Institute of Fiscal Studies - Manifesto Analysis Election 2017

You need around 1.2% per year growth to keep pace with age-adjusted

population growth, to take account of the increase in size and the

ageing population and the fact that older people require more expensive

health care. Under the Conservative plans, their spending would be

roughly constant per age-adjusted person. It is worth noting that

whether you get the Conservatives' 1% per year, or Labour's 2%, both

increases in spending are considerably lower than the

historical average. Health spending has grown by around 40% per year on

average over the last 60 years or so. To illustrate that, if spending

had increased by 4% per year since 2009-10, health spending would be up

by the Green line. So both parties are proposing relatively modest

increases in health spending compared to history. That is not

necessarily a plug for more money for the NHS. It will find it

difficult if costs and expectations continue to rise, but it is

important not to lose sight of the long-running context, and the

invitations of current spending levels. The a BR has predicted that

health spending could need to rise by 5% of national income over the

next 50 years as a result of democratic and other cost pressures.

Funding that would require considerably higher taxes, or

considerable cuts elsewhere, or a commendation of both, and future

governments are likely to find that difficult. So it might be time to

start thinking seriously about sustainable ways to ridges the

growth of health spending. Quite how difficult the NHS will find another

parliament of other lot be low spending increases depends on the

expectations on the health system going forwards. Finally, social

care. Signifying massively, there are two main problems in social care

in England. The biggest is the lack of available insurance. This is a

hugely expensive thing and you do not know whether you are going to

incur these costs later in life or not. Any other circumstance where

you can forget a situation that, there is insurance where you can

provide for those costs. That is not the case with social care, so that

is a problem in this market. Also, the level of funding available for

those entitled to state support at the moment is arguably not enough

for the care they are looking for. The care act was due to introduce a

cap on private contributions to lifetime costs in 2016 which got

kicked two 2020. That would increase certainty for individuals about the

total amount they might have to pay over their lifetime and might

increase the availability of insurance to cover that. In terms of

the party proposals, the Conservatives, we can agree, are

unclear as to what their policy is. Their manifesto seemed to U-turn on

the care act and not propose in permitting a cap on contributions.

Theresa May has done a U-turn on the manifesto and now the Conservatives

look like they would introduce a cap, although we do not know the

level. They have said they would change the asset means test, which

they did not violate costing, and the exact losers and potential

winners depend on the level of assets, your income, your needs and

the care package. There are not enough details spelt out to enable a

proper comparison. Labour have been much more stable in what their

ambition is. They have an ambition for a national care service, which

sounds similar to the care act, although there are not precise

details, but we know they want a cap on private contributions to care

costs and they plan to increase the asset threshold. This would require

additional funding that has not been set out yet. What Labour have done

and the Conservatives have not, is provided additional funding under

the current system of an extra ?2 billion by the end of the

parliament, to be spent on social care. Although 40% of that is taken

up the likely cost rise from Labour's higher minimum wage than

under the Conservative policy. Again, not to suggest that that

money is not being used. It is just that it has already been allocated

to increasing wages, rather than expanding service provision, say.

