Tories 'will spend more' than manifesto pledge, says IFS

A Conservative government would “highly likely” spend more than outlined in its election manifesto and have to increase taxes or borrowing, a respected thinktank said as it described the plans of both main parties as “not credible”.

The Institute for Fiscal Studies (IFS) on Thursday said the chances of the Tories keeping a lid on public spending over a five year parliament looked “remote”.

“Why have they been so immensely modest in their proposals? 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,” said IFS director Paul Johnson.

“When we looked at the manifestos in 2017 we said 'the Conservatives would preside over yet more spending cuts' and that their manifesto would mean 'another parliament of austerity'.”

However, Johnson said this had not happened with current public service spending due to be around £27bn higher next year than implied by their 2017 manifesto.

“That’s closer to the 2017 Labour pledge than to the Conservatives’ own manifesto,” Johnson said.

“Conservative plans if delivered would leave public service spending outside of health still 14% lower in 2023-24 than it was in 2010-11. No more austerity perhaps, but an awful lot of it baked in.”

In contrast, Labour had “doubled down” and pledged to spend an extra £80bn with £50bn promised in 2017.

A £58bn promise to the so-called WASPI women (Women against State Pension Inequality) sat on top of that spending, which Johnson described as “a group who are relatively well off on average” who would receive more than the “much bigger group of much poorer working age benefit recipients”.

“Instead of aiming to increase investment spending by £25bn a year they are now wanting a £55bn increase. Taxes are not supposed to rise by £50bn but by £80bn. Under Labour both taxes and spending would rise to peacetime highs,” Johnson said.

“On generous assumptions they would see the national debt rise by around 3% of national income.”

“Neither is a properly credible prospectus.”

However, Johnson said much of Labour’s vision was of a state “not so dissimilar to those seen in many other successful Western European economies”.

“Labour’s proposed increase in the size of the state would still leave UK public spending at a lower share of national income than that seen in Germany. Water companies are more often than not in public ownership. And, for example, collective pay bargaining is widespread in many European economies,” he said in reference to the party's renationalisation plans and more workers rights.