How to deal with the deficit becomes a big issue before the leaders' debate on the economy

With the economy set to be the main theme of tomorrow night's final leaders' debate on the BBC, that issue looks like it could well dominate the news agenda for the next 48 hours.

Many of the papers this morning run with the story based on the figures released yesterday by the Institute for Fiscal Studies, which suggested that none of the three main parties had disclosed the scale of cuts and tax rises required to tackle the financial crisis under their plans.

The Telegraph sums up the IFS findings:

"The average family already faces tax rises of more than £500 a year in the face of the £1 trillion deficit. But, according to the IFS, Labour will need to increase taxes by another £7 billion a year under its economic plan and the Conservatives will need to raise taxes by about £3 billion. A government run by any of the main parties would find it impossible to cut public services as sharply as they have proposed and would have to raise billions more in taxes, it claimed."

The IFS director, Robert Chote, is quoted in The Independent:

"The institute's director, Robert Chote, condemned all the parties for being "strikingly reticent" about their true intentions and for their failure to come clean on precisely where cuts would be made. Mr Chote added: "The opposition parties have not even set out fiscal targets clearly, and all three are particularly vague on their plans for public spending. The blame for that lies with the Government for refusing to hold a spending review before the election."

The Conservatives have also seized on that IFS attack on the Government for failing to hold a spending review.

However, the party insists that the think-tank has failed to take into account several aspects of Conservative policy which mean that there would not be a need for further tax rises under a Conservative Government:

• They say the IFS does not take account of Tory plans to cut £6 billion of government waste this year as set out by former Government advisers Sir Peter Gershon and Dr Martin Read, with their assumption that all parties are equally able to make efficiency savings in government not being borne out by Labour’s record.
• Additionally, IFS calculations assume that Conservative proposals for a bank levy will raise only £1 billion, whereas the party has said that this is a minimum and expects that the total will be "considerably higher".

Shadow chief secretary to the Treasury, Phillip Hammond, gives the following take on the IFS numbers:

“This report exposes the scale of tax rises planned by the Lib Dems and Labour, with extra tax rises of £470 per household under the Lib Dems and £220 under Labour compared to the Conservative plans. The IFS also slam the Lib Dem estimates of tax revenues as ‘highly speculative’ and destroy their claim to fairness by showing that people earning up to £113,000 benefit more than those earning under £10,000.

“The IFS lay the blame for the lack of detail in the debate about public spending cuts squarely on Gordon Brown’s cynical decision not to publish a spending review in order to hide the truth about his spending cuts from the voters. Labour claim they want to talk about policy but refuse to publish the figures and refuse to debate the issues. People will conclude that Gordon Brown doesn’t want anyone to know the truth about the consequences of his economic failures.”

Jonathan Isaby