The question marks buried deep in the Tory manifesto

Whether Conservatives judge the 2024 manifesto a success or not rather depends on their definition of success.

For some, it will be enough that Rishi Sunak has not exploded his election campaign in quite the way Theresa May did with her pledge to impose extra taxes on people to pay for social care in her 2017 manifesto.

Some will be pleased that, unlike Liz Truss, Mr Sunak has not sought to introduce unfunded tax cuts (even if there are a fair few question marks about how reliable all his revenue numbers are). And for those who crave a moderately sensible set of fiscal reforms, which should incentivise people to work more and improve the nation’s productivity, this manifesto will have proved quite satisfying.

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But for anyone looking for a game-changing moment of economic bravery, this was not it.

With that said, let’s discuss the main contours of this manifesto. The Conservatives are planning to cut taxes by £17.2bn. They also plan to increase spending by around £800m. They plan to pay for that by cutting welfare spending by £12bn and squeezing an extra £6bn out of tax avoiders.

There are some pretty big question marks over whether that money can be raised as easily as the manifesto implies. There are also some other question marks buried deeper in the Tory manifesto. For instance, that relatively small spending increase is actually a net number, dependent on some pretty big spending cuts.

But broadly speaking, it’s going too far to accuse this government of trying to inflict another Truss-style unfunded mini-budget on the UK. This is significantly less radical than that.

Indeed, the problem for many Conservatives is likely to be that it isn’t radical enough.

For while the cuts in National Insurance will slow down the increase in the tax burden in the coming years, they will not stop it from increasing, let alone shrink it.

Indeed, even after those cuts, the tax burden will be higher in 2028-29 (around 36.7% of GDP) than it is today (36.5% of GDP). The fact that it’s not going to the 37.1% of GDP level it was heading to, according to the latest government plans, might come as a relief for those who dislike taxes. But this is hardly the seismic shift some will have been hoping for from this manifesto.

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The Conservatives admit that while the National Insurance cuts don’t entirely compensate for the increases in taxes via the freezing of personal allowances, they say the burden will plateau and possibly even fall ever so slightly by the final year of the next parliament.

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But for those who hoped for a bigger statement from Mr Sunak today, this somewhat more incremental policy package may come as a disappointment. But until we get the Labour manifesto later this week, it will be hard to draw clear comparisons between the major parties.

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