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23 April 2015

SNP’s anti-austerity rhetoric does not reflect its plans, says the IFS

The party is forecast to spend less than Labour and the Lib Dems by the end of the parliament through slower but longer austerity. 

By George Eaton

When the SNP launched its manifesto earlier this week it was with a demand to for the next UK government to “end austerity”. But the rhetoric does not match the reality. The IFS has today published its assessment of the main parties’ fiscal plans, concluding that the gap between the SNP and its rivals, Labour and the Lib Dems, is far smaller than suggested. 

It found that while the SNP would increase total public spending in real terms each year (by 0.5 per cent) “departmental spending would be broadly frozen between 2014–15 and 2019–20, and departmental spending outside of the NHS and aid could be facing a cut of 4.3 per cent”. Real-terms cuts to all departments between 2010-11 and 2019-20 would amount to 9.1 per cent under the SNP, 12.1 per cent under the Conservatives, 5.9 per cent under the Lib Dems and 4.6 per cent under Labour. In the case of unprotected areas (everything excluding international development, the NHS and education), the SNP is forecast to cut by 22.2 per cent, the Tories by 27.6 per cent, the Lib Dems by 18.3 per cent and Labour by 13 per cent.

“Their stated plans do not necessarily match their anti-austerity rhetoric,” the IFS concludes of the SNP. Indeed, as the graph below shows, Labour could be outspending the party by 2018-19 with the Lib Dems surpassing them in 2019-20. While the SNP’s plans “imply a slower pace of austerity than those of the other three parties”, they ultimately mean “a longer period” too. The nationalists’ commitment to ensure that the deficit and the national debt fall “in every year as a share of national income” means that they have less room for manoeuvre than commonly assumed.

Labour could outspend the SNP

It’s important to note that IFS’s projections assume that Labour would make maximum use of the flexibility built into its fiscal rules: to balance only the current deficit (leaving room to borrow for capital investment) and to reduce debt as a share of GDP “as soon as possible” (rather than by a particular year). Whether Ed Miliband would do so would depend on the economic and political circumstances he encountered in office. But even with this caveat, the distance between Labour and the SNP is nowhere near as great as Nicola Sturgeon claims. 

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But while she has chosen to put a profligate spin on her plans, Miliband has chosen to put a frugal spin on his, devoting the first page of Labour’s manifesto to fiscal responsibility and refusing to explicitly pledge to borrow to invest. The priority, he resolved, was combating his party’s profligate reputation. Whether that was the right choice will be determined by the outcome on 7 May.