That is the end of my whistle-stop tour. The Conservatives have not

announced large spending policies and Labour have. There is a big move

towards universal state provision of education at all ages, additional

spending on investment, childcare and schools, but it is worth noting

that several policies could turn out more costly than Labour have

estimated. Now, Carl will talk about the invitations of all of this for

borrowing and debt. -- the implications of all of this. I will

focus on the Conservative and Labour manifestos and I will talk you

through what we think their plans imply for tax revenues in total,

spending in total, and the borrowing and debt, and then we will assess

the extent to which they would or would not meet the fiscal targets

they have set themselves. We start with tax. It is important piece of

context that if the new Chancellor after the election, whoever he or

she was, decided not to do any tax policies in any Budget in the next

parliament, there are already measures in the pipeline which would

boost revenues by ?5 billion in 2001-22, relative to the last

financial year. In particular, they include the dividend tax rise and

the increase in council tax earmarked for social care. In the

Conservative manifesto, there is no specific tax rises spelt out,

although there is a stated intent to carry out measures to reduce

avoidance. On the tax cutting side, they have said they will increase

the personal allowance on the higher rate threshold, and in 2001-22 that

would reduce revenues by about ?2 billion. Under the Conservatives,

you see tax cuts being announced that would offset part of the tax

rise. So you would see the tax system becoming slightly harsher

over the next Parliament. Under Labour, a Labour Chancellor would

inherit the same measures in the pipeline, which are costed at

boosting revenue by ?5 billion. Their manifesto does not contain any

significant tax cuts, but it does contain significant tax rises, which

Rob talked you through. Labour have scored that at ?49 billion of tax

revenue, ?52 billion less a ?3 billion margin to allow for

additional behaviour change and uncertainty around costings. In our

calculations, we dropped ?11 billion out of the 52 that Labour has, and

that is for three reasons. First, an error by Labour in the costing of

their avoidance package. Second, we think a better central estimate of

how much the excessive pay levy and the offshore company property levy

will raise is close to ?0. And we have a lower estimate of how much

revenue they might get from their income tax rises targeted at those

on very high income. That might point to a central estimate of ?41

billion. We think that even ?41 billion would be very generous,

given the downside risk of other policies. So it would still require

the tax avoidance programme, the extension of stamp duty to

derivatives and the review of corporate tax relief, not specified

yet, to deliver ?13 billion of tax revenue. And we think the rising

corporation tax proposed, the rate of corporation tax, might get the

?19 billion in 2022 that they want, but will not raise that much in the

longer term. Going forward, we will assume that Labour's tax measures

would increase tax significantly by the ?41 billion number, not the ?49

billion contained in their manifesto. Where would that leave

the tax burden as a share of GDP? If we start with the total amount of

receipts that Government receives, we can see that as a share of the

economy that has been moving up in recent years. Under Conservatives,

it would continue to grow. The tax burden would continue to rise, in

part because of those announced measures that the new Chancellor

would inherit. Under Labour, you would see the tax burden rise more

quickly. If we put in history, we can see that under the

Conservatives, the measure of total receipts going into the government

would be at the highest level since 1987. Under Labour, at the highest

level since 1985. An alternative measure of the tax burden is to look

at tax receipts. Instead of looking at the total amount going into

government, you look just at the revenue from taxes. This excludes

interest income, profits of nationalised corporations and other

such income. You can see that that used to be much more significant in

the 1960s, 70s and 80s, when the state was very different. Under the

Conservatives' plan, the tax burden on this measure would move up,

slightly above the peak achieved in the 1980s, and it would therefore

reach its highest level since 1969-70. Under Labour, it would

surpass that peak and would reach its highest level since 1949 - 50.

Where would this leave us internationally? This takes IMF data

on all advanced economies. Do not try to read the scale on the left. I

have ranked them from the highest tax as a share of GDP at the top to

the bottom. You have Finland at the bottom. The G7 economies are in dark

green and the UK's position in 2017 is in black. Under Conservative

plans, the tax burden in the UK would rise and our position in this

table would not change. Under Labour, the tax burden would

increase a and would put us in a mid-table position by international

standards. Now to public spending, and I will start with benefit

spending. A new Chancellor would inherit measures in the pipeline

which are set to cut the benefits spending by about ?11 billion in

2021-22, relative to the last financial year and cut spending by

more than that in the longer term. The vast bulk of the cuts would come

from working age families. Under the Conservatives, they have said they

will means test the winter fuel allowance but have not told us how.

We spend about ?2 billion on the winter fuel allowance at the moment

and we assume they will cut that to ?1 billion, half spending, but we do

not know if that is the case. They have said they will replace the

triple lock with a double lock from April 2020 for the state pension

indexation. Over the coming Parliament that is forecast to no

difference at all to the level of the state pension, or how much we

spend on it, and I will come back to this at the end of the presentation.

Labour have said they would increase some benefits which are mostly

targeted at working age families, which would cost ?4 billion. You can

see a similar conclusion to what Rob said, the Conservatives adding

slightly to the benefit cuts already in place and Labour offsetting some

of them. That is benefit spending. What about public services? The

plans that the new government would inherit imply spending as a share of

national income on public services falling over the next few years.

Such that in 2021-22, if you wanted it not to fall as a share of GDP

between now and then, you would have to top up the plans by ?17 billion.

