Both Labour and the Conservatives are already on track to break their spending rules due to uncosted promises made in their manifestos, according to the Resolution Foundation think tank.
The two main parties have both changed their so-called fiscal rules to allow more government spending, but say they will balance day-to-day spending with receipts by the end of parliament.
However, the Resolution Foundation has said in a report that both are on track to breach their rules “even before the ink on them is dry”, with Labour almost certain to cross its limit.
The report will raise questions not just about about the honesty of the parties but also about the sort of detailed costings they have produced, given how uncertain predicting future spending and revenue is.
The Resolution Foundation said Labour’s promise to compensate women affected by the rise in the state pension age could add £12bn to current spending, but is not included in its sums.
It also said Labour has failed to account for £10bn of interest and depreciation costs that would come along with its planned £400bn of investment over 10 years. This means “Labour is already on course to break its goal of a current budget balance in five years’ time,” the think tank said.
The Conservatives also look set to break their spending pledges, the report said, as the party’s manifesto does not include any funding for their goal of raising the national insurance payment threshold to £12,500. The Institute for Fiscal Studies said this could cost £10bn a year.
The Tories’ planned extra investment spending – which is much smaller than Labour’s – is likely to add £1bn a year to spending due to interest payments and depreciation.
The Conservative party’s fiscal rule to balance spending by 2023 “has an 86 per cent chance of being wiped out, given the pattern of historic errors in forecasting the current balance three-years ahead,” the report said.
Labour shadow chancellor John McDonnell said: “This report is inaccurate in its description of Labour’s position. Our investment programme, supported by a fiscal rule which aims to leave the government better off, means depreciation of existing assets will be lower under Labour.”
Resolution Foundation research director James Smith said Labour and the Tories were “right to have adopted new approaches that avoid some of the pitfalls of previous narrow focuses on debt levels”.
“However, the parties seem all too willing to bend or even break their own fiscal rules before they’ve even got started. Both parties have failed to account for the wider costs of their very significant investment programmes.”
The Conservative party has been approached for comment.