Tories and Labour under fire from IFS over ‘conspiracy of silence’ on tax

A leading think tank has accused Labour and the Conservatives of a “conspiracy of silence” as it warned voters that tax rises are likely in the next five years.

The Institute for Fiscal Studies (IFS) criticised the manifestos of both main parties, saying they leave voters “guessing” and casting their ballots in a “knowledge vacuum”.

It also accused Nigel Farage’s Reform UK party and the Greens of poisoning the debate around the painful economic decisions ahead with what it described as unattainable pledges on tax.

The next government faces a stark choice between making tax rises beyond what it promises in its manifesto, cutting spending, and increasing borrowing, the think tank warned.

Paul Johnson, the director of the IFS, said it would be “a considerable surprise if no other taxes are increased over the next five years”, and that none of the main parties are facing up to the difficult choices ahead.

“We’ve called this a conspiracy of silence, and that has been essentially maintained,” he said. “Regardless of who takes office, they will soon face a stark choice: raise taxes by more than they have told us in their manifesto, implement cuts to some areas of spending, or break their fiscal rules and allow debt to rise for longer.

“That is the trilemma. What will they choose? I don’t know; the manifestos do not give us a clue.”

Mr Johnson also accused Labour and the Conservatives of making “essentially unfunded commitments” to improve the NHS.

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The IFS warns that several public services are at risk of suffering “sharp” cuts under either a Labour or a Conservative government.

Broadly, the IFS said, the priorities of each party “do not tell us anything about overall spending on each public service”.

On the NHS, Mr Johnson said that both main parties want to cut waiting times, implement the NHS England workforce plan, build more hospitals and expand mental health services.

But he added: “These ‘fully costed’ manifestos appear to imply all this can be delivered for free. It can’t. You can’t pledge to end all waits of more than 18 weeks, allocate no money to that pledge, and then claim to have a fully costed manifesto.”

He went on: “How would either party deal with backlogs in the court system, overflowing prisons, crises in funding of higher and further education, social care, [and] local government? We have not a clue.”

He also hit out at Reform and the Greens for making tax claims that he said had made offerings from other parties look “feeble” in comparison.

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Their pledges are helping to “poison the entire political debate”, Mr Johnson said.

The IFS said Reform had proposed £90bn of specific tax cuts and £50bn of spending increases, paid for by a £150bn package of measures that include substantial, unspecified cuts in welfare and government waste.

Mr Johnson compared Mr Farage to former prime minister Liz Truss, as he said: “If they want a smaller state – a perfectly reasonable ambition – they should tell us how they will achieve it. We saw the consequences of massive tax cuts with no detail on how they would be paid for in September 2022.”

The claim that the party could eliminate NHS waiting lists at a cost of £17bn a year is also “demonstrably wrong”, he said, adding that the large tax cuts would cost “even more than stated, by a margin of tens of billions of pounds per year”.

The Greens want an additional £80bn a year of borrowing, which Mr Johnson said would have “unpleasant consequences”.

Their biggest proposal, a £90bn-a-year carbon tax, would incentivise a faster transition to net zero but would have far-reaching economic implications, including raising the cost of many essentials.

“Much, probably most, of any money raised would need to be used to mitigate those effects, and to support those on lower incomes, not to fund other things. In any case, any effective carbon tax would reduce the amount of carbon-based activity and hence, eventually, raise a lot less,” said Mr Johnson.

Asked about the IFS analysis, Rishi Sunak said: “I don’t agree with that. We have a fully costed manifesto which can deliver tax cuts for people at every stage in their lives, and that is largely funded by making sure that we can find some savings in the growth of the welfare budget, because it’s been growing at unsustainable levels since the pandemic.

“We’ve set out a very clear plan to reform that, to support people into work, and in fact, the IFS acknowledge that last time around, [when] they said that wasn’t possible, it was actually delivered, and that’s something that the IFS themselves have said.”

Asked whether Mr Johnson was “wrong”, Labour leader Sir Keir Starmer said: “I don’t accept the [economic] forecasts that say we can’t do better than this. The economy has flatlined for 14 years. That is exactly what we are wanting to change; that’s why we’ve set out our plans for growth in our manifesto.”