Labour manifesto plans to leave £58bn black hole in public finances, Tories warn

Updated: 

Labour spending plans would open up a £58 billion "black hole" in the public finances, leading to higher taxes and more debt borrowing, the Conservatives have warned.

Following the launch of Labour's General Election manifesto on Tuesday, the Tories issued an analysis highlighting what it said were billions of pounds of unfunded commitments.

Labour hit back accusing the Conservatives of peddling "false claims" in order to divert attention from their own record on the economy.

The party has insisted its plans are fully costed - raising taxes on big business and higher earners by £48 billion to pay for its programme to increase spending on education, health and other public services.

However the Conservative offensive - backed by a new poster campaign - underlines their belief that Jeremy Corbyn's credibility on the economy remains a key Labour weakness.

The Tories said that if Labour's nationalisation programme - which was not costed in the manifesto - and other investment spending was taken into account, it would lead to an additional £58 billion in borrowing by 2021-22, the final year of the next parliament.

Chancellor Philip Hammond said: "There is a £58 billion black hole in Jeremy Corbyn's manifesto - and it will be paid for by every single family in the country with higher taxes and more debt."

His comments were dismissed by Labour's elections co-ordinator Andrew Gwynne, who said: "This is absolute rubbish from the Tories and yet another wholly cynical ploy to try and avoid scrutiny of their own spending plans.

"That a Conservative chancellor can't tell the difference between capital spending and revenue spending is extremely worrying."

Meanwhile Mr Corbyn's key union backer - Unite general secretary Len McCluskey - said Labour will have had a "successful" election campaign if it manages to hold on to 200 seats, restricting the increase in the size of Theresa May's majority.

In a sign of the pressures within the Labour camp as it continues to trail in the polls, he told the Politico website: "I don't see Labour winning. I think it would be extraordinary."

The row between the two main parties erupted as Liberal Democrat leader Tim Farron prepared to seize a rare moment in the political spotlight with the launch of his party's manifesto.

The Lib Dem programme will include a rent-to-own scheme to enable tenants purchase their homes with increased spending on schools and health - in part paid for by a 1p increase on income tax.

The Tory dossier puts the cost of Labour's plans for a publicly-owned energy sector at £7.8 billion, water at £6.4 billion, the railways at £1.7 billion and the Royal Mail at £860 million, while it says establishing a national investment bank would add a further £10 billion.

It also argues that Labour's plans to borrow to invest in the country's infrastructure - with a national transformation fund investing £250 billion over 10 years - should be included in the overall borrowing figures.

"Jeremy Corbyn and John McDonnell say that their so-called 'fiscal credibility rule' does not commit them to balancing the capital budget and therefore have not costed the amount they would borrow for capital," the dossier said.

"However, whatever their rules say, money borrowed for capital spending is money that still needs to be borrowed. We have therefore included capital spending in our calculation of their black hole."

Labour said that after nationalisation, it would be able to cut household water bills by £100-a-year and energy bills by £120, stopping dividends to shareholders while cutting the cost of interest payments on the companies' debts as the government would be able to borrow more cheaply.

The Conservatives claimed they were using "made-up numbers".