It’s hard to imagine a bigger contrast between the Labour and Conservative manifestos. Where Labour was promising vast tax and spending hikes, the Conservatives are promising virtually nothing.
This is supposed to be a manifesto for five years in government, yet the new tax and day-to-day spending pledges announced yesterday would have been modest in the context of a single annual budget.
That slightly understates things because there is some big new spending already in the pipeline. NHS and schools funding are due to rise over the next couple of years, by really quite substantial amounts.
But for the rest of the public sector, and for those dependent on benefits and tax credits, there is nothing here. Perhaps no return to austerity, but certainly no attempt to undo a decade’s cuts.
While an increase of more than £13 billion in day-to-day public spending is due next year, on these plans spending on public services other than health would still be 15 per cent below its 2010 level by 2023.
Disappointingly there is nothing new for social care. Although the prime minister promised in his first speech on taking office that he would “fix the crisis in social care once and for all”, all we have is a vague promise to look for consensus.
We’ve had two decades of that search. We have had a series of perfectly good proposals. It is way past time for action.
Why so little on spending? The clue lies in two things. The first is a commitment to current budget balance. The second is a desire not to raise taxes. If you want the first then, given where we are on the public finances, the only way to raise current (non-investment) spending is to raise taxes.
Not only are there no tax rises promised, there is a modest cut in National Insurance contributions. That will help most workers but by less than £2 a week.
There is also a “triple lock” on income tax, National Insurance and VAT, committing not to increase the rates of any of them over the coming parliament. Of course, there are other ways to raise taxes, but the chancellor, Sajid Javid, may regret having his hands tied in this way.
And this is all part of what is ultimately a misleading narrative — the idea we can improve, or maintain, public services and the welfare state without raising taxes. In the face of changing demographics and ever rising costs of healthcare, we can’t.
That in part is why the tax burden has crept inexorably upwards over the past 20 years and why, despite the promises, I expect it to continue to do so even under a Tory government.
Paul Johnson is director of the Institute for Fiscal Studies. Follow him on @PJTheEconomist.
This article was first published in The Times and is reproduced here with permission.