IFS: Labour leaves door open to borrowing £90bn more than the Conservatives

 
Guy Bentley
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Labour's borrowing plans remain vague (Source: Getty)

The independent Institute for Fiscal Studies (IFS) has published its analysis of several of the parties' manifestos.

The Conservatives, Labour, Lib Dems and the SNP all came in for scrutiny from the think tank - although Ukip and the Greens were left off the list.

The IFS' numbers show a substantial difference between the major parties' plans for public spending cuts and deficit reduction. Under a Labour government, Britain's debt could be £90bn higher than under the Conservatives.

The Tories want to cut the national debt as a proportion of GDP to 72 per cent, whereas under Labour debt would fall from 80 per cent of GDP today to 77 per cent in 2020. Labour has vowed to cut down on the current deficit, but has left itself room to manoeuvre with a possible £26bn of capital spending per year.

The IFS explained the trade-offs of the Conservatives' more ambitious deficit reduction plan:

The Conservative plans, if implemented, would have the advantage of resulting in lower debt interest payments and could potentially leave the country better placed to deal with future adverse economic shocks. But they would require much deeper spending cuts or tax increases than would the other parties' plans.

For the Tory figures to stack up, they would need to cut £30bn from unprotected departments to meet their borrowing targets. Outside health and education, departments could face spending reductions of 17.9 per cent.

But according to the IFS, voters are still "somewhat in the dark" about the specific spending cuts the parties would make.

Carl Emerson, deputy director of the IFS, slammed the Tory plans, saying they were "predicated on substantial and almost entirely unspecified spending cuts and tax increases".

The think tank added Labour had been "considerably more vague" about its plans on borrowing than the other parties. However, Labour's plans to reduce borrowing were, it said, largely in line with those of the SNP only at a faster rate.

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