Since everyone's been talking about it, and I’ve spent far too much time squinting at the detail, a quick thread on the parties’ spending plans, as far as we can evaluate them (1/?)
The Tory case is fairly straightforward. Under @sajidjavid’s new fiscal rules, the day-to-day budget will be balanced, but infrastructure spending will effectively be treated separately, with a cap for public investment of 3% of GDP.
The infrastructure spending part of this is what gives us the reported £22 billion extra in capital spending per year.
The first half (about the day to day budget) means that while there is room for one or two manifesto surprises, the party is likely to stick mostly to existing spending plans, while incorporating pre-existing pledges on NHS, education, police alongside anything new.
The Labour case is more interesting. Or, as I argued in the Mail on Sunday yesterday, terrifying... (perennial note: I don't write the headlines) dailymail.co.uk/debate/article…
The obvious starting point is the 2017 manifesto. But we’ve never actually have a figure for that. In particular, the idea that it is/was/ever has been ‘fully costed’ was utter bollix.
I went through at the time for CapX and counted up 80 separate spending commitments, some of them very chunky indeed. Set against that were less than a dozen tax rise capx.co/labours-manife…
They're listed here, but even they in many cases weren't going to raise what Labour claimed (eg corporation tax, income tax rises which assumed no dynamic effects) or were ring-fenced for explicit spending commitments labour.org.uk/wp-content/upl…
As @philipjcowley says, Labour’s own team acknowledged that their numbers were a mess, and were baffled that the Tories made such an awful job of pulling them apart. newstatesman.com/politics/econo… 
Cowley also claims one Labour insider felt the Tories could have plausibly found a trillion pounds of spending commitments in the manifesto in 2017. The new Tory dossier, published at the weekend, goes for £600 billion approx over five years
But that's 2017. What about 2019?
Back in 2017, McDonnell did the same thing Javid is now doing - say that capital spending (aka ‘investment’) would go into a separate pot. This ‘National Transformation Fund’ would be worth £250 billion, to be spent over the next decade - although would be heavily front-loaded.
McDonnell has now upped that to £400 billion, split between a £150 billion ‘Social Transformation Fund’ and a £250 billion ‘Green Transformation Fund’.
This is where the widely accepted £55 billion a year figure comes from - the equivalent, as I pointed out on the podcast, of roughly half of NHS England’s budget. audioboom.com/posts/7419020-…
But that’s not the end of it - not by a long way.
Labour’s party conference this year voted to expand its renationalisation programme to include all of the Big Six energy firms, rather than just their transmission and distribution networks. McDonnell has reportedly indicated that he will carry this through.
This takes the upfront borrowing cost, according to @CPSThinkTank's estimates here cps.org.uk/files/reports/…, from £176 billion to £306 billion.
@CPSThinkTank At this point, cue the arguments about acquiring an asset meaning there’s no actual cost, ‘Parliament will set the price’ etc. But at least in terms of actual level of borrowing, to renationalise these assets at market value would involve that figure or something v much like it.
@CPSThinkTank Next, home insulation. Labour recently announced a £250 billion ‘Warm Homes for All’ scheme. But look at the small print, and only £60 billion of this will come from the National Transformation Fund, in the form of direct grants to the poorest.
@CPSThinkTank The remaining £190 billion will be handed out as loans to homeowners, to be repaid via lower energy costs over a period of decades. labour.org.uk/press/warm-hom…
Then there’s wind farms. Jeremy Corbyn recently promised to spend £83 billion on these. But only £6.2 billion will come from McDonnell’s fund. The remainder will be borrowed from private investors. labour.org.uk/press/corbyn-p…
I asked Labour how exactly this will work, because it’s really not clear how these investors get repaid, how this will be kept off the balance sheet, or why people who have just had their assets forcibly nationalised will leap at the chance to become Labour's business partners.
And when you turn from capital spending to revenue spending, there are more big numbers. Just in terms of stuff in the news this week, there’s a Universal Basic Income trial - £4.5 billion. Free school meals for primary school - £1 billion. Expanding childcare - £4.5 billion.
We obviously need to wait for the manifesto, but the Tory dossier The Tory dossier puts all of this at £385 billion over five years.
Admittedly, you can quibble with some of the sums. They’ve included the cost of a four-day week starting immediately, whereas Labour have said it will be something we move towards over a decade.
But equally, they've used the £17 billion p.a. version of @CPSThinkTank's costings for public sector, which assumes a very significant productivity boost from everyone cutting their hours, rather than the much more realistic and far higher estimate of £45 billion a year.
@CPSThinkTank (Labour have said that this will be paid for via productivity gains - but given public sector productivity has grown at 0.2 per cent a year over the last 20 years, they would need it to grow at 10 times the rate.)
(While channelling every penny of benefit from more efficient working towards cutting workers’ hours rather than improving public services, which doesn't seem like a great deal for the taxpayer...)
In short, we'll have to wait till the manifesto comes out to get a better idea of the total cost of Labour’s programme. But even then we probably won't have a full idea, partly because there’s so much of it they don’t seem to be putting on the books
And partly because they're likely to use the same line about it being 'fully costed', and I'm likely to get traumatic flashbacks to seemingly everyone apart from me just letting that claim pass last time
But as I say in the Mail on Sunday (that link again - dailymail.co.uk/debate/article…) it’s pretty clear that whether it’s on the books or not, they are going to be borrowing a truly colossal amount - and it’s very hard to see how the public finances will be able to take the strain.
