Prime Minister Boris Johnson has launched the Conservative manifesto with a pledge that he would increase spending by a fraction of Labour’s plans in a “sensible, moderate” approach to the economy.
According to the Conservatives’ sums, the party would increase day-to-day spending by £2.9bn a year by 2023-24, compared to an £82.9bn increase under Labour. This means for every pound the Tories promise to spend that year, Labour would spend £28.50.
The new money from the Conservatives comes on top of the more sizeable extra spending announced in September, however, which promised a £33.9bn boost for the NHS over the next four years among other policies.
The Tory party said today that it would also cut taxes – although not by as much as Johnson promised in the summer – and still be able to balance the books.
Johnson and co said they could do this thanks in large part to the scrapping of the planned corporation tax cut from 19 per cent to 17 per cent. This would make up the bulk of the £5.9bn extra revenue they on average expect to receive for the next four years.
The Tories said this extra revenue would more than offset tax cuts, which would cost the government £3.3bn a year on average, and spending increases, which would average out at £2.3bn extra a year.
Revealing the manifesto in Telford, Shropshire, Johnson promised “tax-cutting One Nation Conservatism” but did not keep the promise he made during the Tory leadership election to cut taxes for higher earners, which experts said could cost £20bn.
Instead, he unveiled a “triple tax lock” plan to freeze national insurance, income tax, and VAT.
Paul Johnson, director of the Institute for Fiscal Studies, criticised the policy, however. He said it was “part of a fundamentally damaging narrative – that we can have the public services we want, with more money for health and pensions and schools – without paying for them”.
Nonetheless, the Conservatives sought to portray themselves as the party of economic credibility. Johnson said: “We are maintaining fiscal discipline… and we will keep debt coming down.”
In a costing document released with the manifesto, chancellor Sajid Javid wrote that under the manifesto the Tories would stick to their new spending rule of having “the current budget in balance no later than the third year of the forecast period”.
The document also put specific figures to the tax and spend plans. The bulk of the tax cuts would come from the already announced rise in the national insurance contribution threshold to £9,500 next year. This would cost on average £2.3bn a year, the Tories said.
The PM announced that he would review business rates and start by cutting them for retailers in 2020-21 in a giveaway worth £320m next year and £10m each year thereafter.
The majority of the extra spending will go on the NHS, with an extra £1.5bn a year on average over the next four years, mainly going towards putting 50,000 more nurses into the health service. This will add to the £33.9bn promised in September.