Roundup: Manifestos of two main British election contenders fail to satisfy experts
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E-mail Xinhua, May 27, 2017
by Peter Barker
LONDON, May 26 (Xinhua) -- The UK general election on June 8 will be a straight fight between the two main political parties, the ruling Conservatives and the main opposition party Labour.
Both parties have published their manifestos, and on Friday a leading independent economic think-tank examined the implications for policy and the costs in both manifestos.
The London-based Institute for Fiscal Studies (IFS) found that the policies of the Conservatives would mean a smaller state, with small tax gains and the possibility of tax rises.
Labour's policies would make the state larger, but also cost more in taxes.
The Conservatives already have policies in place under the current government to continue cuts in government spending, and to cut welfare payments.
Carl Emmerson, deputy director of the IFS, told a press briefing in central London: "For the Conservatives the big risk is that, after seven years of austerity, they would not be able to deliver the promised spending cuts either at all or at least without serious damage to the quality of public services. Their tight immigration targets would, if delivered, also damage the economy and the tax base."
The Conservatives have few tax proposals. A manifesto promise to raise the income tax personal allowance to 12,500 pounds (about 16,000 U.S. dollars) would leave about 24 million basic rate payers 33 pounds a year better off.
The Conservatives have given themselves the freedom to raise the rates of income tax and national insurance (a tax for health care) contributions, but have made no other tax commitments, the IFS said in a briefing document.
Compared with Labour, the Conservatives are offering a relatively smaller state and consequently lower taxes, said Emmerson.
"With that offer come unacknowledged risks to the quality of public services, and tough choices over spending. The difficulty in making some of those choices has been well exemplified by the to-ing and fro-ing, to put it politely, over the funding of social care," he added.
The Conservatives pledged at their manifesto launch last week to make old people pay for their own health care at home or in hospital out of their life savings and property, to be paid after their death -- exempting just the final 100,000 pounds of estate value.
This policy aimed to reduce liability for health spending for public services, against a background of a population where the number of old people is set to increase over coming decades.
This drew heavy criticism, and at the beginning of this week Prime Minister Theresa May said the manifesto plan would be reviewed if she was re-elected.
The Conservatives plan a real-terms increase of 8 billion pounds over the next five years in National Health Service (NHS) spending which would extend the lowest period of spending increases in NHS history to 12 years.
Growth in the NHS spending grew by an average of 4.1 percent each year between 1955 and 2016, but austerity policies have meant that the average for 2010 and planned to 2023 is 1.4 percent, the IFS said.
Labour promise to spend more with 2 percent growth per year.
LABOUR MANIFESTO RISKS
The Labour manifesto's spending and reform promises came with two big risks, said Emmerson -- that the revenue raising target was not realistic and that tax increases and higher minimum wages would damage the economy.
Both main parties plan to increase the minimum wage. By 2020, Conservative plans would see three times as many people on the minimum wage as in 2015.
Under Labour plans it would be more than five times, with over a quarter of all private sector workers and 60 percent of those aged 18 to 24 having their wage set by the government.
Labour thought it could raise more from higher income tax on rich people and a higher corporation tax, the IFS said in a briefing document, with an aim of raising 49 billion pounds a year.
"Labour certainly shouldn't plan on stated tax increases raising more than 40 billion pounds in the short run, and more likely than not they would raise less than that. They would certainly raise considerably less in the longer term," said Emmerson.
Paul Johnson, IFS director, said the two main parties had rarely offered such a clear and substantial difference of policies.
"One is promising relatively low levels of spending, tax and borrowing, while the other is promising a much bigger state. But neither is being really honest with the public," said Johnson.
"It is likely that the Conservatives would either have to resort to tax or borrowing increases to bail out public services under increasing pressure, or would risk presiding over a decline in the quality of some of those services, including the NHS."
Labour's commitment to a much bigger public sector would require higher taxes that affect many, he said.
"A bigger state than the one we have been used to is perfectly feasible as many countries have demonstrated, but Labour should not pretend that such a step-change could be funded entirely by a small minority at the very top.
"In particular the large increase in company taxation that they propose would undoubtedly affect a far broader group than that." (One pound = 1.28 U.S. dollars) Enditem
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