Neither Tories nor Labour offer 'honest set of choices' on economy - think tank

Neither of the two main parties is presenting an "honest set of choices" to the public over their tax and spending plans, a respected economic think tank has warned.

The Institute for Fiscal Studies (IFS) warned that the Tory focus on cutting immigration risked a £6 billion hit to the Exchequer and the plans for continued austerity may prove impossible to deliver without causing serious damage to services.

Labour's plans for tax hikes aimed at top earners and businesses may "not raise anything like" the £48.6 billion claimed and their proposals could turn out to be "economically damaging".

Giving his assessment of the parties' plans, IFS deputy director Carl Emmerson said: "The shame of the two big parties' manifestos is that neither sets out an honest set of choices.

"Neither addresses the long-term challenges we face. For Labour we can have pretty much everything - free higher education, free childcare, more spending on pay, health, infrastructure.

"And the pretence is that can all be funded by faceless corporations and 'the rich'.

"There is a choice we can make as a country to have a bigger state. That would not make us unusual in international terms.

"But that comes at a cost in higher taxes which would inevitably need to be borne by large numbers of us."

He added "there is no way that the tens of billions of pounds of tax rises they promise" could be borne by the top 5% of earners and big business.

Under Labour's plans, the party would "raise spending to its highest level since the mid-1980s and tax to record levels in peacetime".

Turning to the Tory plans, he said: "The Conservatives simply offer the cuts already promised. Additional funding pledges for the NHS and schools are just confirming that spending would rise in a way broadly consistent with the March Budget.

"Compared with Labour, they are offering a relatively smaller state and consequently lower taxes. With that offer come unacknowledged risks to the quality of public services, and tough choices over spending."

Mr Emmerson dismissed Theresa May's plans to reduce benefits to the elderly by means-testing the winter fuel payment and scrapping the pensions triple lock as making "wholly trivial" savings.

And he said the manifesto U-turn over a cap on care costs would result in "presumably increasing public spending overall".

The Tory commitment to get net migration down to the "tens of thousands" risked causing considerable damage to the economy, particularly when coupled with the ageing British population.

"Their continued focus on reducing immigration would, if effective, cause considerable economic damage as well as creating an additional problem for the public finances," he said.

The Office for Budget Responsibility has already downgraded its forecasts for tax receipts by £6 billion in 2020-21 - and rising thereafter - due to lower expected net immigration.

"Meeting the Conservatives' commitment to reduce immigration to the tens of thousands would hit tax revenues by a similar amount again," he said.