It’s just two weeks until election day and the country’s political parties are vying to seem like they have the most credible plan to sort out the economy and Britiain's governmental purse strings. Today the Institute for Fiscal Studies (IFS), one of the country’s most respected think tanks, has offered its diagnosis, and it’s not looking good.
Looking at the manifesto promises of the Tories, Labour, the Lib Dems and the SNP, it found that no party had provided ‘anything like full details of their fiscal plans for each year of the coming parliament’, leaving voters ‘somewhat in the dark’ about just how severe their spending cuts and tax hikes would be.
The IFS had particular criticism for the way in which the big three parties relied on vague proposals to raise money (in the Lib Dems' case, £10bn worth) by clamping down on tax avoidance.
‘There are genuinely big differences between the main parties’ fiscal plans,’ said Carl Emmerson, deputy director of the IFS. ‘The electorate has a real choice, although it can at best see only the broad outlines of that choice.’
Perhaps unsurprisingly the Conservatives have the most aggressive austerity plan, aiming for a 5.2% cut in borrowing relative to national income. But their plans for tax cut and protected NHS, aid and education spending mean they will have to slash spending in unprotected departments by up to 17.9% - cuts that haven’t been spelled out in any great detail.
Labour’s plans suggest a reduction in borrowing of around 3.6% of national income. If they can find £7.5bn of revenues by clamping down on tax avoidance (which seems ambitious), they would only need to cut £1bn from unprotected departments – but that would arguably leave the deficit in a less healthy state, as Labour has been much vaguer about when it plans to reach a budget surplus.
You will be unsurprised to hear the Lib Dems’ plans straddle the fence between the two, with slower debt reduction than the Tories but more cuts than Labour. The SNP, meanwhile, are the slowest cutters of the lot.
The IFS projected that the national debt would fall under the Tories from 80% to 72% as a percentage of GDP over the next Parliament, and to 77% under Labour - a £90bn difference between the parties. Extrapolating what would happen if either was in government from now until 2030 (because that's going to happen), it said the Conservatives would cut the debt to 50% of GDP, and Labour to 67%.
Given the likelihood of a coalition it seems that whatever happens on the 7th May, at this point we can only guess at what direction the public finances are going to take.