Manifesto Policy Explainer What do the Conservative and Labour manifestos mean for the economy?

Both the Conservatives and Labour have made claims to be the party of the economy and business:

The headline economic commitments

Conservatives 

Economic security is the bedrock of any future success, which is why we have a clear plan to take the bold action needed to build a strong economy.

1. Reducing borrowing and debt
2. Backing businesses to invest innovate and trade
3. Cutting taxes and reforming our welfare system
4. Delivering world-class education
5. Delivering an affordable transition to domestic, sustainable energy

Labour

Sustained economic growth is the only route to improving the prosperity of our country and the living standards of working people. That is why it is Labour’s first mission for government. It means being pro-business and pro-worker. We are the party of wealth creation.

1. Deliver economic stability with tough spending rules
2. A new partnership with business to boost growth everywhere
3. A National Wealth Fund to invest in jobs
4. Planning reform to build 1.5 million new homes
5. Devolution of power across England
6. A New Deal for Working People

Macroeconomic stability

Both parties have made commitments to macroeconomic stability as their first economic commitment. Fiscal rules can help reinforce market stability ensuring borrowing costs remain low and stable

• The Conservatives plan to have net borrowing below 3% of GDP and to have net debt falling in the fifth year of the forecast, i.e. retain the current fiscal rules.

• Labour plans to balance the current budget and have debt falling by the fifth year of forecast. Labour’s rules explicitly differentiate between current and capital spending, only allowing borrowing for investment.
  • Labour have made an additional commitment to strengthen the UK’s economic institutions to further reinforce economic stability. They plan to strengthen the role of the OBR, stating that “Every fiscal event making significant changes to taxation or spending will be subject to an independent OBR forecast.”

What they’ve costed in their manifestos

At the headline level, the costed manifesto commitments of both parties are consistent with relatively similar fiscal rules. However, they have been attacked by the IFS for failing to face the stark reality of the UK’s shaky public finances, which imply significant spending cuts for unprotected departments without more significant increases in the tax burden. Both parties’ costed spending and tax commitments are respectively around 1% of public sector spending and tax receipts.

Conservative policy costings 

Labour policy costings