We’ve had Norman Smith declaring the Tory economy as ‘utterly terrible’ and forecasting something of an Orwellian ‘Wigan Pier’ type future for the country and now we have Evan Davis declaring that Tory comments on Labour’s plans to raise £3000 worth of taxes from every family over 5 yearswere ‘ridiculous’.
But are they? The IFS within hours of the Tory claim leapt into action to denounce it just as they did the Tory pledge to cut welfare by £12 bn…looking at the IFS website it is hard to find anything similarly critical of Labour….but, as the BBC insists, they are ‘independent’.
If Labour were to make no cuts and borrowed nothing then to clear the £70 billion deficit it would cost around £3,000 per household over the course of 5 years.
The Today programme (around 06:10) was going to investigate the Tory claim in a measured and indepth way, or so I thought. What they actually gave us, and described as a ‘tough interview by Evan’, was a clip of Evan Davis berating Grant Shapps and doing his usual trick of preventing any answer to develop by interrupting with claims that ‘It’s ridiculous’. Justin Webb told us that ‘Evan gets very upset about the figures when he thinks they are being misused…..and quite right too!’ No bias there then.
And that was that…the BBC’s most prestigious news and current affairs programme resorts to low abuse and playing clips that don’t explain anything but are purely there for the entertainment and amusement of the ‘Hampstead lefties’ ensconced at the BBC and the Guardian.
But who is being ‘ridiculous’?
Are the Tories right…at least in making the assumptions it does?
Here the one reliable journalist at the BBC agrees that Labour will have a £30 billion blackhole in their economic plans……
‘Andrew Neil: You would borrow more, wouldn’t you?
Andrew Neil: To bridge the deficit you have to borrow more. You’re going to borrow £30 billion a year simply to pay for public investment. That’s part of what you’re going to do – correct?
Lucy Powell: We are going to balance the books by the current expenditure by end of the Parliament.
Andrew Neil: And borrow £30 billion a year for public investment
In 2010 Miliband was proposing a 50-50 split between raising taxes and spending cuts….
I’m told that the new Labour leader – who taught economics at Harvard during his sabbatical in 2003-2004 and chaired the Treasury’s Council of Economic Advisers for a year upon his return to the UK – is considering switching to a 1:1 (or 50 per cent to 50 per cent) ratio of spending cuts to tax rises, as advocated by Balls during the leadership campaign.
The IFS in 2014 was telling us that the state of the deficit means we will have to have….
£70 billion of tax increases or spending cuts over the course of the next Parliament if the Government are going to balance the books.
The IFS admits that Labour may be looking at having to borrow up to that £30 billion to avoid making some cuts…
Ed Balls has said he wants to balance the books by then on current spending. That allows him more wiggle room – about £28 billion of it.
So that leaves £42 billion to find from cuts or taxes for Labour on the IFS figures…..and a 50-50 split would be £21 billion in extra taxes….which is higher than the Tories predict for Labour at £15 bn…but the IFS now claims….
So on the face of it Labour might need a fiscal tightening of just over £18 billion by 2017–18…Obviously, such a tightening – if half is to come from tax rises – would imply a net tax rise of around £9 billion in 2017–18 (and not the £15 billion the Conservatives suggest).
The IFS forgets the previous ‘fiscal tightening’ of £7.5 billion they mention earlier in their statement…taking it to nearly £26 billion…and a tax rise of not £9bn but £13 billion or so, nearer the £15 billion the Tories suggest….so one time the IFS predicts the tax rise would need be £21 billion, then their figures suggest £13 billion…but they claim it’s nearer £9 billion….who is guessing what?
Looks more like the IFS figures don’t add up than the Tories….the IFS rushed out their statement within hours of the Conservative claim and that being the case seems more politically motivated than based on sound number crunching…..paradoxically the IFS in their opening statement made clear that around £21 billion in tax take over 5 years was in fact what the Tories predicted…
The Conservative Party have claimed that under Labour there would be a £3,028 tax rise for every working household. This calculation assumes that Labour would increase taxes on working households by £7.5 billion in 2016–17 and £15 billion from 2017–18 onwards, with the £3,028 being the average tax rise cumulated over all years through to 2019–20.
So the Tory figures match the IFS’s…..or the IFS figures that you have to dig for in other IFS comments but which they don’t admit as their own estimate in their latest rebuttal.
Having denounced the Tories for ‘guesswork’ the IFS goes into detail about Labour’s policies in order to ‘prove’ the Tories wrong…but then they say this…..,
It is also not entirely clear – at least to us – when Labour would want to achieve current budget balance.
There is real uncertainty about what path the Labour party want to follow for the public finances. The Conservatives have been clearer about what they want to achieve, but they have not been clear about how they would achieve it.
There is little value in bandying around numbers which suggest either party would increases taxes by an average of £3,000 for each working household. We don’t know what they will do after the election. But neither of the two main parties has said anything to suggest that is what they are planning.
So..’It is also not entirely clear – at least to us …There is real uncertainty about what path the Labour party want… We don’t know what they will do after the election’. ……and yet they can still ‘disprove’ the Tory claim and ‘prove’ the Labour case!
The Tory figures are indeed ‘guesswork’ but based upon the information that is out there and what Miliband and co, and indeed the IFS, have said……the IFS seemed altogether too eager to undermine the claim and the BBC all too eager to jump on the bandwagon.