So the size of the state as measured by public service spending as a

share of the economy would be ?17 billion lower than it would be if we

decided to keep it constant. That 17 billion can be decomposed into a ?27

billion takeaway from cutting day to day spending, alongside a ?10

billion boost to investment spending. Phillip Hammond announced

an increase in investment spending in the last Autumn Statement. Under

the Conservatives, it seems to us that the manifesto commitments for

increases to spending on schools, NHS, social care, suggest they would

perhaps leave overall spending broadly unchanged from the March

Budget. While they would increase spending in real terms on schools

and the NHS over the next few years, that is consistent with the plans

set out in the Budget, which already had spending growing over the next

couple of years on those areas, and had a settlement for total public

spending which would allow some growth in the NHS and schools

budgets beyond that. So we don't think the Conservative manifesto has

added to total public spending am a relative to a reading of the March

Budget. Labour would make some big changes. Public service spending

would increase. Labour has scored this at an increase of ?44 billion.

We take an estimate of ?46 billion because we think the cost of

abolishing tuition fees is a of billion greater. And in terms of

capital spending, Labour have said they would do this large boost

infrastructure spending, ?250 billion over ten years. We do not

know the profile but we will assume ?12.5 billion extra in the current

financial year and ?25 billion a year thereafter.

How this would leave public spending as a share of our economy. This is

total public spending as a share of GDP that shot up during the

recession and it has been falling as the coalition and the Conservatives

have been cutting it backment under the serve plans, public spending

would continue falling, albeit at a slower rate. Under Labour, public

spending would grow as a share of national income and the difference

is about 3.5% of GDP or ?81 billion. How does this compare to history.

The Conservatives could be cutting to the levels of 2004. Labour would

be increasing it to the highest level since 1985. How would you

compare internationally. I have the same set of countries, ranked by how

much they spend as a share of national income. France is the

biggest spender, and Hong Kong is the smallest. G7 economies in green.

The UK in black. Under the serves public spending -- Conservatives o

public spending would fall. Under Labour we would be at Canadian and

not Scandinavian levels. What about the effect of the proposals on

economy? What we have done is for Labour's additional infrastructure

spending we have used OBR estimates to say wheen Labour increases

infrastructure spending it would boost GDP and you would get some

money back in tax receipts. The multiplier is one for year one, if

you increase infrastructure by 25 billion, you get an economy 25

billion bigger and some of that will be taxed. But that multiplier fades

over time and the boost to GDP and tax is only temporary. On the supply

side, Labour's increase in infrastructure spending would if

they spent it well boost the productive capacity of the economy

and you end up with higher growth. However, Labour's increased labour

market regulations such as the higher minimum wage would have the

opposite effect. This shows the proportion of employees paid the

minimum wage. About 9% of employs aged 18 or over. The Conservatives

have proposed an increase, the impact is put into the OBR's

forecast. That increase is for those aged 25 and over. That is the group

the national living wage applies under the serves. Labour have said

they would introduce a ?10 an hour living wage and apply to all

individuals aged 18 and over. We estimate this is the proportion of

employees paid the minimum wage f you take all individuals aged 18 and

over you move to a situation where over a quarter would have their

wages set by Whitehall F you look at the 18 to 24 group, allowing them to

have a ?10 an hour wage would mean 60% would have their wage set by

Whitehall and would take a risk with their employment prospects. In

addition in Labour's manifesto we would get to have four additional

bank holidays a year. That would be nice to have but it wouldn't be cost

free and the higher rate of corporation tax. The Conservatives

have a commitment to reduce net immigration which also weaken growth

and the public finances. In terms of this for the longer term, in terms

of capacity of the economy, we assume no effect of either party's

policy and take the forecast for the potential as unchanged from the

March budget. So this moves us on to to objective for reducing the

deficit. We start with the current Government's plans. The Conservative

Government had committed to eliminate the deficit by 2018/19.

That is now unlikely to happen and in the statement, Mr Hammond pushed

that to be as soon as possible. The forecast in Marc implied you would

need further fiscal action. The new Conservative manifesto said they

want a balanced budget by the beginning of the next decade. So the

target date has been pushed back further and perhaps this implies we

will get to have 15 years of austerity starting in 2010 through

2025. Labour have said they want to eliminate the deficit on day-to-day

spending within five years, so their happy to borrow to invest. But

day-to-day they want to cover by tax receipts. A forward looking target

has much to commend it. I would say that because it recommended in

successive IFS budgets and it was adopted by George Osborne and Ed

Balls. What do euro estimates imply for the deficit? Under the serves

the deficit would rise between last year and this year as it does in the

forecast, it would fall over the following two years and stabilise at

about 1% of GDP. Under Labour it would increase more quickly and then

fall over the following two years, before stabilising at about 2. 35%.

