It’s no wonder the markets are raising questions about UK public finances – neither of the main parties has anything approaching a clear message on fiscal tightening.
From Labour, you get blithe assurances on taxes. Liam Byrne didn’t quite ask us to read his lips yesterday when promising no new tax increases, but he might as well have done. Carl Emmerson from the Institute for Fiscal Studies was unimpressed:
I cannot see how the Government can promise to not affect front line services when you look at the scale of the cuts they have got to plan for.
Liam Byrne is talking just about the first four years and after that there will undoubtedly have to be more pain and that is likely to be tax rises or even greater public sector cuts.
But the Tories are not in the clear either. I was baffled by William Hague’s recent speech at the Conservative Party Spring Forum. Half way through his speech, he lays out the Tory pitch to the undecided voter:
And to those who say they do not know what the Conservatives will do, let us tell them. We will cut the spending that cannot go on and the borrowing that leads to ruin.
So what follows? Here are all the commitments Hague makes that will cost money:
(i) Cutting taxes on business to give the UK the ‘most competitive’ tax environment in the G20
(ii) reversal of Labour’s planned national insurance increase
(iii) abolition or reduction of inheritance tax
(iv) two year freeze on Council tax (despite promises of the ‘biggest ever’ transfer of power to Councils)
(v) stamp duty abolished for first time buyers (despite unsustainable prices in the housing market)
(vi) more university places and apprenticeships
(vii) nursing care in their homes for the elderly.
And here are all the commitments is the only commitment that will clearly save money (though not much):
(i) Scrap ‘a large slice’ of expensive quangos.
And voters are supposed to be convinced this adds up to “vision of a Britain restored.”
Both parties need to convince the electorate they can get Britain back on its feet (the slogan I’d advise either to run their campaign under). But as Martin Wolf argues in today’s FT, at the moment it’s shaping up to be an election that both sides deserve to lose.