Jeremy Corbyn’s manifesto plans could lead to £30billion more borrowing, experts reveal

LABOUR'S manifesto plans were rubbished by independent experts within minutes as it was claimed the party faces a £30billion budget black hole if it is elected.

Jeremy Corbyn today vowed to hike state spending by 10 per cent, which he claims will be fully paid for by new taxes on big business and the rich.

If the levies raised as much as Labour wants, Britain would face its largest tax burden since the 1940s.

But economists warned today that the tax hikes would be unlikely to raise enough to pay for the additional spending - leaving a hole in the national accounts of up to £30billion.

Mr Corbyn announced plans for £50billion more day-to-day spending on childcare, free university tuition and other handouts.

In addition, he vowed to spend £25billion a year on new infrastructure - spending which would technically not count towards the national debt because of accounting rules.

Labour insists that the additional £50billion will not require new borrowing because they can raise the same amount of money by increasing corporation tax, slapping new taxes on higher earners and cracking down on avoidance.

However, the respected Institute for Fiscal Studies suggested that the taxes would raise much less than Labour expects.

IFS director Paul Johnson told The World at One on BBC Radio 4: "That's £50billion of spending plus another £25billion of spending on infrastructure, and that's an increase of £75billion which is really very very big indeed - I mean, that's a 10 per cent increase in total levels of spending.

"They're looking at raising an awful lot of money from companies and from higher earners, and the long-run impact of the changes they're suggesting almost certainly wouldn't raise the full £50billion.

"If they were able to raise that amount, that would take the tax burden in the UK to its highest level in 70 years."

He added: "You'd get, I don't know, £20-30billion - but the long-run impact will be rather smaller than the £50billion they're hoping for."

If a Labour Government failed to raise the full £50billion, it would either have to scale back its spending plans or borrow more money.

An IFS briefing note published this afternoon said that new taxes on people earning more than £80,000 would have a highly uncertain effect, because taxpayers would change their behaviour in response to the higher levies.

In particular, they would be likely to put more money into tax-free pension plans, as well as working less and even leaving Britain entirely.

The note's author Robert Joyce said: "Labour’s policy could raise something like the £4.5billion per year it expects, but it could also raise nothing."

Other think-tank experts were equally critical of Labour's manifesto plans which would dramatically increase the size of the state.

Julian Jessop of the free-market Institute of Economic Affairs said: "The Labour Party’s proposals to dramatically hike taxes would raise the tax burden to the highest share of GDP since the 1940s.

"But their estimates of how much can actually be raised from corporations and the top 5 per cent fail to take full account of the negative impact on the economy."

Tim Knox, director of the Centre for Policy Studies, added: "High earners are the geese that lay the golden eggs: the top 1 per cent of taxpayers already pay about 30 per cent of all income tax.

"Forcing them to pay more might be politically tempting but is economically crazy."

Labour insists that its policies will reduce inequality and soften the burden of austerity - but polls show that most voters do not trust the party to implement even its most popular plans.