The Conservatives, Labour, Liberal Democrats, and the SNP have all failed to explain how they plan to cut the deficit, the Institute of Fiscal Studies (IFS) has said.
The independent think tank found that the electorate have been left “in the dark” over cuts planned by all four major parties, with each only providing “broad outlines” about their economic plans in their manifestos.
The coalition government has overseen a reduction in borrowing from a 10.2% peak in 2009-10 to 5.0% this year, but whoever forms the next government still faces a tough task of finishing the job and reducing borrowing back to sustainable levels.
The IFS said:
“All four parties’ plans imply further austerity over the next parliament. The Conservatives are planning a reduction in borrowing over the next parliament of 5.2% of national income, which would result in a surplus of 0.2% of national income by 2018–19. Labour have been less clear about their plans for borrowing, but their ambition to balance the current budget would be consistent with a smaller reduction in borrowing of 3.6% of national income, bringing it to 1.4% of national income by 2018–19. The Liberal Democrats are aiming for a borrowing reduction of 3.9%, to be achieved a year earlier (i.e. in 2017–18), while the SNP tax and spending plans imply a borrowing reduction of 3.6% of national income, but this would not be completed until 2019–20.
“The differences between the Conservatives on the one hand, and Labour and the SNP on the other, are substantial. The Conservatives need to find much more substantial spending cuts; Labour and the SNP would reduce the deficit and debt significantly more slowly.”
Traditionally, Conservatives have campaigned on the point that public service pledges by Labour or the Lib Dems were unfunded, but this years has seen politicians of every colour being deliberately evasive about where they will be making cuts and where they will be finding the funds for investment pledges.
The Tory plans imply the greatest reduction in borrowing, and so would be making more cuts than the other parties over the next parliament. However, the IFS found that despite this, their detailed tax policies are a net giveaway of 0.1% of national income, their detailed social security measures would only provide a tenth of the cuts that they have said they want to deliver, and their commitments on aid, the NHS and schools would (relative to a real freeze) increase spending on these areas by 0.3% of national income.
Labour have been careful to avoid the question of exactly how much of the deficit they plan to cut and by when, but they have given more detail of how they would achieve any deficit reduction. The IFS found that their detailed measures would boost rather than reduce tax revenues. The cost of their protections for public services is about the same as the Conservatives, but they have not committed to increasing NHS spending by the same levels as the Tories. However, in practice, they will likely deliver increases to NHS spending of at least that scale, and they have been clear taht some cuts to ‘unprotected departments’ would be required.
Meanwhile, Labour have said that the Tories were planning “the biggest cuts anywhere in the developed world” if they gain power on 9 May, while the Tories have warned that a Labour-SNP coalition would be deeply unstable.
Both Labour and the Tories have attempted to avoid questions about any future coalition partners, but according to the most recent polls, neither is likely to win an outright majority and so will need at least one coalition partner or a supply and confidence deal with another smaller party.