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Nigel Farage’s Reform UK has been accused of pursuing “fantasy economics” as it set out a series of sweeping pledges to slash taxes and increase spending if it comes to power at the next general election.
Farage’s rightwing populist party has so far been light on detail about how its policies would be paid for at a time when the current Labour government is facing tight spending constraints amid rising borrowing costs and low economic growth.
In 2022, Farage was a supporter of the tax-cutting policies put forward by former Conservative prime minister Liz Truss, which triggered a sharp jump in borrowing costs that ultimately led to her resignation.
He said on Tuesday that Truss’s “massive failure” was that she did “not propose any cuts in public spending”.
Farage this week unveiled a number of policies aimed at cutting government costs — but the calculations behind these savings have been widely contested by economists and policy experts.
Shadow chancellor Mel Stride said: “Farage has announced billions in unfunded commitments with fantasy ways to pay for them”.
Promised tax cuts
Farage has vowed numerous times that he would increase the personal allowance people can earn before they are taxed, from £12,570 to £20,000. Economists believe this would cost the government between £50bn to £80bn per year.
Farage has also gone further than his manifesto pledge to abolish inheritance tax on all estates under £2mn, vowing in March to “get rid of inheritance tax” altogether. According to estimates by the Institute for Fiscal Studies, this would cost between £14bn by the time of the next election, expected in 2029.
Meanwhile, Farage’s pledge to increase the transferable tax allowance between married couples from £1,260 today to £5,000 would cost around £1.5bn, according to FT analysis.
Increased spending plans
Farage has claimed he would scrap the two child benefit cap, which is expected to cost at least £3.5bn per year by 2029, and reinstate winter fuel payments for all pensioners, which would add at least £1.5bn to government costs per year.
His party has also loosely restated a pledge made in its manifesto to launch a new model of state ownership of utilities, like water and gas companies, while the other 50 per cent would be owned by UK pension funds.
Where will the money come from?
All of this would be paid for, Reform claims, by drastic cuts to government spending in a few key areas: the environment, asylum seeker support and scaling back the size of government.
Farage’s biggest savings by far would come from abolishing all policies aimed at reaching net zero emissions by 2050, which he said the Institute for Government had claimed cost around £45bn a year.
However, the IfG report on which those figures were based, written in 2021, stated specifically that “most of the investment is unlikely to come from the government” and that it would be “largely funded and delivered by the private sector and individuals”.
Jill Rutter from the IfG told the Financial Times that Farage was using “old figures” and added that “chopping private investment does not save the government money”.
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. Starmer’s government has not yet committed to making those investments.
Farage also said that he would slash government spending on arm’s length bodies — or “quangos” — by five per cent, which he claimed would save £65bn over five years, or an average of £13bn per year.
Rutter added that big savings from quangos would not come from cutting administrative costs and staff, but by slashing the projects those bodies support.
“Are you chopping Arts Council funding, or the money distributed by them to people in creative sectors?” asked Rutter.
Farage also said that he would end the use of hotels to house asylum seekers by sending home all migrants that arrive to the UK illegally, which he claimed would save at least £4bn a year. On Tuesday, however, Farage failed to answer a question about what he would do with the tens of thousands of asylum seekers already in the country.
Finally, Farage said he would scrap all government diversity, equity and inclusion (DEI) initiatives, suggesting this would save around £7bn a year.
The figure came from a self-proclaimed Thatcherite pressure group called the Conservative Way Forward. Of the £7bn in DEI spending that the group identified, £5.5bn came from quangos, which Farage had already said he would reduce funding for.
Helen Miller, deputy director of the Institute for Fiscal Studies, said Reform had set out a “vision that involves much lower taxes, paid for with large, unspecified cuts to public services that would go far beyond a crackdown on waste”.
