Let’s get fiscal: How the Tories’ and Labour’s spending plans compare
The UK’s two biggest parties have today pledged a major shake-up of current fiscal rules, paving the way for the greatest level of investment in over a generation.
Under a Conservative government, fiscal rules would be relaxed to create “a decade of renewal”, boosting investment from around 1.8 per cent to three per cent of GDP.
Read more: Sajid Javid pledges ‘new fiscal rules for a new economy’
Chancellor Sajid Javid this morning said a new year Budget would set out the detail for plans “to level-up the entire UK”, including extra cash for new schools and hospitals, roads, railways and better broadband.
Speaking shortly afterwards shadow chancellor John McDonnell revealed his own shake-up to the system.
McDonnell said: “Our fiscal rule for the next parliament will exclude borrowing for investment from our borrowing targets. It will mandate us to deliver an improvement in the overall balance sheet by the end of the parliament.
“So that when we invest in the infrastructure our country desperately needs, it’s recognised both as a cost and as a benefit.”
Big increases in spending
The Institute for Fiscal Studies (IFS) said both parties were proposing “substantial increases”.
The Tories’ pledge would lift the cap on spending to “a level not sustained in the last 40 years”.
Meanwhile Labour’s plans to spend an extra £55bn annually over the next five years would be “more than double public investment spending, to a level unprecedented since the 1970s – a very different era”.
The research group added: “Labour’s election 2019 plans would take UK government investment spending from near the bottom of the international league table to near the top.
“The challenge for a government seeking to invest on this scale will be finding worthwhile and viable projects to invest in.”
Robert Colville, director of the think tank Centre for Policy Studies, said the Conservatives’ pledge would “actually make Britain a ‘normal’ nation in terms of infra[structure] spending. Public spending in the UK has been low for a long time.”
He also argued that it was “ridiculous” to suggest the two parties were aligned in their spending plans.
“The dividing line isn’t spend vs spend. It’s spend more money vs spend all the money,” he said.
Main image: Getty