Slightly below the level we had. In the last year of next Parliament the

deficit would be ?21 billion under the Conservatives. Some way off the

getting the balance they want. And under Labour it would be higher at

?58 billion. Of course Labour's deficit part of that is explained by

the additional capital spending and receivest they they have said

they're happy to borrow to pay for that. Under the serves the current

budget was strengthen between the currentier and 2019 and then

strengthen at a reduced rate. Under Labour you see a similar pattern.

Their budget would be in a weaker position, because we assume they

don't get the tax revenues they expect. But under both parties you

would move into a surplus on the current budget in 2019/20. Labour

would meet its target with ?21 billion to spare. So what about

debt? The current debt had a target to have debt falling in each year of

the Parliament. That target has been missed and Philip Hammond to have it

falling in 2020. They forecast this target would be met with some room

to spare. In the Conservative manifesto there doesn't seem to be

any debt target specified. Labour have said that as a share of

national income, they would ensure that national debt is lower at the

end of Parliament than today. There are good reasons with debt at its

high level to want it to fall, but it is much less clear it has to be

lower than it was in 2016. Under our estimates debt as a share of

national income would rise between last year and this year and then

fall and more quickly under the Conservatives. Under Labour, it

would stabilise for a couple of years before falling back and Labour

would be on course to meet their target just. Debt would be lower at

the end of Parliament. The difference between the two parties

is sizeable, because of the extra investment spending we would have

under Labour and the short fall in tax receipts, that means we would

have debt at 4.25% higher. So Labour will be on course to have debt

lower. But it is important to note that debt has been increased and

reduced, because of loans that the Bank of England has been making to

the financial sector, that are being repaid and made on a two year basis.

So it adds to debt when we are making the loans. It reduces when we

get it back. If we strip that out, and ignore that financial

intervention, we would see that debt would fall more gradually under the

Conservatives. But under Labour it wouldn't fall and they would miss

their fiscal target. One of the driving factors around meeting their

target is because of the inclusion of the loans in debt that we hope to

be repaid in the next couple of years. The headline conclusion that

is debt would fall under Labour and you may ask would that be the case?

It is because you can have an increase in the outlook for

borrowing and still have debt fall. So we think if you had all Labour's

spending increases and spend ?25 billion a year on f infrastructure

you would only need ?30 billion in tax rises. So because we are costing

their measures at 41 billion that gives us head room. Of course in

Labour's manifesto, they propose nationalisation of Royal Mail and

they want to have in every region publy owned companies operating in

rail, emergency and water and that would add to net debt. So depending

on the scale and the timing of Labour's nationalisation programme,

it could lead to Labour being on course to breach its target. But in

some ways that just shows how odd it is to target public sector net debt.

We would have more debt and we would, the public sector would have

greater assets. The financial health of the public sector wouldn't

necessarily be any worse. Just as privatisation doesn't make the

health of the public finances better f you sell an asset you're not may

have making the public finances stronger. It is whether you think

these assets and these organisation would be better managed if they were

operated in the public or private sector. That is what is what will

matter for the economy and living standards. So finally before I

conclude, I want to talk about the long run public finance. We have an

ageing population that adds pressure to the public finances and one

pressure comes from pension spending. The OBR has a projection

for spending on pensions assuming the triple lock remained in place

and pension spend would increase as a share of national income over the

next 50 years, about 2% of GDP. Those wiggle down when the age

rises. It goes up to 66 and then to 67 and 68 and then 69 in the mid

2050s. Keeping adult life spent over the age of pension constant. An

alternative would be to increase with average earnings and keep pace

with the average worker. It is also something you can't do more than

over the long run any way. You can see under this scenario, spending

would grow and the policy would be more ex-tenest pensive and --

expensive and make the challenges nor difficult for subsequent

Chancellors. To conclude, the Conservatives have set out

relatively modest changes. Under the Conservatives you would get a rise

in tax and day-to-day spending cuts. Eliminating the deficit would be

pushed back into the Parliament after next and the long run

challenge would remain. If they were to make the immigration target you

would get weaker growth and weaken the public finances. With Labour you

get an increase in the size and shape of state and they propose

large increases in tax, borrowing maintained to finance a large

increase in spending. There are big down side risks with Labour's plan.

The tax measures unlikely to raise the 49 billion they want.

