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FactCheck: Labour manifesto under microscope

By Channel 4 News

Updated on 12 April 2010

Channel 4 News's FactCheck sifts through Labour's general election manifesto. Tax benefits, policing and pensions are among the policy pledges under our microscope.

FactCheck

It's 76 pages long but as soon as Labour published its 2010 manifesto the FactCheck team were hard at work sorting the fact from the spin – here's what we found out...

The claim: "The direct tax and benefit measures introduced since 1997 mean that in 2010-11, households will be £1,450 a year better off on average."

Here's another number from respected tax and spend analysts the Institute for Fiscal Studies: -£270. Yep, that's right – they found households are in fact £270 worse off, on average, as a result of all of Labour's tax and benefit measures than they were in 1997.

Labour's claim mentions only one type of tax – direct taxes (taxes levied directly on individuals, such as income tax and national insurance).

The IFS's figure (on which there's much more detail here) takes into account all the tax and benefit changes introduced since 1997.

That includes direct taxes, as well as indirect taxes on services such as VAT, fuel duty or stamp duty, and business taxes such as capital gains tax and corporation tax.

"Ultimately, all taxes are borne by individuals. The money paid in corporation tax is money that would otherwise have been paid in dividends (or invested and then earned as income by other people)," says David Phillips of the IFS.

While Labour may have reduced direct taxation, it has shifted the burden on to other areas of the tax system. So by not taking the whole system into account, you come up with a potentially misleading picture.

The claim: "The Tories would cut police and PCSO numbers."

Rubbish, say the Tories. So what's the truth?

Labour has promised to protect police numbers till 2013. The Tories haven't made a similar commitment – they think numbers should be up to local police chiefs rather than dictated centrally.

Shadow home secretary Chris Grayling has also expressed reservations about the usefulness of police community support officers (PCSOs) in the past.

Whoever gets into power will have to make cuts; the Tories have pledged to cut faster than Labour. Labour told FactCheck that, because the Tories aren't promising to protect the front line, police and PCSO numbers would be at risk.

Given the current financial climate, pretty much anything not protected is at risk. But that doesn't back up the firmer claim Labour makes in its manifesto that the Tories will cut police numbers.

The claim: "We have done all we can to keep mortgage rates low – at 0.5 per cent during this recession compared to 15 per cent in the 1990s – and will continue to do so in the future."

It's a repeated Labour claim, and once again it is worth a little history lesson.

In October 1989 interest rates were hovering just below 15 per cent, but from October 1990 that number gradually fell (although staying in double figures). And then Black Wednesday happened.

On 16 September 1992 interest rates jumped to 12 per cent as the Conservative government under John Major battled to stop the pound crashing out of the ERM. But that wasn’t enough, and rates of 15 per cent were announced.

Except the government was forced to cave in that evening and rates remained at 12 per cent. One month later interest rates fell to just under 8 per cent, and stayed under 6 per cent from January 1993 until May 1997.

The claim: "So to increase security in retirement, we will restore the link between the basic state pension and earnings from 2012 – a link broken by the Tories in 1980."

Labour and the Conservatives had previously said that while they aimed to increase the basic state pension in line with earnings from 2012 they would only commit to doing so from 2015. The Pensions Act 2007 required the government to introduce the earnings link before the end of the next Parliament.

Labour’s 2010 manifesto commits them to restoring the link from 2012. But has it been costed properly? "There is no cost involved above what we put in Budget 2010," a Labour Party spokesman told FactCheck.

However if you take a look at the Budget there isn’t an explicit reference to the basic state pension being linked with earnings from 2012.

Asked to explain the apparent lack of a costing, a Treasury spokesman told FactCheck that a regulatory impact assessment published by the government on 29 November 2006 along with the Pensions Bill estimated the cost of uprating the basic state pension in line with earnings. And indeed it does, in cash terms, 2007/08 prices and as a percentage of GDP.

John Ball, head of defined benefit pension consulting at Towers Watson – a global company that specialises in risk and financial management, estimates the cost of this policy to be £2bn a year by the end of the next parliament.

