Claim and counter claim over IFS report

28th Apr 2010

Yesterday's Institute for Fiscal Studies (IFS) report on the parties' plans to tackle the deficit has proved something of a political bombshell.

Still shaping the campaign debate 24 hours after its release the report, criticised the three major parties for a failure to give sufficient information on future cuts and tax rises.

This has not stopped politicians of all hues playing down IFS criticisms of their policies and even claiming the research justified their own positions.

But how accurate are their versions of the IFS research?

The Claims

Lib Dem leader Nick Clegg seized on the suggestion that his party would be required to make the smallest cut in departmental spending, telling Channel Four News: "We won't need to deliver as deep cuts in departments as the other parties."

Shadow Chief Secretary to the Treasury Phillip Hammond, underlined the IFS argument that the Conservative plans would see the smallest tax takeaway from households when paying down the debt.

Labour's response has concentrated primarily on the negative coverage of Conservative policy. However, on this morning's Today programme, rather than claiming vindication by the IFS, David Miliband was simply rejecting the apparent criticism of Government policies in the report.

Mr Miliband played down the news that the IFS had calculated a £44 billion shortfall between the money Labour needed to find, and the detail they have given on plans to halve the deficit in four years time.

"That's a statistic for 2016-17" he said, implying there was no such concern over plans up to 2015.

Analysis

Liberal Democrats

Looking at the information provided, it is suggested by the IFS that the current policies of the Liberal Democrats would require a £46.5 billion cut in departmental expenditure limits, as opposed to £50.8 billion for Labour and £63.7 billion for Conservatives. These figures take into account the parties proposals to ring fence certain areas of public spending.

The IFS figures also suggest that the Lib Dems' plans will lead to the smallest shortfall in the deficit - £34.5 billion, as opposed to Labour's £44.1 billion and the Tories' £52.4 billion.

So the report does appear to give Nick Clegg just grounds to make his claim.

However the report acknowledges that the figures flatter the Liberal Democrats, because much of the cuts proposed by Nick Clegg's party will not take effect until after 2014-15.

As the report states: "The Liberal Democrats are back-loading their spending cuts into 2015—16 and 2016—17. Focusing on the size of the spending cut required by 2014—15, and the proportion of it that has been identified to date, therefore flatters them to some degree".

The Conservatives

Phillip Hammond's claim is is borne out by the IFS analysis of the parties tax and spending plans, also published yesterday.

The research suggests that the total tax 'takeaway' from households by each party would be £610 for Labour, £760 under the Liberal Democrats compared to £390 under the Conservatives.

However when coupled with the other report it seems that while the Conservatives' proposals do indeed mean less tax rises for households, the details the Tories are yet to set out could have an effect on the figures.

As the report on deficit reducing plans says: "Labour and Conservative plans imply further tax raising measures"

Labour

Mr Miliband's claim that the criticism of lack of detail in Labour's deficit reduction plan applied to the year 2016-17 seems inaccurate.

Point four on page three of the report specifically discusses cuts that will need to be found between April 2011 and March 2015, suggesting Labour will need to find £50.8 billion by 2015.

"The Conservatives would need to cut public services spending in their unprotected areas by £63.7 billion, Labour by £50.8 billion and the Liberal Democrats by £46.5 billion between April 2011 and March 2015. Of these the Conservative have announced measures that would bring about 17.7 per cent of the total cuts they need, leaving a shortfall of £52.4 billion. Labour has announced measures that would bring about 13.1 per cent of what it would need, leaving a shortfall of £44.1 billion. The Liberal Democrats have announced measures that would bring about 25.9 per cent of what they would need, leaving a shortfall of £34.5 billion."


The analysis suggests only 13 per cent of this has so far been set out leaving a shortfall of £44.1 billion in 2015, not it would seem 2016-17.

Full Fact contacted the IFS about Mr Miliband's remarks, and a spokesperson suggested the Foreign Secretary was mistaken in his comments.

Conclusion

Given the high regard with which the IFS is held by commentators, it is understandable that the parties would want to claim to have their backing.

The claims made by both Nick Clegg and Phillip Hammond about their respective parties' policies are backed up by what the IFS actually said, even if they glossed over other details.

David Miliband however does appear to have made an innaccurate statement about what the IFS said about Labour's policies.

Ultimately, despite the tug of war between the parties to claim the IFS message as their own, or at least damning their rivals, some of the points made in the report suggest there is little to choose between them.

Despite some policy differences, the IFS researchers still forecast debt will not return to 40 per cent until 2031-32, whichever party, or combination of parties, governs us after May 6.

By Patrick Casey