Particularly over the longer term. Despite tip crease in infrastructure

spending, the capacity of the economy could be harmed by proposals

such as increased national living wage and not increasing the pension

age would make the challenge harder to meet. Thank you. We will stop now

for questions. We will take questions in batches of

three. The gentleman here. Michael Savage from the Observer. I wanted

to ask a quick question about immigration. Obviously, you referred

to the Conservative pledge on tens of thousands. Have you attempted to

make a calculation of that impact, or partially trying to meet that

target? From the Chartered Institute of Taxation. You got through all of

that without mentioning Brexit, so I am going to mention it now. Just to

ask whether you think the nature of Brexit, whether soft or hard, what

impact that will have on growth, tax take and really how deliverable the

party's plans are. From the Independent. After the Conservative

manifesto came out, with headlines saying that the Conservatives plan

to spend ?8 billion more on the NHS and four billion on schools, with

the implied assumption that that was additional to the current baseline,

and there was also pressure on the Prime Minister to explain where this

money would come from. From what you are saying, that seems to be wrong,

in the sense that there is no extra money, in effect, planned for those

public services, so there is no need to actually cost any of those

promises. Is that fair? On immigration, in November, the OBR

advised down its forecast for immigration relative to what it

would have done had we voted a different way in the referendum. And

that reduction was an 80,000 reduction in net immigration from

their previous assumption of about 260,000, to 180,000. They cost of

that at ?6 billion off revenues. So if we were to go from 180 down to

100, which is close to tens of thousands, we think that would be

another ?6 billion of revenue. You could go further in terms of cutting

immigration and the number would become bigger than ?6 billion, but

that seems a good rule of thumb. That is a cost about four years out.

That would rise over time because every year you have less

immigration, you hit public finances again for a bit more. On Brexit, it

is very clear that there are advantages to being in the single

market for the economy. Those advantages translate into a stronger

fiscal position. That is why the OBR downgraded its forecast, one of the

reasons, why it downgraded its forecast for growth in public

finances between the March 2016 Budget and the November 2016 budget.

All of these calculations are based on their most recent column

forecast, with some adjustments for investment spending plans. Clearly,

the nature of the trade deal we get, and any transitional protection we

may get, will matter for the public finances. Certainly there is a lot

of uncertainty, more than we normally expect around any forecast

for the economy and public finances. We are taking the OBR's forecasts

and only adjusting for a boost to GDP in the near term from Labour's

infrastructure spending. Clearly, one risk with Brexit is that

investment falls in the UK economy, and clearly that may mean that it is

not time to put up corporation tax significantly. Maybe that is a risky

thing to do at that moment in time. In terms of spending commitments, I

think it is unambiguous what the Conservative pledge on health is, a

real terms increase over the next five years that is relative to now.

Schools is a bit less explicit, it is real terms as opposed to cash

terms, but we think we are right in how we interpret that. There are

advantages to the Conservatives to people thinking it is extra money,

even if that suggests they have not put a costing to that. There are

areas where we do think it would be additional money. If they introduced

a cap on social care, that would be additional money. It is tricky

because after 2020, or 2021 in the case of health, there are not actual

plans for spending at a departmental level because there is not a

spending review that is set. So short of the government having a

full spending review to say exactly where money is going, you have a set

budget, so to some extent extra money for health means there is less

for other areas. Without setting out exactly where it is across all

areas, you cannot say, we have funded it by this, because it is not

a simple answer. Our take is essentially that the increase

between now and the end of the parliament the Conservative

manifesto is committing to is perfectly achievable within the

March Budget plan. We were not thinking the March Budget plan would

be less generous to the NHS or schools than the Conservative

manifesto suggests. So it is not additional over and above the March

Budget plan, and it means you do not need to offset the effect of those

measures if you want to keep the deficit on the same path. Faisal

Islam, Sky News. I might have missed this, but have you done an

assessment on the winter fuel allowance? I know they have not set

where the means test would be, but for plausible interpretations of

what the manifesto and briefing materials have said, can we say

several million would lose the winter fuel allowance? What savings

are we talking about? We will take a question here. BuzzFeed News. I have

a question on the cost effectiveness of free school breakfasts versus

lunch. Some other analysts have suggested your analysis of the cost

effectiveness of the breakfast depends on a relatively low take-up.

