, the party will have to abandon all of its manifesto proposals.
“Neither manifesto is entirely honest,” says Paul Johnson, director of the IFS.
“The Conservatives would end up borrowing or tax a bit more than they are saying because their spending plans just don’t look terribly credible.”
“For Labour I don’t think they can raise the kind of tax revenue they are talking about in the ways that they are describing so maybe more taxes for the rest of us. Also the scale of change they are talking about cannot be delivered as quickly as they are implying.”
Only the Liberal Democrats’ manifesto survives the IFS’s scrutiny intact. It attracts some criticism (the pledge of free, quality childcare would be difficult to deliver quickly) but it doesn’t contain the same hidden risks.
The IFS is not inviting you to dismiss the proposals that Labour and the Conservatives set out, it is encouraging you to read skeptically and, where necessary, apply disbelief.
The manifestos have a value.
They make promises that will be politically hard to break, they present us with real choice and set out a vision for the future. But while their manifestos will tell you where Labour and the Conservatives want to get to, they won’t really tell you how much it will cost.