The UK’s main political parties have “ducked” addressing the challenges facing the public finances in the election campaign and ignored the “painful choices” those imply, according to the Institute for Fiscal Studies (IFS).
The leading economic research group has accused Labour and the Conservatives of engaging in a “conspiracy of silence” in their manifestos.
It warned it would be a “considerable surprise” if taxes did not have to rise in the next parliament
In an analysis of the main parties’ manifestos, the IFS said debt was at its highest level in 60 years.
At the same time, the tax burden is edging up close to record highs as the public purse faces bigger increases in debt interest spending than allowed for, and growing welfare spending.
With Labour and the Conservatives committed to similar fiscal rules, the IFS warned: “Despite these high tax levels, spending on many public services will likely need to be cut over the next five years if government debt is not to ratchet ever upwards or unless taxes are increased further.”
Paul Johnson, director of the IFS, also criticised Labour and the Conservative Party for both ruling out increases to income tax, National Insurance and VAT.
“Despite a damaging rush to rule out increases in all sorts of tax rates, it will be a considerable surprise if no other taxes are increased over the next five years,” he said.
The IFS also condemned a lack of transparency over plans to keep thresholds on income tax frozen for a further three years, which will raise £10bn a year.
The Tories, Labour and the Liberal Democrats would keep the measure in place.
The IFS also questioned if parties could raise £5bn by “cracking down” on tax evasion and avoidance.
“Maybe,” said Mr Johnson, but he added that none of the manifestos “make much of the fact that on official estimates most of the shortfall in what HMRC collects is not from big, faceless conglomerates but from the self-employed and small businesses”.
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