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All three parties 'have black holes in spending plans'
Nicholas Cecil, Deputy Political Editor27 Apr 2010
The gaping black holes in Gordon Brown, David Cameron and Nick Clegg's plans to tackle Britain's public finances crisis were laid bare today.
The Institute for Fiscal Studies warned that taxes would almost certainly have to rise after the election — no matter who wins.
The respected economists also accused Labour, the Conservatives and the Liberal Democrats all of failing to be open with voters.
They found the Tories the biggest shortfall in their plans for public spending cuts between April 2011 and March 2015 — of £52.4 billion — compared with £44.1 billion for Labour and £34.5 billion for the Lib-Dems.
“Whoever forms the next government, that points to greater reliance on tax increases and welfare cuts after the election than the parties are willing to admit to beforehand.” Other key findings are:
* Labour would have to raise taxes by another £7 billion to meet their ratio of 2:1 for spending cuts to tax rises to repair the public finances.
* The Conservative plans imply cuts to public services that have not been delivered over any five-year period since the Second World War. Labour and the Lib-Dems would have to bring in the deepest cuts since the four years from April 1976 to March 1980.
* The Lib-Dems revenue raising plans have the greatest degree of “uncertainty”, with some measures expected to raise less than claimed and others more.
* The Conservatives, while making bigger public spending cuts would still “probably” have to reverse half the net tax cuts that they have just announced.
* The increase in the tax burden implied by Labour's announced measures will weaken work incentives for most people. The Conservative plans to partially block Labour's National Insurance rise next April would strengthen the incentive for many people to work, as would the Lib-Dems proposals.
* The Lib-Dems would have to raise taxes if they are unable to raise the revenue they plan or if they discover the squeeze on spending becomes unacceptably tight.
* Labour's changes to the tax system are not an “appealing” set of reforms.
* The Lib-Dem plan to restrict tax relief on pension contributions for higher earners is “misguided”.
* The Labour and Lib-Dem plans would increase tax revenues, as a share of national income, to the highest since the 1989-90 boom.
The most stinging criticism of the parties is the failure to spell out to people in far greater details where future cuts will hit or which taxes may have to rise. “The voters in this election deserve to make an informed choice between the plans the parties have to repair our public finances,” said the IFS. “Unfortunately, all of them are vaguer than they could be or should be.”
Business Secretary Lord was asked how Labour would deliver the savings to reduce Britain's state deficit. He said: “Every party knows that we are going into a period which is going to present a very tough public spending climate and that means the choices we make, the priorities we choose and the way we switch spending from lower-priority programmes to higher-priority ones is the bread and butter of this election.”
Shadow chief secretary to the Treasury, Philip Hammond, admitted: “I don't think any party has identified in detail how they will reduce public spending over the course of the coming parliament.”
Reader views (10)
I liked Alex Salmond's comments on Question Time about the "iceberg" of cuts awaiting us after this election, we are only being allowed to see the tip of the iceberg at the moment.
None of the big three were prepared to mention the hidden cuts during the debate.
- John J, Edinburgh, Scotland, 30/04/2010 15:47
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Start with money squandered on unholy run on the euro superstate, £13Bn immigrants, £5Bn membership, £9Bn foreign aid the list goes On&On.
- Bill, Hove sussex, 28/04/2010 11:12
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it all makes me want to lock myself in the loo and do a bit of quantitative easing
- murray, london, 28/04/2010 10:45
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nickspurs is quite right.
Let's try to put some numbers on it:-
Current Government Debt is about £850 billion.
Current deficit around £170 billion (that's howe much it goes up each year)
When Nu Lie Bore have "halved the deficit" after 4 years the Government Debt will be circa £1.5 TRILLION and it will still be increasing by £85 billion each year.
Add to that the public sector pensions deficit. PFI and personal debt (about the same as government debt) and we are deep in the Brown Stuff.
Well done Gordon - you've been in charge since 1997.
- Anglo, Sussex England, 28/04/2010 06:37
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Its even worse than people realise, when Labour says they will reduce the deficit by half, that is the over spend PER YEAR! In other words the overall deficit will continue to rise each year, albeit by less than before..clearly no party is telling the truth. Brown`s old style tax and spend has led us to the brink of disaster.
- nickspurs, London, 27/04/2010 20:13
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The politicians have run out of our money.
Stand by for a LOT of trouble - it will start very soon after the election. It will not be pretty and some of us are really going to suffer.
- Anglo, Sussex England, 27/04/2010 19:44
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i'd venture to suggest that it's not just their spending plans that have black holes.
truthful intent and promises of what can and will
happen are also black holes. but then who would vote for any of them if they told it as it is and will be.
- m.o'brien, london.uk, 27/04/2010 16:40
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I think we all know that taxes are going to rise - the deficit cannot be sensibly funded purely from efficiency savings as Brown seems to want us to believe. I would rather have the Institute of Fiscal Studies than rely wholly upon the Bank of England. The former is independent of politics and has demonstrated that fact regularly. The Bank of England, whilst not overtly political, is so close to the Treasury it struggles to maintain successfully the balance between Government targets and fiscal responsibility. What the IFS says may be unwelcome at times, but it usually helps clarify the public debate.
- James Elliott, Eastbourne UK, 27/04/2010 14:48
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Would we save anything by getting rid of The Institute of Fiscal Studies? After all we have The Independent Bank of England.
They must hundreds of quangos we can close down.
- ALAN,, ENGLAND., 27/04/2010 14:17
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Finally some truth behind all the spin.
Labour have been writing cheques with our money but not cashing them (for 13 years). Fiscal Pain ahoy!
Or is it the banks fault again? lol
- bobby, berks, 27/04/2010 13:11
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