He commented: "The public finances are in much worse shape than they were when the Government said it would have to wait and see if restoring the earnings link in 2012 was affordable. Today’s announcement says more about the power of the grey vote than about the outcome of any affordability test."

"It looks as though the policy will now go ahead regardless of affordability," a spokesman for the Institute for Fiscal Studies said. “Previously the government had given themselves a get-out clause, but the working assumption in government has always been that it would be introduced in 2012.”

It's worth noting that the Conservative policy is also to reintroduce the link between pensions and benefits in 2012 while the Liberal Democrats would restore that link immediately.

The claim: "As a result of cancer screening and as a result of the two week requirement that a specialist must be available to see you, that is the reason why the rates of survival for breast cancer, as for bowel cancer in this country, are now above 90 per cent for those who get the diagnostic test early and who get the screening, and we want to do more in the future."

Gordon Brown, speaking at the manifesto launch, 12 April 2010

Labour officials pointed FactCheck to stats suggesting there was a five-year survival result of more than 93 per cent for the small numbers (8.7 per cent) of bowel cancer sufferers diagnosed at the first stage of the disease between 1996 and 2002.

This primarily covers the time Labour was in power, although the government’s two-week waiting limit for cancer referrals was introduced later, as part of the NHS cancer plan in 2000.

The Department of Health originally said it did not recognise those figures. However, it later told FactCheck that, although one-year survival rates for bowel cancers diagnosed in 2007 were 76 per cent, the rate could rise to over 90 per cent if the cancer was caught early – which seems to back up Brown.

Bowel cancer survival rates still lag behind those for breast cancer, which are closer to 95 per cent after one year and 82 per cent after five years, for cancers diagnosed between 2001-6.

The claim: "We will guarantee that when someone who has found it difficult to get into work comes off benefits, their family will be at least £40 a week better off."

A frequent complaint about the benefit system is that claimants are better off on benefits than in work. Labour's manifesto proposes to tackle this with a guarantee that every person on benefits for more than six months would be at least £40 per week better off when moving into work. But only for the first six months.

The Better Off in Work policy was first revealed in December 2009 by work and pensions secretary Yvette Cooper.

So how much of an impact could this policy have?

We spoke to two charities that help people back into work. Homelessness charity Off the Streets and Into Work (OSW) works out if its clients could benefit from working. The charity reports that individuals are typically only £16 per week better off in work, despite the government’s efforts to date.

Another charity, Tomorrow’s People, says a lone parent with several children may actually be worse off in work. This would be as a result of having to spend more on school meals, on rent (having lost these benefits) and work associated costs. When this is added up, the shortfall could be more than £50 per week for some families.

The Labour party has confirmed claimants would only be eligible for the top-up to their wages for six months so after this point people could end up worse off again.

Update: Mike Brewer, director of the direct tax and welfare programme at the Institute for Fiscal Studies, got in touch to point out that an (albeit less generous) version of the Better Off In Work Credit has been piloted.

He told us: "The evaluation found: 'In the course of its year-long pilot period, very few customers were entitled to a BWC,' and 'overall the evidence suggests that the BWC as piloted has not been a significant addition to the range of back-to-work support.' So not a great success."

The claim: "More children than ever leave primary school secure in the basics."

Almost. Results for individual maths and science Sats tests saw 79 and 88 per cent of 11-year-olds achieving the required level in 2009, compared to 62 and 69 per cent respectively in 1997.

Labour admitted making a slip on the English results though – 80 per cent met the grade in 2009, a considerable increase on the 63 per cent who did so in 1997, but a slight drop on the 81 per cent who made it in 2008.

The verdict
Well it has been a mammoth job for FactCheck to unpick the Labour manifesto for 2010.

For starters, we’ve found that Labour has been quite selective when presenting their statistical information about direct taxes, they did not made it clear that the Better off in Work policy is only for 6 months and don’t really have the facts to back up claims about Tory cuts to policing.

We’ll continue to keep a beady eye out – let us know if you spot anything.

Email us at factcheck@channel4.com

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