Borrowing v austerity: take your pick on 7 May, says IFS

An independent think tank is warning that Ed Miliband will unleash a wave of extra borrowing by 2020 if he wins the general election - £50 billion a year more than the Tories are planning. But there’s a stark warning about life under the Tories, too.

Paul Johnson, director of the Institute for Fiscal Studies, writes in The Times that the extra funds Miliband would need to balance the books under his plans risk adding £170 billion to the national debt by 2030, leaving little room for the government to offer emergency help if there is another economic crash.

This all sounds like a boost for Chancellor George Osborne who received good and bad news this morning when the latest figures from the Office for National Statistics showed inflation dropping to 0.5 per cent in December – a record low. (Good news in that households feel better off, bad in that tax receipts for the Treasury go down and the threat of Japanese-style deflation increases.)

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• Countdown to 7 May: Check The Week's daily election round-up

Meanwhile, Osborne was due to use a vote later today in the Commons on a charter for budget responsibility to try to bind Ed Miliband and the shadow chancellor Ed Balls to his strategy for future cuts in public spending.

Miliband and Balls will go along with the Chancellor’s game by voting in favour of the charter to avoid being cast as the binge spenders that the Tories claim they are.

The difference between the two plans is that the Tories have said they want to get to budget surplus before the end of the next Parliament whereas Labour want to borrow to pay for investment spending. Johnson reckons this implies Labour would need to make cuts of £30bn less over the next Parliament than the Conservatives.

That would make a “really big difference to the extent of the cuts” which Johnson foresees as being grim under the Tories. “If you take the plans set out in the Autumn Statement at face value, spending cuts of more than £50 billion could be required after 2015-16.”

He told Radio 4’s Today programme this morning: “If we go down that line we have cuts after the election that are at least as significant, year on year, as the cuts we have had in this Parliament which could take spending on non-protected bits of public spending - police, home office, environment, defence - to an average of at least 30 per cent less than they were in 2010.

“So if we follow the Conservative route, we have got some really big spending cuts to come… the effect would be less good public services, and some risks to the delivery of public services.”

For the voters it offers a stark choice - a future of higher borrowing and debt under Labour or cuts that will damage public services under the Tories. You pays your money and you takes your choice…