The Institute for Fiscal Studies (IFS) has released a report revealing what it calls a “conspiracy of silence” among the major political parties in this election. According to the IFS, the manifestos of the three main parties – Labour, the Liberal Democrats, and the Conservatives – lack transparency and fail to address a significant black hole in the government’s spending plans.
The IFS is primarily concerned with the lack of clarity on how the parties will fill the gap in the government’s budget. It explains that every government spending plan includes assumptions about how much spending, taxes, and economic growth will increase in the coming years. This is known as the “baseline.” However, the IFS points out that the baseline assumes a slow growth rate of only 1% per year after adjusting for inflation. This is problematic because it does not account for the expected increase in spending on essential services like the NHS, schools, and defense. As a result, the IFS predicts that the unprotected departments, such as the Home Office and the legal system, will face annual cuts of 3.5%.
While the parties have committed to this baseline, the IFS argues that it is a “conspiracy of silence” because they can simply make adjustments after the election when they conduct a spending review. This allows them to avoid discussing the need for more funding for these unprotected departments, or else face a return to austerity.
The IFS also highlights five other issues that the major parties are not addressing in their manifestos. First, despite promising not to increase major tax rates, the reality is that taxes will go up for everyone. This is due to freezing the thresholds for paying certain tax rates, resulting in individuals paying taxes on a larger portion of their income. Second, all three parties rely heavily on the assumption that they will generate significant revenue from tightening tax avoidance rules, which the IFS believes is not a surefire solution.
The third issue is the fiscal rules that all parties have agreed to follow. The IFS argues that these rules are not necessarily effective and can be manipulated. They also raise questions about the Bank of England’s interest payments to banks as part of its quantitative easing program, a topic only the Reform Party has addressed in their manifesto.
The fourth issue is Brexit, which has been largely absent from this campaign. While the impact of leaving the EU may be overstated, it is still a significant factor in the country’s economic future. Lastly, the IFS raises concerns about the lack of discussion on international issues such as tariffs on Chinese electric cars, net-zero policies, and sanctions on Russia.
However, the IFS acknowledges that addressing these issues may prove to be a risky move for any party, as seen in the disastrous impact of the Conservative Party’s 2017 manifesto, which attempted to tackle the issue of social care. As a result, the current manifestos are thin on policy proposals.
In conclusion, the IFS argues that there is a “conspiracy of silence” among the major parties, and the issues they are not addressing go far beyond what the IFS has brought to light.