I wonder if you could talk to that. From the Financial Times. Just a

question of detail on the Labour plans. You suggested the offshore

property measure and the excessive pay measure would bring in zero

revenues. Can you explain why? Starting with winter fuel, in many

ways the obvious thing to do when you hear they are going to means

test winter fuel would be to use an existing part of the system, by

which I mean to use the fact that you could restrict it to those

already entitled to pension credit, which is already assessed as the

people with highest needs amongst pensioner households. That would

save just over 1 billion of the 2 billion in total we spend on winter

fuel payments. That is the thing the Conservatives now seem to have all

out. That would take winter if you from around about 10 million

pensioners. Given that they have ruled that out, frankly I have no

idea what they will do. The big picture is that the total spending

on winter fuel payments is only 2% of all benefit spending on

pensioners. So whatever they do, at an aggregate level, it will be small

in terms of spending on pensioners. It could affect some households up

to ?300 a year. But given that they seem to have ruled out the most

obvious way of means testing winter fuel payments, I don't know what

they will do. Any means test is costly to set up and administer, and

given that this is only a small pot of money, actually, arguably if you

on controlling spending on on controlling spending on

pensioners it would be better to look at things like the state

pension. For free school meals, we have not

done a costing of the policy, given their manifesto commitments. What we

think you would get from restricting free school lunches back to this

advantage to pupils for those first three years would be around 700

million saving. In terms of free school breakfasts, if you had 100%

take-up, we think the cost would be relatively similar to what you would

gain from that, around 700 million. The reason why it is so much more,

even though free school breakfasts are cheaper, obviously you are

extending it to a larger cohort because you are doing it across the

whole of primary school, not just the first three years. You are doing

it for more pupils within each cohort because you are giving it to

all pupils, rather than those that would have got free school meals.

And also, that is assuming basically 100% take-up. Take-up is clearly

crucial here. And there are suggestions that the Conservatives

assume around 25% take-up. I do not think that is unreasonable. Pilots

that have done this have found relatively low take-up. So if you

were going for a costing of what might be the likely indications of

that, low take-up is not the on the realms of possibility but it is

quite sensitive to that. The Conservatives have not explicitly

put a costing, they have just said that additional savings will be

given back to schools. So the vocation of a costing being slightly

higher than they expect is that residual money going to schools

might be slightly lower, but until you roll it out it is uncertain what

the level of take-up would be. The 25% take-up which you got in

deprived areas, you might think nationally the take-up would be

lower because those in advantaged areas would not be so keen on taking

advantage of a free breakfast. However, you might think that

parents in work might like to send their child to school earlier and

take advantage of more free childcare. It could go either way

and it is hard to know. A couple of the policies and why we think they

are more likely to raise nothing. On the excessive papal see, this is a

Labour proposal to introduce a levy on employers, on income. We are not

sure if it is on earnings, income or somewhere in between, earnings above

?330,000, a couple of different rates above that level. You can

think of it like employer national Insurance. Labour think this will

bring in 1.3 billion a year. We think up to around half of that you

will not get because some of that 1.3 billion would have been taxed

anyway. For example, let's say the effect is to reduce the earnings

that are actually paid to workers. These very high income workers, half

of their marginal earnings would have been taxed anyway, income tax

and National Insurance. That is part of the reason why we think it should

be closer to zero. And we think plausible degrees of behavioural

response would eliminate the rest of the revenue. There is uncertainty

around that because there is uncertainty about exactly how much

these high income people respond, but given what we know about the

responses of people above ?150,000 a year, it seems plausible that the

remaining revenue would be likely to be mopped up just from behavioural

response. The offshore reporting levy. Our understanding is that

Labour would like to find properties that are being held in offshore

properties in countries that are going to be put on some new

blacklist. Having spoken to lawyers who specialise in helping clients do

this, we understand that those companies are already not being used

because the law has changed in ways that makes it unattractive. Also,

this would be a tax on new arrangements. So people would just

stop using companies in these blacklisted countries and instead

use companies in countries such as the US, which I suspect would not

make the blacklist. People just would not use these structures. We

think a better central estimate of what you would raise is something

like zero, not 1.6 billion. From the daily Mirror. I want to pick up on

something from your opening about the Tory spending plans for the NHS

where you said there must be serious doubts as to the deliverability of

such a tight spending plan. Do you mean they will be forced to put in

more money as Parliament goes on, or that by not putting in more money it

raises questions about the long-term future of the NHS, and if so, what

would be the consequences? From the Guardian. You seem negative about

the rising minimum wage from both parties but obviously more from

Labour. Labour think that will raise income levels and therefore GDP by

virtue of increasing demand in the economy. Do you think that is

plausible? Also, Robert, you made great emphasis of the circularity of

taxing corporations and it feeding back into households. Do you have a

proportion of the amount of pension funds that invest in UK domiciled

companies? At the very back. From the Independent, and others. Also on

the minimum wage, how much do the respective plans stand to save the

Treasury on the basis that the tax credit will could be rigid used? --

on the basis that the tax credit bill could be reduced.

