IFS suggests Lib Dems only party with 'economically credible' manifesto

Neither Labour's nor the Tories' spending plans are credible, said the IFS. Picture: Kirsty Wigglesworth/PA Wire/PA Images - Credit: PA Wire/PA Images

Neither the Conservatives nor Labour is being honest with the electorate or are offering a ‘properly credible prospectus’ in their general election manifesto spending plans, a leading economic think tank has said.

“Neither Labour nor the Conservatives is being honest with the electorate,” said Institute for Fiscal Studies (IFS) director Paul Johnson at a presentation.

He stated: “While the Conservatives continue to pretend that tax rises will never be needed to secure decent public services, Labour pretends that huge increases in spending can be financed by just big companies and the rich. In this respect neither Labour nor the Conservatives is being honest with the electorate.”

By contrast, the Liberal Democrats’ proposals are “simple” and “progressive”, he said.

“Liberal Democrat proposals to put a penny on the main rates of income tax would be simple, progressive and would raise a secure level of revenue,” he said.

There is “essentially nothing new” in the Tories’ spending plans, and he warned that party could preside over an increase in the debt and deficit by leaving the threat of a no-deal Brexit on the table by promising to leave the EU by the end of 2020.

It was “highly likely” that a Conservative government would end up raising taxes or increase borrowing as the party will end up spending more than the party’s manifesto implied.

IFS director Paul Johnson said that the chances of the Conservatives being able to hold spending down over the course of a five-year parliament in the way that they proposed appeared to be “remote”.

“Why have they been so immensely modest in their proposals?” he asked.

“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.”

Johnson added that Labour would not be able to deliver on its promise to raise investment levels by £55 billion a year as the public sector does not have the capacity to “ramp up” that much that quickly.

It is “highly likely”, according to the IFS, that a Labour government would have to find other tax increases beyond its promised hikes on big business and wealthy people, if the party wants to raise the extra £83 billion a year its spending plans need.

“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,” said Johnson.