A friend of mine told me few weeks ago that she was afraid that as she got older she was turning into her mother. That’s no problem I said, as I get older, I think I am turning into Victor Meldrew!
I’ve thought that particularly in the last few days as I’ve looked at the spending plans in the Labour and Tory manifesto. I went full Victor Meldrew time after time as I said, “I don’t believe it!”
The Conservatives haven’t actually told us how much their manifesto will cost but we have had a lot of pre-election spending commitments. The trouble is that they all fall apart as soon as you look at them. Let me give two NHS examples. In October, Johnson announced that the Tories would build 40 new hospitals. When you looked at the finances allowed for this project it allowed for the refurbishment of 6 hospitals and the development of plans for building up to 34 more. It didn’t supply the money to build the hospitals themselves!
Over the weekend we were told that there would be 50,000 more nurses than today. No-one doubts that the NHS needs more nurses but no-one in the NHS has asked for 50,000 more and if they did what type of nurses would they be? The fact is that the NHS budgets already have cash in them to take on 20,000 more nurses but they cannot fill the vacancies as EU nurses either go home or don’t come. The Tories were unable to explain whether its 50,000 more than currently budgeted for i.e. 70,000 nurses more or 30,000 more than currently budgeted for. In either case they were unable to say how and when these nurses would arrive! That’s a lot of money unexplained.
They have also failed to tell us whether or not their spending plans are based on staying in the EU or leaving it under the various options available. All the options in the pictures above shows that there will be less money to send on anything.
Labour, in part, have put some figures to their proposals. The highly respected and totally independent Institute for Fiscal Studies has the following thoughts on Labour’s taxation polices:
- Labour’s proposed income tax rise for those with incomes above £80,000 would affect only the highest-income 3% of adults. But this accounts for less than a tenth of the additional revenue Labour says it would raise.
- About three-quarters of the revenue comes from increasing taxes on companies and their shareholders. It would be a mistake to think of this as falling entirely on ‘the rich’.
- To the extent that corporation tax falls on company shareholders, that includes everyone with a defined contribution pension. And in practice much of the burden will be passed on to companies’ employees through lower wages, and customers through higher prices – and that means all of us.
In all Labour’s tax and spend plans have been described as “colossal, enormous and simply lacking credibility”, by the IFS. Why is this important? Because there are 17 references to the IFS in Labour’s manifesto as they have sought to use the organisation to add credibility to its financial proposals.
As with the Tories a major fault with the Labour proposals is a total failure to say whether they intend to spend these amounts within or outside the EU.
The contrast between both these Parties and the Lib Dems is great. There are four key components to the Lib Dems announcements.
£7.5 billion a year more for health and social care which would be funded by a 1p increase in income tax. All economists agree that this is deliverable and the correct amount. This would give £40 billion over the assumed 5-year lifetime of a Parliament.
£10 billion a year from a ‘Brexit bonus’. This is the amount of extra tax which will arise from the bigger economy which will occur if we stay in the EU. It would be spent on a range of series including housing and the environment. Again, all economists have agreed that this is a realistic estimate of the enhanced prospects for growth if we remain in the EU.
Systematic detail of how other improvements would be paid for either by more specific topic based taxation, charges or savings. Every single announcement like these have been reviewed by a relevant external body.
Lastly, we recognise the need to start paying back the huge debts that we already owe as a nation. Countries are no different from families and individuals when we borrow money, we have to pay it back. If we spend today and don’t pay back money our gift to future generations would be huge debts.
So, my conclusions and those of most economic observers is very simple. The LibDem and Green manifestos ‘are credible’ because they are based on the UK still being ‘in the EU’. The Tory manifesto must be predicated on a No Deal exit, the terms of which are unknown. Labour can’t decide if we’ll be In or Out so how can their manifesto be costed or trusted?
I hope that you will join with me in saying, “I don’t beeelieeeve them!” if you look at what the Tory and Labour Parties are saying about your money.
You can hear more about the financial offerings of the three main Parties on our video channel. https://bit.ly/2LbUnxl