Respected thinktank says neither Conservatives nor Labour are being entirely honest about how they will fund and deliver their different visions for the UK

A plague on both your houses. That, put simply, is the considered view of the Institute for Fiscal Studies on the tax and spending pledges made by the Conservative and Labour parties in their election manifestos.

There was, the IFS noted, a real choice for voters on 8 June, marking quite a change from recent elections. But it was a choice between the undeliverable on the part of the Tories and the unworkable from Labour. Even by the IFS’s exacting standards, it was a withering assessment.

Theresa May’s pitch to the public is more of the same. More austerity, more welfare cuts and a balanced budget by the middle of the next decade – 10 years later than originally planned.

If the idea behind providing few costed pledges in the Conservative manifesto was designed to provide the IFS with less to attack, the strategy didn’t work. The thinktank says May’s spending plans will put real pressure on public services, and in particular extend to 12 years what is comfortably the most severe squeeze on the NHS since it was founded in 1948.

IFS makes damning assessment of Tory and Labour manifestos Read more

At a time when demographic and technological change is pushing up the cost of providing healthcare, the IFS says the average increase in the NHS budget between 2010 – when David Cameron became prime minister – and 2022-23 will be 1.4% a year on average, and just 1.2% a year from 2016-17 onwards. Hence the IFS’s concern that the Conservative plans are not deliverable. Labour is planning to be more generous, but not by much. Over the past 60 years, the NHS budget has increased in real (inflation-adjusted) terms by 4.1% a year. Labour’s proposed increase would be half that.

The IFS gives the prime minister half a cheer for making an attempt to get to grip with the cost of an ageing population. But it notes that the scrapping of the triple lock on the state pension and the means-testing of the winter fuel allowance would make a trivial difference to spending. As for social care, the IFS’s deputy director, Carl Emmerson, said that they seemed to be in “a state of flux” following this week’s U-turn on capping costs. A state of flux is IFS-speak for complete shambles.

Labour lost its hard-won economic credibility by virtue of being in power during the global financial crisis and has struggled to get it back. The latest attempt involves an increase of almost £50bn a year in day-to-day government spending paid for by equivalent increases in tax. Infrastructure spending would rise by £250bn over the next 10 years funded by higher borrowing.

The IFS doesn’t have that much of a problem with borrowing for public investment when interest rates are historically low, noting that it could boost growth in the short- and the long-term if used wisely.

The same, though, can’t be said of the plans for day-to-day spending, where the thinktank is clear that the plan for paying for an expansion in state activity “would not work”.

Labour’s tax proposals would raise at most £40bn a year, the IFS said, and probably less than that. The thinktank says the party’s £49bn tax calculation involves factual mistakes, optimistic assumptions and unspecified tax increases.

The plans would see the size of the state increase to a level not seen in 30 years, the IFS said. This, in itself, would not be an issue, since it would bring Britain into line with many other advanced economies. The issue is how to pay for it.

“If [Labour] want the advantages of a bigger state they should be willing to candidly set out the consequences – higher taxation affecting broad segments of the population.”

Indeed, this is the gripe the IFS has with both parties. The Tories would shrink the state; Labour would expand it. If the opinion polls are to be believed, Labour’s “soak the rich” approach has gone down rather better than “more of the same” from the Conservatives. But neither, according to the IFS, is being entirely straight with the public about how their quite different visions would be realised.

