IFS attack

Tax rises or spending cuts ‘ignored’ in manifestos

Paul Johnson IFS
Paul Johnson: we have been left guessing (pic: Terry Murden)

Both Labour and the Conservative party have been accused of avoiding big questions over tax and public spending and whoever wins on 4 July will face “huge decisions on the size of the state”.

The Institute for Fiscal Studies (IFS) has previously accused the main parties of engaging in a “conspiracy of silence” and ignoring “painful choices”.

It has warned that 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”.

Paul Johnson, director of the IFS, said the parties continue to ignore how they will tackle the challenge of sustaining public services, raising tax or the level of government borrowing.

He said 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.

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

Mr Johnson questioned why Labour and the Conservative Party had ruled out increases to income tax, National Insurance and VAT and said iit will be “a considerable surprise if no other taxes are increased over the next five years.”

SNP leader John Swinney claims that both parties are committed to huge spending cuts and has called on Labour, as the likely winner on 4 July, to raise taxes in order to avoid eroding public finances further.

Prime Minister Rishi Sunak insisted the Tory manifesto is a “fully costed manifesto which can deliver tax cuts for people at every stage in their lives” and in Edinburgh yesterday he said his government had put the country on the road to “economic stability”.

Labour leader Sir Keir Starmer said: “The economy has flatlined for 14 years and that is exactly what we are wanting to change and that’s why we have set out plans for growth in our manifesto.”

The Lib Dems also claimed its manifesto was “fully costed”.

The IFS also looked at the proposals by the Green Party and Reform. The Greens have outlined major spending plans which would be paid for by tax rises and an additional £80bn a year in borrowing.

Reform plans to 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 that in both cases they were “wholly unattainable” and only helped “to poison the entire political debate.”

The Green Party refuted the IFS’s verdict, arguing that it was following a European model of redistributing tax with a higher take from GDP and through more intervention by government.

Reform had not commented on the IFS report.

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