On the NHS... So I think the... It could plough in two ways. If the

risk is that the debt settlement is tight and that could manifest itself

either the quality of NHS doesn't meet expectation and the

Conservative Government would respond by having to top up the

plans. So it would be a risk for the public finances and another risk is

it shows that the deterioration in the quality doesn't meet our

expectation and the risk is our expectations have to be

disappointed. I don't know how it plays out. In a narrow public

finance sense it is a risk to the public finances that it would be

undeliverable and they would respond by topping up the plans. We don't

know that is the way they would go. We have big long-term pressures on

the NHS spending and it may be the choice we make is to lower our

expectation given the price tag of maintaining our current expectations

in the context of an ageing society. A couple of questions on the minimum

wage. Philip, I think just important to clarify what we are saying about

the minimum wage. It is not necessarily negative about

increasing it. What would be negative about it doing it in a

sudden large way, because what we do know that is there will be a point

beyond which higher minimum wages have to impact on employ. If we

outlawed contracts of ?100 an hour fewer people would be employed. It

follows you want a cautious process to incrementally increase and assess

the impacts. So it is the sudden large increase that we think is

risky and setting a key economic policy without reference to its most

potentially harmful side effect, which is the employment effect,

seems not a sensible way to proceed. In terms of I think you asked a

question about the wider effects on national income, there is a lot of

issues. The OBR think introducing the national living wage would

reduce national income. Because of enlarged, because of the employment

effects you would expect. In principle, if it leads to

productivity increases which it may well do, you may think some of the

cost can pay for itself. But to think that a large, huge increase in

the contractual minimum can pay for itself entirely would at least be

imprudent. There is a related question from the back about the

knock on effects on what the Treasury gets in. This relates in a

way I will explain, so, yes, if you have higher wages entitlement to

benefits go down and there is a saving to the Treasury. That is not

the same as saying there is an over all saving. That money is coming

from somewhere. There is redistribution from some other

household have to people that are being paid a higher minimum wage.

The issue is whether the people the money is coming from would be taxed

more or less heavily than the people that the money is going to. Because

a lot of minimum wages are on means tested, they face higher tax rates

than say if that money had stayed within corporate profits and charged

corporation tax. There may be an argument that it could save money.

But even that is not simple, because over all it probably reduces

national income and there is less income to tax. So certainly banking

on the national higher minimum wage saving you money which you can then

spend would be risky. I think that is everything on the minimum wage.

On pension funds investments in UK companies, I'm afraid I don't have

those figures. Helen may have them. In pension funds when you think,

this is not just today, but over a long period of time. When thing

people do is take FTSE company shares and you can get ONS data on

the portion held by foreigners. That is misleading, there is other shares

out side the FTSE 100 and some of the big companies like a big Chilean

mining company haven't got any profits in the UK and are not hit by

UK corporation tax. Some of the corporation tax will be passed on to

foreigners that is politically great because they don't vote in our

Lexes. Elections. But the UK will be paying some corporation tax for

other companies. But we can't say how much any given individual is

bearing. One more. I would ask another one. In Labour's plans there

is one quite big figure that is quite opaque, that is about

reorganising tax relief for companies, something like 3.6

billion, do you have a sense of what that could include. There is no

detail so far. There is no detail. We, there are various corporate tax

relief you could have a go at. They're already engenerous compared

to other countries. You could take aim at things like are there any tax

credits and chop a lot out of that. Not you would want to, but you could

take aim at that. There are various reliefs. We have funny film schemes.

There are things you could aim at. There are probably a enough you

could raise that money. But there are plenty of things you could do to

make our tax system worse. For now, we have no idea what the Labour

Party would take aim at. Thank you very much everyone.

Could you be in charge of army, the navy and air force and still be

responsible for the lives of all service perm knell. Personnel. So

you want to be Secretary of State for defence. If I was walking down a

corridor, even a civilian civil servant would say good morning.

Walked down with a staff of three