Conservatives warn of '£58bn black hole' in Labour spending plans

Philip Hammond claims the Tories have uncovered a £58bn black hole in Labour's election manifesto spending plans.

The Chancellor says new analysis now that Jeremy Corbyn's manifesto has been published in full reveals the cost would be borne by ordinary families.

But Labour is hitting back, claiming re-nationalisation of water, energy companies and the Royal Mail (LSE: RMG.L - news) will bring down household bills by £220 a year.

The party claims axing dividends to shareholders and reducing interest payments on debts will mean cheaper water, gas and electricity for consumers.

:: Labour manifesto: What it says and what it means

The Conservatives have published a 17-page dossier on Labour's new spending plans, its promises to reverse Tory cuts and proposals for raising revenue.

The Tories are also unveiling a new election campaign poster which, alongside a mock-up of Labour's manifesto, says: "Written by Corbyn, paid for by you."

Mr Hammond said: "There is a £58bn black hole in Jeremy Corbyn's manifesto.

"And it will be paid for by every single family in the country with higher taxes and more debt.

"Jeremy Corbyn's numbers simply don't add up and he can't be trusted to run the economy or negotiate the right deal for Britain."

The Tory estimates on Labour spending plans include:

:: Infrastructure spending: £25bn
:: National Investment Bank: £10bn
:: Nationalising the railways: £1.77bn
:: Nationalisation of energy: £7.86bn
:: Nationalisation of water: £6.4bn
:: Free childcare: £5.3bn
:: Schools funding £5.66bn
:: NHS funding: £7.4bn
:: Abolishing tuition fees and reintroducing maintenance grants: £11.2bn

But Mr Corbyn, promising lower utility bills after re-nationalisation, says: "The Tories have rigged our economy so that bill payers fund wealthy shareholders of companies which in turn pay little in tax. It doesn't have to be this way.

"Labour will rebalance our economy so that the many are no longer ripped off by the wealthy and powerful few. Labour will transform our energy, water and mail markets so that they work for consumers.

"Our plans for public ownership and greater transparency will slash bills and drive investment in efficiency and renewables."

Labour says the £220 savings combine £100 from water bills and £120 from energy.

The £100 savings on water bills would come from stopping the extraction of dividends to shareholders, which have averaged £1.8bn per year during the last 10 years, and reducing interest payments on water company debt by £500m per year.

The party says Anglian, Severn Trent (Other OTC: STRNY - news) and Yorkshire paid more in dividends than they made in profit in that period, meaning they were borrowing on the back of household bills to pay shareholders.

Labour says the £120 saving on energy bills is based on eliminating dividends and reducing interest payments through lower government borrowing costs, and claims energy companies are paying out £3.2bn in dividends and interest payments per year.

But again the Tories say the sums don't add up.

"These are made up numbers, based on a shambolic manifesto with a £58bn black hole at its heart," a Conservative spokesman said.

"But while his figures are a fantasy, it's ordinary working families who will pay with higher taxes or higher bills."

Responding to the Tory claims about Labour's manifesto spending plans, election coordinator Andrew Gwynne said: "This is absolute rubbish from the Tories and yet another wholly cynical ploy to try and avoid scrutiny of their own spending plans.

"That a Conservative Chancellor can't tell the difference between capital spending and revenue spending is extremely worrying.

"Labour published its manifesto alongside a costings document, which sets out, with unprecedented clarity, our fully funded spending commitments.

"We won't be taking any lessons from the Tories who have failed on every fiscal target they have set themselves and who, less than six months ago, delivered a budget with an as yet unfunded £2.06bn black hole arising from their u-turn on their proposed tax rises on low and middle income self-employed people.

"Rather than wasting their time producing false claims like this, the Tories should commit to the same level of clarity when it comes to their turn."

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