IFS: Tories, Labour and Lib Dems will make average household poorer
All three main parties will leave us worse off, analysis of their manifestos says.
The Conservatives, Labour and the Liberal Democrats would all make the average household poorer over the next five years, according to analysis of their General Election manifestos by respected thinktank the Institute for Fiscal Studies (IFS).
There are “large differences” between them, but they “share a lack of willingness to be clear about the details” when it comes to spending cuts, the IFS writes in a rather damning conclusion to its study.
Main similarities
All three main political parties believe there is “a huge amount of money to be extracted through a clampdown on tax avoidance (mysteriously missed by all previous clampdowns)”, the IFS says, but it casts doubt on just how much.
National Insurance and VAT won’t be fundamentally changed by any party, although the Conservatives have now gone further and pledged to introduce a law preventing increases in Income Tax, VAT and National Insurance in the next Parliament.
Meanwhile, the so-called ‘triple lock’ on the Basic State Pension and the move to a single State Pension will be preserved by all. The IFS says the decision to base one of the elements of the triple lock on average earnings is "absurd" as it means pension payouts will be higher when people have more money and vice versa.
But the Conservatives and Labour both want to change how much people can save into private pensions, which the IFS says is altering the “treatment of an eminently sensible part” of the tax system and is “worrying”.
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Main differences
The Conservatives want to increase the tax-free personal Income Tax allowance and increase the higher rate (40%) threshold. The Lib Dems also want to increase the personal allowance
Labour, meanwhile, wants to reintroduce the 10% starting rate of Income Tax, which the IFS says is pointless, and increase the additional rate from 45% to 50%. The IFS questions how much the latter move would raise, if anything.
Labour and the Liberal Democrats leaving the higher (40%) limit untouched would slowly suck more people into this tax band, a process known as fiscal drag.
The IFS also criticises the fact that the additional rate starting point of £150,000 is not being increased in line with inflation.
Labour and the Liberal Democrats both want to introduce a ‘Mansion Tax’, which the IFS says is “unnecessarily complicated”.
The Conservatives will also protect all pensioner benefits, which the IFS says will make it “very challenging” for it to find its promised benefit savings from elsewhere. Labour will withdraw winter fuel payments from richer pensioners, which the IFS says will raise a “paltry” sum, while the Liberal Democrats will end free TV licences for over-75s.
The Conservatives have said they will freeze working-age benefits for two years, but the IFS says it is “disappointing that no further details” about the other ways it’s going to save £12 billion have been revealed.
What the IFS would do instead
The IFS says reforms to Council Tax, which in England and Wales is still based on 1991 values, would be a better measure than a Mansion Tax.
In terms of the Conservative cuts to benefit spending, the IFS proposes a series of ideas including abolishing Child Benefit but compensating lower-income families through Universal Credit and making Housing Benefit claimants pay at least 10% of their rent.
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More on loveMONEY.com:
General Election: what the party promises mean for your money
Comments
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On of the biggest lies that has been foisted on this country by ALL parties since the eartly 1960s is that the NHS can/should be run as a business. A recent world wide survey of health costs and outcomes showed that the US system, so much loved by our current Government because it is run as a business, cost TWICE as much per capita as the UK's NHS and has lower health outcomes. Please once and for all can we put to bed the patently ludicruous idea that health issues can be coped with by a business plan. You, I, anybody, have absolutely NO idea what health issues we are going to face tomorrow. To say you can plan for a health service like you can for a business making cars or whatever is so stupid you wonder that any of the current government were actually in higher education, let alone have degrees! So much for Oxbridge degrees being of a higher academic level than anywhere else!
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I see my post has been deleted too critical of past and present governments. I no longer live in the UK thank god. But if I did UKip are the only party worth voting for.
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The IFS like all other think tanks are a bunch of overpaid wa*****s. The only way to save £12 billion is to stop all overseas aid, stop immigration and more benefit sucking spongers going to the UK,cut health service bosses and politicians pay to pay for more Doctors and Nurses, leave the Eu, The problem with the health service is that thousands of foreigners receive care who have never paid a penny into the system, likewise the benefit system. There are so many Eastern European citizens taking up low paid jobs that Uk the unskilled cant get jobs.They are of no benefit to the Uk because their pay is so low they don't pay very much if any tax. When jobs are avaliable the unemployed should be forced to work or lose their benefits. Single women should not be paid by the state to lay on their backs and have kids just to get a council house and benefits.Overseas Aids sufferers should not have the automatic right to live in the Uk and use up the Nhs budget when Uk cancer patients are being refused life prolonging drugs.I believe I have covered most things and upset the lily livered liberal minority. Ps. Privatise the BBC another gravy train of overpaid pratts who broadcast drivel that no one watches and everyone pays for. Did you also know that the so called detector vans cant detect if you are watching one of the new flat screen tv's the technology was for the old crt tv's. So why buy a licence and support the crap BBC>The vans are all a big bluff.
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03 May 2015