Institute for Fiscal Studies (IFS) Director Paul Johnson said proposals outlined by the left-wing leader would raise taxes for “millions” of people, increase national debt and the party’s position on Brexit would prolong economic uncertainly. During an extensive comparative analysis of some of the major parties’ manifestos, the economic think-tank highlighted several flaws in Labour’s plans, including its flagship nationalisation programme. Labour has outlined a vision to increase public spending to an estimated £73 billion by 2023-24.
Its plans to nationalise several private sectors including the railways, broadband and water, would be funded through tax rises for the top five percent of earners.
However, according to the IFS it cannot be delivered.
Mr Johnson said the cost of Labour’s programme would increases taxes to “peacetime highs” and increase public debt by three percent.
The IFS director added Labour would have to go against its pledge not to raise taxes for hardworking Britons outside of the highest-earners, because the “public sector doesn’t have the capacity”.
Mr Johnson said: “Under Labour both taxes and spending would rise to peacetime highs.
“On generous assumptions they would see the national debt rise by around 3 percent of national income.”
The IFS chief added: “It is highly likely that Labour, at least over the longer-term, would need to implement other tax raising measures in order to raise the £80 billion of tax revenue that they want and even just sticking to those proposals they would clearly increase taxes for many millions outside the top 5 percent.
“In reality, a change in the scale and scope of the state that they propose would require more broad based tax increases at some point.”
Another major promise by Mr Corbyn to “eradicate in-work poverty” has also been savaged by the economic experts.
In its election manifesto, the Labour Party plans to introduce a Real Living Wage of at least £10 per hour for all workers aged 16 and over, as well as setting up an Inclusive Ownership Fund (IOF) to allow employees to own a stake in larger companies.
The IFS director said Boris Johnson’s moderate plans “if delivered would leave public service spending outside of health still 14 percent lower in 2023-24 than it was in 2010-11”.
The Tories pledge day-to-day public spending would increase by just £3billion, however the economic think-tank state its “highly unlikely” they will stick to those numbers and would end up “taxing or borrowing more” over a five-year period.
On its Brexit strategy, if Boris Johnson gets his withdrawal agreement through parliament, the Prime Minister has pledged not to extend the transition period beyond 2020 – which in-turn could increase the chances of the UK leaving the bloc without a trade deal.
On Brexit, the IFS chief said: “The risk for the Conservatives is that their ‘die in a ditch’ style promise to exit the Brexit transition period by the end of 2020 could mean something rather like a ‘no deal’ outcome. That would harm the economy and of course increase the debt and deficit.”
In conclusion the IFS director said neither the Tories nor Labour is offering a “properly credible prospectus”.