Neither of the two main parties “has set out an honest set of choices” to the public over their tax and spending plans, the Institute of Fiscal Studies has said.



In a critical assessment of the Conservative and Labour party manifestos, the thinktank said both parties presented a misleading picture of the impact their polices would have over the course of the next parliament. It warned that neither addressed the long-term challenges facing the UK.

The Tory focus on cutting immigration risked a £6bn hit to the exchequer and the plans for continued austerity could prove impossible to deliver without causing serious damage to services, the IFS said.

General election 2017: IFS says Tories offering five years of austerity and Labour's plans 'would not work' – politics live Read more

Labour’s proposals would raise spending to its highest level since the mid-1980s and tax levels to record levels in peacetime, the thinktank said. But the party’s plans for tax hikes aimed at top earners and businesses may “not raise anything like” the £48.6bn claimed and its proposals could turn out to be economically damaging, it added.

The warning came as all the main parties resumed campaigning following a pause after the Manchester attack. Labour has closed the gap in opinion polls since its manifesto launch, which included a boost in spending on the NHS, schools and the abolition of university tuition fees. Theresa May promised to increase spending on long-term care, though her plan to make those who suffer long-term illnesses pay the most proved to be unpopular and was quickly dropped in favour of an unspecified spending cap.

The thinktank’s deputy director, Carl Emmerson, accused Labour of “pretending that everything can be paid for” under plans to raise taxes on the richest, many of whom will avoid paying higher rates of tax.



“The shame of the two big parties’ manifestos is that neither sets out an honest set of choices. Neither addresses the long-term challenges we face. For Labour, we can have pretty much everything – free higher education, free childcare, more spending on pay, health, infrastructure,” he said.

“And the pretence is that can all be funded by faceless corporations and ‘the rich’. The case [for higher taxes] needs to be made with honesty about what it would mean for tax payments, not pretending that everything can be paid for by ‘someone else’.”

Turning to the Tory plans, he criticised the Tories for proposing five more years of austerity that were unlikely to be “deliverable”. Emmerson said a Tory government would be forced to either pull back on spending cuts or increase taxes to prevent further cuts in the NHS and schools from hitting services.

“The Conservatives simply offer the cuts already promised. Additional funding pledges for the NHS and schools are just confirming that spending would rise in a way broadly consistent with the March budget,” he said.



Schools face years of funding cuts if Tories win election, say thinktanks Read more

“Compared with Labour, they are offering a relatively smaller state and consequently lower taxes. With that offer come unacknowledged risks to the quality of public services.”

Emmerson dismissed Theresa May’s plans to reduce benefits to the elderly by means testing the winter fuel payment and scrapping the pensions triple-lock as offering “wholly trivial” savings. And he said the manifesto U-turn over a cap on care costs would result in “presumably increasing public spending overall”.



The Tory commitment to get net migration down to the tens of thousands risked harming the economy, particularly when coupled with the ageing British population, Emmerson said. “Their continued focus on reducing immigration would, if effective, cause considerable economic damage as well as creating an additional problem for the public finances”.

John McDonnell, the shadow chancellor, said Labour’s manifesto already took into account attempts by the richest individuals and corporations to avoid new higher rates of tax.

“We believe the IFS has underestimated the revenue raising effectiveness of some of the tax changes we would make, but we recognise the potential for uncertainty which is why we have allowed headroom in our plans,” he said.

McDonnell said the IFS agreed that Labour would achieve a budget surplus in the last year of the parliament of around £20bn. And while this sum was smaller than the Tory target, he said it was more likely to be achieved.

“The IFS confirms that Labour are on target to meet our manifesto commitments in regards to our fiscal credibility rule, to balance the budget on day to day spending in the coming parliament and have debt falling as a share of GDP as we have committed,” McDonnell said.

“The IFS assessment of the Conservatives is clear: their plans would damage our economy and public services with five more years of damaging austerity.”



