Labour and Conservative spending plans unrealistic says IFS
29 Nov 2019
The Labour pledge to not raise taxes is ‘clearly not true’, the same Tory promise is doubtful as their plans would result in ‘taxing or borrowing more’
29 Nov 2019
Analysis by the Institute for Fiscal Studies (IFS) compared the tax and spending policies of the top three political parties ahead of the 2019 general election, questioning the truth behind figures published in their manifesto’s.
Under Labour plans for taxation, senior research economist at the IFS, Stuart Adam said: ‘To say that the increase in tax for the top 5% of earners wouldn’t increase tax for the other 95%, is clearly not true.’
Adam was referring to the proposal in Labour’s manifesto to not introduce any increases in VAT, income tax or national insurance for anyone earning less than £80,000, the top 5% of UK earners.
IFS director, Paul Johnson said: ‘It is highly likely that Labour, at least over the longer term, would need to implement other tax raising measures in order to raise the £80bn of tax revenue that they want and even just sticking to those proposals they would clearly increase taxes for many millions outside the top 5%.’
Referring to Labour’s plans, Johnson added: ‘In no sense will the austerity seen over the last decade be ended in the next five years’.
Discussing the Conservative plans, Johnson said: ‘Spending on public services apart from healthcare would still be 14% lower by 2023/24 than it was in 2010/11.
‘In reality, a change in the scale and scope of the state that they propose would require more broad based tax increases at some point.’
However, he said that Conservatives would ‘pretend that tax rises will never be needed to secure decent public services’.
Johnson also said that: ‘It is highly likely that the Conservatives would end up spending more than their manifesto implies, and thus taxing or borrowing more.’
The analysis showed that Liberal Democrats’ plans involves somewhat lower levels of borrowing than implied by either Labour or Conservative manifestos, and they appear to be the only one of the three parties which would put debt on a decisively downward path.
Johnson said their spending plans would involve ‘lower levels of borrowing than under Labour or the Conservatives, but would still be seen as ‘radical in most periods’.