Who's telling the truth about the Tory plans?

Yesterday's war of fiscal words will have left many people perplexed. Sean O'Grady, Economics Editor, separates fact from fiction

INHERITANCE TAX

Labour claims

That the Tories will make start on this in their first Budget, with full implementation by 2014 costing £1.5bn a year. "A Treasury costing of their non-dom policy found that it would raise a fraction of the amount the Conservatives had predicted, leaving a substantial funding gap," they claim.

Tories' rebuttal

The tax cut is "fully funded from a levy on all non-doms, not just the 20 per cent of non-doms who have been in the UK for 7 years". The party also says that "Labour ministers have admitted in the past that the data required to cost a levy on non-doms does not exist."

Verdict

The numbers are anyone's guess as we don't have much idea how many non-doms there will be over the next decade. A no-score draw.

ABOLISHING STAMP DUTY ON SHARES

Labour claims

This will cost £5.2bn a year by 2014 and not much less than that next year, because: "The Conservatives have not said when this tax change would be introduced, so, following the methodology of this document, it has only been counted as coming into full operation by 2014/15, although indicative figures for earlier years are provided."

Tories' rebuttal

Simply that "this is not Conservative Party policy and never has been", and that Labour's "dodgy dossier makes the spectacular admission that Gordon Brown's pensions tax raid has taken £5bn a year out of people's pension pots".

Verdict

Easy home win for the Tories. They do want to get rid of it to help the pension funds, but not any time soon. Labour went much too far in assuming that this would be done quickly, and is vulnerable to attacks on its approach to pensions and "stealth taxes".

'SWEDISH' SCHOOL REFORMS

Labour claims

The Conservatives "have pledged to reduce spending on Building Schools for the Future to reallocate funding to create new school places in Swedish-style academies... The Conservatives claim that there are no additional running costs attached to the new school places created. This is an unrealistic assumption and an HM Treasury costing found that additional running costs would be substantial."

Tories' rebuttal

"Labour's numbers are deliberately misleading. They assume that the new school places we have pledged have an additional revenue cost. Labour claims that if a pupil moves school we would have to fund places at their new and old school. But this does not happen at the moment. Money follows the pupil – if a school has fewer pupils this year than it did last year, it receives less funding."

Verdict

Surprising Tory win at Ed Balls' home ground, due to what appears to be a confusion of school places and school pupils (though Labour might still be right about what is the better way to spend the money).

AVOID RISE IN NATIONAL INSURANCE

Labour claims

That the Tories say it will be their "number one priority" because of the impact higher NICs will have on jobs. "The Conservatives have not set out what specific tax increases or spending reductions would fund this policy."

Tories' rebuttal

Even a number one priority doesn't have to happen soon, according to the Conservatives. David Cameron has never promised early action, even on this. "The dossier is right that avoiding Labour's tax rise on anyone earning over £20,000 is our 'number one priority' on tax, but it also points out that we have not pledged to do this."

Verdict

Slim Tory home loss on their traditional tax-cutting agenda – it stretches belief that a "number one priority" could be delayed for many years. They will disappoint employers and their own supporters if they don't try to get on with this one.

CANCELLING NHS IT SCHEME

Labour claims

That the Conservatives would make no savings whatever from one of their flagship pledges, because the cost of cancellation exceeds savings on running costs. "The Conservatives have never produced a firm costing for the saving from this policy," they say.

Tories' rebuttal

"IT experts" claim that the total costs to taxpayers could be as much as £20bn, and that Labour have now reversed their policy to match that of the Conservatives. "Scrapping this disastrous and ineffective project will free up funds for improving front-line health services."

Verdict

Labour's claims are indeed undermined by the fact that they themselves are cutting back on the scheme, and they refuse to detail the cancellation costs. If these really are that high, then Labour's contract wasn't drafted well. Labour lose one nil at home.

THREE NEW INFANTRY BATTALIONS

Labour claims

That the Tories have "never" produced a costing for this policy. The Treasury costing is put at £778m in the first year and £105m a year thereafter. "The Conservatives have not set out what specific tax increases or spending reductions would fund this policy," they say.

Tories' rebuttal

They say Labour are "trying to misrepresent our position" and that they only want to restore the number of soldiers "once we have seen the MoD's books". They have also committed to a wider Strategic Defence Review. They go further than the Lib Dems in backing the war in Afghanistan.

Verdict

Slim Labour win, against the run of play: the Tories' pledge looks unequivocal, and specific. Why say it if you might not do it? To win the support of certain red top newspapers, perhaps? Tory support for "Our Boys" is conditional shock.

SUMMARY

Labour claims

The overall Labour claim that the Tories, like all opposition parties, make some foolish, uncosted claims is fair. Labour also says that the Tories have a huge credibility gap, yet Labour has postponed its own Comprehensive Spending Review.

Tories' rebuttal

The Conservatives say these are "lies", but they have themselves to blame for being so vague on timings and priorities. They should copy Labour's 1997 plan of having only a few limited – but categorical – promises printed on credit-card sized "pledge cards". They in turn claim that Labour has a huge credibility gap.

Verdict

Months more of this sterile, unreal debate? The truth is that both parties have a huge credibility gap, and neither's sums add up. Sensibly, they should make more "contingent" promises, so that if the economy improves faster than expected they could cut taxes or invest in services faster than otherwise, and vice versa. Fat chance.