Unveiling the Uncertainties: A Deep Dive into the Conservative Manifesto’s Economic Promises and Pitfalls

The Conservative party's manifesto leaves key issues unresolved

Those anticipating a bold economic transformation will find this manifesto lacking.

Economics and data chief @EdConwaySky

Tuesday, June 11, 2024, 7:

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The perception of the 2024 manifesto as a triumph among Conservatives hinges on how they define success.

For many, the mere fact that Rishi Sunak has managed to avoid a major blunder in his campaign, unlike Theresa May's controversial decision to introduce additional taxes for social care in her 2017 manifesto, will suffice.

Many will appreciate that, in contrast to Liz Truss, Mr. Sunak has avoided proposing tax reductions that lack financial backing, although there are still some doubts concerning the accuracy of his fiscal projections. Additionally, for those who desire a reasonably prudent array of fiscal changes aimed at motivating increased workforce participation and enhancing the country's productivity, this platform likely hit the mark.

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However, those in search of a pivotal act of financial boldness were left wanting.

To begin, let's delve into the key aspects of this manifesto. The Conservative Party intends to reduce taxes by £17.2 billion. Additionally, they aim to boost spending by approximately £800 million. They propose to finance these initiatives by reducing welfare expenditures by £12 billion and extracting an additional £6 billion from those evading taxes.

The feasibility of securing the funds as effortlessly as the manifesto suggests remains uncertain. Additionally, there are further uncertainties concealed within the Conservative manifesto. For example, the modest increase in spending proposed actually relies on significant reductions in other areas of expenditure.

Generally, it would be an exaggeration to claim that the current administration is attempting to impose another unfunded mini-budget reminiscent of Truss’s approach on the UK. What is being proposed now is far less extreme.

Certainly, the issue for numerous Conservatives may well be that it lacks sufficient radicalism.

Despite the reductions in National Insurance potentially moderating the growth of the tax burden in future years, they won't halt its upward trajectory, nor will they reduce it.

Certainly, despite the reductions, the tax load in 2028-29 will still be greater (approximately 36.7% of GDP) compared to the current level (36.5% of GDP). While it’s a relief that it won’t reach the projected 37.1% of GDP, as per recent government projections, it’s not the drastic change many might have expected from this manifesto.

Discover more: Sunak unveils comprehensive manifesto. What are the main promises of the Conservatives and Lib Dems?

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The Conservative Party acknowledges that the reductions in National Insurance may not fully offset the tax increases resulting from the freezing of personal allowances. However, they claim that the overall tax burden is expected to stabilize and could marginally decrease by the end of the next parliamentary term.

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For those expecting a more significant announcement from Mr. Sunak today, the relatively modest set of policies he presented might feel underwhelming. However, a definitive comparison between the major parties will be difficult until the Labour party releases its manifesto later this week.

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