The much awaited judgment of the Institute for Fiscal Studies was brutal and even-handed: a plague on both your houses.
A feature of every election campaign is the day when the thinktank that specialises in tax, public spending and government borrowing does a number-crunching exercise on the party manifestos.
This time it was the Liberal Democrats who fared best. The party’s decision to put a penny on income tax was praised for being simple, progressive and guaranteed to raise a certain amount of revenue. The IFS said there would be a growth dividend of 2% of GDP from Jo Swinson’s policy of scrapping Brexit. And they were the only one of the three main parties to have debt on a decisively downward path.
Boris Johnson and Jeremy Corbyn received harsher treatment. Although there was a stark choice between the Conservatives’ do-nothing manifesto and Labour’s plans for a big increase in the size of the state, neither was offering a “properly credible prospectus”, according to the thinktank.
Its director, Paul Johnson, expressed scepticism about the chances of the Conservatives keeping to their plan for only modest increases in spending during the next parliament. On past form, they would end up being more generous, with the result they would have to choose between raising taxes or breaking their fiscal rules by borrowing more. Failure to negotiate a settlement with the EU by the end of next year would rekindle the prospect of a no-deal Brexit and send the deficit shooting upwards.
As for Labour, the IFS said the party’s tax and spending package didn’t really add up and would lead to many millions outside the top 5% of earners paying more. All other countries which tax and spend on the scale that Labour was proposing levied more tax on the average worker than Britain does, Johnson added.
The IFS was particularly critical of Labour’s plan – not included in its manifesto – to compensate the women affected by an increase in the state pension age. Labour was promising a lot more to a “relatively well off group” than it was for those hit by benefit cuts.
