IFS Director discusses parties' general election claims

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This article was first printed by the Daily Mail and has been reproduced here in full with permission.

Despite their reputation, politicians rarely tell bare faced lies. But they can be skilled at using facts and statistics selectively, out of context, without stating the assumptions and caveats. And never more so than in the run up to elections.

We’ve seen quite a bit of it already. The prime minister has used two different ways of counting spending cuts to imply, incorrectly, that under Conservative policies spending cuts over the next parliament will be less dramatic than they have been over this parliament.

In fact they will be at least as big. The opposition, when talking about the average hit to living standards from tax rises and benefit cuts, neglect to point out that these measures disproportionately hit many of those at the very top of the income distribution.

Then there are the claims they make about what the other will do in the future. Recently we had the Conservatives saying that a Labour Government would spend an extra £20bn in its first year in office.

Labour retorts that the Conservatives would destroy the NHS and drag the welfare state back into the 1930s. They both know perfectly well (or should know) that these are, at best, gross exaggerations.

So how is the poor voter to make any sense of the conflicting claims and statistics?

To some extent of course, it’s not a matter of the details. With their claims about the future, what the parties are really asking us is what kind of choice they want to make.

 Labour would cut spending by less and therefore borrow more than the Conservatives. They have said so. The Conservatives would cut spending on public services significantly more than Labour. They have said so. Those broad facts are important, and the difference between the parties offers a real choice to the voter.

Here are some other big facts that matter. Living standards this year should be just about back to where they were in 2010, but still won’t have recovered their pre-recession levels. Employment levels are remarkably high. Wages have been doing badly, and more so in the private sector than the public sector. The productivity performance of the economy has been pretty dreadful.

If you look at tax changes made since the start of 2010 by far and away the biggest losers have been those in the very richest households. Those on modest to good earnings have been largely protected. But benefits for working age families have also been cut, hitting those in the lower half of the income distribution. But, for most, the social security system remains substantially more generous than it was in 1997.

The economy is finally growing and the deficit has been halved since 2010. But despite some tax rises and big spending cuts the deficit is much bigger than Chancellor George Osborne intended, largely because the economy did so badly between 2010 and 2012. That’s why the next government will have to cut some more.

Or the next government could choose further tax rises. You haven’t heard politicians mentioning that? They don’t tend to before elections. Look at the history of the last 30 years though and you’ll see quite clearly that tax rises tend to be announced soon after a general election.

There are huge numbers of important economic facts I would like to pour out here, far more than is possible in a single article. If we are to make an informed decision as we put a cross against a candidate’s name in May it is important to understand what has happened to the economy, incomes, and the public finances. It is important to understand what the parties are proposing for next time.

That’s why we at the IFS have started to put out independent and objective analyses covering all this in some detail. And we will continue to do so over the next few months. Our election website is at http://election2015.ifs.org.uk/

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