By Karim El-Bar
The Labour Party, Britain’s center-left main opposition party, unveiled its election manifesto on Monday, pledging that each of its policies would be fully funded and require no additional borrowing.
In a clear attempt to rebrand itself as a party of fiscal responsibility, Labour leader Ed Miliband promised his government would cut the deficit every year and aim for a budget surplus “as soon as possible in the next parliament.”
Labour intends to find funds for its programs by re-allocating funds, and by increasing taxes mostly for the wealthy and for banks.
“The very start of our manifesto is different from those of previous elections. It does not do what most manifestos do. It isn’t a shopping list of spending policies,” Miliband said, speaking in Manchester. “This is a manifesto which shows Labour is not only the party of change but the party of responsibility too.”
‘Budget responsibility lock’
Considering the manifesto ends with the austere phrase “We don’t promise the earth,” it is perhaps unsurprising that Labour, through their “budget responsibility lock,” placed cutting the deficit every year at the heart of their manifesto.
The budget responsibility lock comprises three key pillars.
First of all, every policy in Labour’s manifesto is funded and will require no additional borrowing. Labour would legislate to require all major parties to have their manifesto pledges independently audited by the Office for Budget Responsibility, or OBR, in the future.
Then, having declared that their first budget will cut the deficit every year, every subsequent budget will have to do the same and be independently verified as doing such by the OBR.
Finally, Labour pledged to ensure the national debt is reduced and a surplus is secured as soon as possible in the next parliament.
Controversially, the Labour Party have not set a deadline for the deficit’s elimination, only saying that they would achieve a budget surplus “as soon as possible” between 2015 and 2020.
Both the center-right Conservative Party and centrist Liberal Democrat Party – who formed a coalition government in 2010 – have pledged to eliminate the deficit by 2017/18.
Asked why he would not set a specific date in the question-and-answer session after his speech, Miliband said he only wanted to make promises he could keep, pointing out that Chancellor George Osbourne of the Conservative Party missed his own target.
In December 2014, Osbourne was forced to admit that his government could not eliminate the deficit which stood at about 5 percent of GDP at that time. Osborne’s budget did not take into account the evolution of the labor market. The government forecast that employment would improve, but the unemployment rate was at 6 percent at the time.
Miliband used this question to underscore a theme he stressed heavily throughout the event: accusing the Conservatives of now being “the irresponsible party in British politics.”
The opposition leader said the Conservatives have announced an unfunded rail fare freeze that would cost £3 billion, another unfunded extra £8 billion investment in the NHS, on top of unfunded tax cuts worth £10 billion, totaling around £20 billion in unfunded promises.
Home Secretary Theresa May did admit on BBC Radio Berkshire on Monday that sources of funding for Conservative proposals were uncertain. "What we've shown is that we can do it at a time of austerity... we're looking now ahead to being able to... provide that £8bn extra for the health service. We haven't identified the specifics but we've been very clear about the record that we have."
“Nothing is more dangerous to our NHS than saying you will protect it without being able to say where the money is coming from. You can’t help the NHS with an IOU,” Miliband said.
“The fundamental truth that runs through this manifesto is that Britain will only succeed when working people succeed,” Miliband wrote in the forward to his party’s manifesto.
This was a recurring theme in the five new policies he unveiled during his speech.
He first pledged to raise the minimum wage to £8 by October 2019. “It will mean someone working full time on the National Minimum Wage being £800 a year better off compared to continuing with the rate of rise under the Tories (Conservatives),” Miliband said.
The Labour leader then pledged to help train passengers with a fully-funded rail fare freeze for one year, and then implement a cap on every route for any future fare rises.
“The cost, of just over £200 million, will be fully funded by switching spending within the existing transport budget from delaying road projects on the A27 and A358 for which the economic case is still uncertain,” Miliband said.
“We will not raise the basic or higher rate of Income Tax, National Insurance or VAT,” Miliband said, outlining his third new policy. “Instead, we will cut taxes for working families by bringing in a lower starting 10p rate of income tax by reversing the Tories’ Marriage Tax Allowance.”
To support working families, Miliband then pledged his party would protect tax credits in the next parliament and ensure they rise in line with inflation.
Finally, in a move aimed at working parents, he announced a new National Primary Childcare Service “to match primary schools with volunteers and a range of quality extracurricular sports, art and music activities before and after school. It will be paid for by ending Government funding for the New Schools Network, an organisation set up to promote the Free Schools programme.”
The manifesto also included: an extra £2.5 billion fund for the NHS paid for by a mansion tax on properties valued at over £2 million, 25 hours of childcare for working parents of children aged three and four paid for by increasing the banking levy by £800m, freezing gas and electricity bills until 2017 so they can only fall not rise, banning zero-hour contracts that provide no regular or minimum work hours, scrapping winter fuel payments for the richest pensioners, cutting tuition fees from £9,000 to £6,000, cutting ministers' pay by five per cent, reintroducing the 50p tax rate on incomes over £150,000 a year and abolishing non-domicile status, which allows wealthy Britons to legally not pay tax on income earned abroad.
British Chancellor of the Exchequer George Osbourne issued his party’s response, saying, “Today Ed Miliband failed to provide a credible economic plan and nobody will be fooled… Britain doesn’t want to go back to the chaos of the past.”
Liberal Democrat leader and Deputy Prime Minister Nick Clegg had an unforgiving assessment of Labour’s manifesto, saying it was “not worth the paper it’s written on.”
“The Labour Party's saying they have no plans for additional borrowing is like an alcoholic who consumes a bottle of vodka every day, saying they have no plans to drink more vodka. It's a dangerous addiction and the Labour Party have no plan and no date by which to clear the decks, wipe the slate clean and deal with the deficit," he said.
Danny Alexander, the Liberal Democrat chief secretary to the Treasury, said “Labour is still struggling to face up to the economic facts of life.”
“They still believe that you can borrow your way out of debt. They have no clear timetable to finish the job of balancing the books,” he said.
Paul Johnson, director of the Institute of Fiscal Studies, said in an interview on the BBC’s Daily Politics show that, “Literally we would not know what we were voting for if we were going to vote for Labour.”
This was in reference to Labour not saying by when it would eliminate the deficit, which “gives them an enormous amount of flexibility” he said, adding that Labour has given “no additional clarity” about whether its plans involve extra cuts.
Nigel Farage, leader of the right-wing UKIP, also criticized the lack of detail in Labour’s proposals. “I don’t see anything in their plans that suggest to me that they really are going to get the deficit down. Where are the specific areas in which they're actually going to cut spending?" he asked.
Scottish National Party leader Nicola Sturgeon attacked Labour from the left: “Yes, we need to get the deficit down, but we need to do that in a way and at a pace that allows us to invest in infrastructure, in skills and innovation, in things that get the economy growing."
"There is a very clear choice at this election: you can have more austerity with Labour, the Tories or the Liberals, or you can have a clear alternative to austerity with the SNP," she said.
The U.K. general election will take place on May 7, 2015.