Top economist drills down on party policy

IFS's Paul Johnson, formerly of Shoreham SUS-150420-121744001
IFS's Paul Johnson, formerly of Shoreham SUS-150420-121744001
  • Economist’s talk charts progress since last election
  • Party policies come under scrutiny
  • Greens respond to ‘nonsense numbers’ accusation
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‘NONSENSE’ numbers, dealing with the deficit and widespread cuts were discussed by one of the country’s leading economists during an alternative talk on the upcoming elections on Friday.

Institute for Fiscal Studies (IFS) director Paul Johnson returned to his home town of Shoreham to deliver an independent talk on politics at the Ropetackle Arts Centre.

I think the further the parties from power actually the less sense their numbers make

Paul Johnson, IFS

No political party was safe from his cynical approach, as he discussed the progress of the country since 2010 before taking audience questions.

Asked whether the manifestos of parties further from power and whether the numbers added up, he said: “They don’t. I actually brought with me something from the Green Party manifesto and it sets out their tax proposals and sets out £200 billion of tax increases.

“Now, £200 billion might not mean much but that’s double what we currently raise from income tax.

“(The party propose) £25 billion from a wealth tax, £20 billion from a Robin Hood tax – he must be rich – £30 billion from tax avoidance, £30 billion from higher income payers, £20 billion from a pensions tax. Really, these numbers are nonsense.

“I think the further the parties from power actually the less sense their numbers make.”

Mr Johnson also highlighted doubt over UKIP’s assertion it could solve tax avoidance by leaving Europe, while the SNP came under scrutiny for its financial policies for Scotland and the likely need for significant tax rises or cuts.

But it was not just the smaller parties which were analysed, with differing stances on identical issues by Labour and the Conservatives also discussed.

Mr Johnson spoke of Tory claims families were £900 better off, while Labour claimed they were £1,600 worse off.

He explained how both figures could be argued, depending on the calculations used.

He said the Tories were using Real Household Disposable Income (RHDI), with estimates in the future, for 2015/16, helping demonstrating the £900 figure.

Labour, however, compare average weekly earnings in September, 2013, with May 2010, which shows a fall in real average wages amounting to £31 per week.

Mr Johnson argued these views were ‘not helpful’, suggesting Labour’s message was incomplete as people were more likely to judge their financial positions after taxes and benefits were taken out of any wages.

And on the upcoming election, he said there was a ‘genuine choice’ between the two main parties.

He said: “Broadly speaking, the Conservatives want to get rid of the deficit altogether and David Cameron said he wanted to do it by 2018.

“That includes quite a lot of cuts, really quite a lot of cuts. Probably a faster rate than we have ever seen.

“Labour and what it is going to cut is unclear. It is happy to run a current budget balance and happy to borrow £30 billion a year. That is a substantial difference.”

Other topics covered were Europe and where the cuts would fall.

When questioned on the potential impact of leaving the EU, he forecasted a hit to the economy should the country pull out, with ‘transition’ costs and a widespread uncertainty likely.

In the longer run, he said tax and regulation policies could help mitigate some of the negative short-term effects.

And on cuts, he highlighted the likelihood of any budget slashes coming from the same areas, regardless of party.

He said: “If you look at parties proposals it’s about the future cuts from exactly same place. Middle England, don’t worry. They are taking away from the poor and the very rich through a whole bank of tax changes.”

In response to Mr Johnson, Green parliamentary candidate James Doyle said the policies mentioned had been carefully calculated.

He said: “I have a lot of respect for Paul Johnson and the IFS for bringing a critical eye to the nation’s finances, and everyone’s plans for how to improve them.

“It’s worth pointing out that as recently as Saturday he said in the Times that ‘all parties were being dishonest’ about economic promises.”

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