All three parties 'have black holes in spending plans'

Crying shame: it was every politician’s worst nightmare as Labour MPs Tessa Jowell and Yvette Cooper did their best to comfort a baby on the campaign trail in Waterloo today. But sadly for the two women, it all ended in tears
10 April 2012
WEST END FINAL

Get our award-winning daily news email featuring exclusive stories, opinion and expert analysis

I would like to be emailed about offers, event and updates from Evening Standard. Read our privacy notice.

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."

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in