Farage reveals the Reform economic policy. No-one believes it is plausible.

Following a speech by Nigel Farage, Reform has changed overnight from a low tax low spend party into a low tax higher spend party. Populists gonna populist, and they can hardly fail to notice the zeitgeist shifting after Labour’s unpopular recent announcements.

Of course, spend typically comes from tax intake, so it’s as untenable as it sounds. And it’s not like the state sector is overflowing with money at present as the administration tries

He’s decided Reform will reverse a couple of Labour’s more unpopular policies – the two child benefit cap and the removal of the winter fuel payment. Which is great. Who knew they supported a strong welfare state? However doing that will cost the state an extra £5 billion or so.

He’ll also make the tax breaks if you’re married bigger, with one spouse not having to pay income tax on their first £25,000 of income.

But the biggest new announcement is his intent to raise the minimum threshold for income tax to £20,000 overnight. This means no-will have to pay tax of their first £20k of income per year, and anyone who earns less than that will not have to pay income tax at all.

Nice in theory I’m sure. But this is a hefty rise from the existing threshold of £12,570 and has a commensurately large cost.

Of course, no formal costings were supplied by Reform – inane populist soundbites never need any evidence that they’ll work from reality. The Financial Times provides us with some annual estimates for all the above, as well as the total abolishment of all inheritance tax he’s announced recently.

Policy	Cost
Increasing marriage tax allowance	£1.5 billion
Abolishing inheritance tax	£14 billion
Increasing marriage tax allowance	£1.5 billion
Abolishing inheritance tax	£14 billion
Scrapping the 2-child benefit cap	£3.5 billion
Reinstate winter fuel payments	£1.5 billion
Increasing the personal income tax threshold	£50 – 80 billion

The astonishing £50-80 billion estimate is also supported by the Institute of Fiscal Studies.

Overall, that adds up to a £86 – £115 billion cut in public money.

For reference, it was Liz Truss’ disastrous mini-budget that made her Briton’s shortest-reigning total failure of a Prime Minister. Famously a lettuce outlasted her tenure of 45 days. Her budget ended up costing the country a tremendous amount as well as making a mockery of any Conservative claim to be masters of the economy. Idioms such as the “moron premium” were coined to describe what happened and the untold damage it did to our country.

And her policies only cost roughly half of Farage’s income threshold cuts alone at £45 million.

Many people are making that point, including Labour chair Ellie Reeves who said:

There’s nothing new about what Nigel Farage said today: the tens of billions of pounds of fantasy promises he made this morning are exactly how Liz Truss crashed the economy, devastating the finances of families across the country.
Those families don’t need to be told what the consequences would be of this nonsense. They live through it every month through the higher mortgages, higher rents, higher prices, and higher bills inflicted upon them by the last government.

Let it never be forgotten that Nigel Farage was the one person who absolutely loved the Truss budgets that would go on to cause untold damage to the UK, as well as cost her her career. Back then:

…Farage described Truss’ budget as, “the best Conservative budget since 1986”, while it was reported in the Daily Express at the time of the deeply damaging budget, that Farage had, “praised Chancellor Kwasi Kwarteng for cutting taxes and moving ahead with the policy despite warnings from world economic organisations.”

And we all know how that turned out.

Current Prime Minister Starmer is joining the fray, referring to Farage’s economics are a “fantasy” claiming that:

Farage is making the exact same bet Liz Truss did – that you can spend tens of billions on tax cuts without a proper way of paying for it.

“And just like Truss, he is using your family finances, your mortgage, your bills as a gambling chip on his mad experiment. The result will be the same.

The Conservatives also say it’s a “fantasy”. They can’t allude to Liz Truss of course because she’s one of theirs. Instead they’re summoning up their own bogeyman to make the point.

Farage has announced billions in unfunded commitments with fantasy ways to pay for them. It’s Corbynism in a different colour.

I don’t think Corbyn was particularly well known for wanting massive tax cuts but there we go.

Their leader, Kemi Badenoch, basically accused Reform of lying:

I was elected to tell the truth. So I only announce policies that are costed, clear, or save money—anything else is a lie. Our country can turn itself around, but not with empty promises.

The Liberal Democrats also aren’t fans. Their leader, Ed Davey, said that:

Nigel Farage praised the disastrous Truss mini-budget, and now he wants to repeat it with huge unfunded spending pledges and only vague promises of fantasy savings. It’s Trussonomics on steroids.”

Economists don’t buy it, as gentle and reserved some of them tend to be. Senior Economist Adam Smith noted:

As it stands, I don’t think they have really set out how they would pay for such big giveaways…at some point, if they’re going to be a party of government, they would have to make those numbers add up.

Even the Daily Mail columnists, who could hardly be described as your typical enemies of the Reform party, don’t believe in it:

All in all, there’s an air of unreality about the proposals announced by Farage on Tuesday. Many of the figures are broad brush. They can only be made to add up through a haze of cigarette smoke amid the sound of merriment.

And anyway hate the very idea of it:

My fear is that he is being held hostage by the expectations of his new supporters. They don’t want a smaller state. They just want a better life, which I doubt they’ll get with Farage’s statist policies. He and Reform would then face a terrible reckoning – and Britain a dark future.

Even some ardent Reformers can’t quite make themselves believe in it.

…leading Reform activist Tim Montgomerie, who defected from the Tories after founding the ConservativeHome site, admitted: ‘The sums don’t add up.’

Farage doesn’t seem all that bothered. He banged on for a bit about how much money could be saved by magically getting rid of asylum seeker accommodation, ending “DEI” and “net zero”, plus the classic cutting bureaucracy every administration promises. He didn’t note of course that most of what they seem to have supposedly cut so far in local government didn’t cost anything anyway because it didn’t exist.

To the extent that he did make vague claims about which spending he’d cut to make his tax and welfare changes, the bulk of the savings come from abolishing all the pro-environmental policies that fall under his category of “net zero”. This supposedly saves £45 billion a year. Except of course it doesn’t. He seems to have totally misunderstood an Institute of Government report, willfully or otherwise.

Instead, the report claimed that “most of the investment is unlikely to come from the government”, and, as their spokesperson confirmed, “chopping private investment does not save the government money”.

The Climate Change Committee had a lower estimate, especially in the long term:

The Climate Change Committee said earlier this year that meeting the UK’s climate targets would cost the government between £6bn and £23bn of additional capital investment by the year 2035, falling to between £1bn and £4bn by 2050.

But anyway, it’s a funny kind of savings when:

Keir Starmer’s government has not yet committed to making those investments.

And let’s not get into the fact that not tackling climate change is going to create almost unimaginable extra costs that won’t be able to be sound-bited away when the world gets even hotter.

He also double-counted his “DEI” savings as they were already incorporated into the figure he gave for “quangos”. And it was noted that any big savings from the rest of the quangos would have to come from abolishing the projects they work on, rather than some imaginary reduction of administrative costs.

“Are you chopping Arts Council funding, or the money distributed by them to people in creative sectors?” asked Rutter.

He was quizzed about everyone’s favourite metaphor..

Asked if he had a ‘magic money tree’, Mr Farage admitted his sums were ‘slightly optimistic’…

But anyway, the cost vs savings balance – the actual devastating impact this could wreak on the UK were it to be done – aren’t the point in his view. What self-respecting populist would ever care about economic reality? His response:

You can argue about numbers adding up. You can probably argue that at no point in the history of any form of government has anybody ever thought their numbers added up.

One thing he wouldn’t commit to keeping is the pension triple-lock, which will certainly displease a section of his potential electorate.