By talking down the economy, is Nigel Farage hoping to spark an early general election?

In a landmark speech setting out his new economic vision, the Reform UK leader suggested that market forces will soon force Labour to adopt austerity measures that will collapse the government. It’s wishful thinking masquerading as wisdom, says Sean O’Grady – and, like much of his fiscal programme, simply doesn’t add up

It was probably very foolish of me to expect that Nigel Farage was going to live up to the billing and, with his latest speech, unveil a properly prepared economic and fiscal programme for a Reform UK administration that would actually reassure people that he and his party are ready for government. True to form, of course, he unveiled no such thing.

Instead of anything recognisable as a plan, with his first big economic speech since becoming party leader last year, at his press conference in the City of London’s Banking Hall, he delivered a political “hope” – namely, that the markets would force the chancellor into austerity measures, that the Labour government would implode sometime in 2027, and a general election would swiftly follow.

That, I think, is wishful thinking masquerading as wisdom. No Labour government since 1931 has fallen over a financial crisis. Quite the opposite.

Labour cabinets managed to stay together during: the global financial crash of 2008; the IMF crisis in 1976; various sterling crises in the 1960s; and, for connoisseurs of economic history, the convertibility crisis of 1947. The idea that Labour MPs, most freshly elected in 2024, would rebel and lose their seats in 2027 on a 15 per cent poll rating is for the birds.

More important, Nigel’s numbers – of which there are very few for a speech reputedly outlining his party’s proposed economic agenda – still don’t add up. Analysing Reform’s economic policy remains akin to wrestling with a big turquoise blancmange: messy, unsatisfactory and hard to know exactly where to start.

So let’s first take an actually quite promising proposition, which was trailed before he dumped this great disappointment of a pudding upon us. Reform’s unfunded tax cuts of £90bn that were central to its general election manifesto – or “contract”, as they termed it – have been scrapped. I seem to recall Farage casually dismissing them during that campaign, but they’ve now been formally renounced. Which is progress, given that they were about double the equally unfunded tax cuts that Liz Truss and Kwasi Kwarteng attempted to implement in the infamous 2022 mini-Budget before the financial markets and her own party stopped them from wrecking the UK’s credit rating for good.

The new Farage fiscal rule was, so the pre-speech spin went, that tax cuts would only be contemplated once public spending had been pruned back. Now, that is an improvement. Sounds prudent.

Yet in his speech, Farage couldn’t resist saying that, before any of those cuts in spending came through, he would still like to raise the personal income tax thresholds by an unspecified amount, cut taxes for non-doms, and ditch the IR35 rules that prevent tax avoidance via bogus self-employment. So borrowing would inevitably go up, add to the deficit and the national debt. Not so prudent.

Who would trust a party that blithely put forward such a mad manifesto only 16 months ago?

Are Farage’s cuts in public spending even realistic? Not entirely. Again, like the tax proposals, they’re vague, with numbers rarely attached to them.

He would probably be able to cut spending on social security just by slashing the Budget – for example, by slicing £9bn from spending on personal independence payments, or PIP. He claims there’s “overdiagnosis” of mental health “maladies”, such as people suffering from “non-major anxiety”. But there’s no great evidence of that.

What is fact is that the UK population is getting older, and living longer in poorer health. If a Farage government were to cut the welfare spend to cut taxes, then some of the most vulnerable people who depend on social care and help with staying independent in their old age would suffer the consequences.

As for the fate of the state retirement pension and the triple-lock, Farage was evasive: “How can anybody project on pensions, or thresholds, or any of those things?” To which the answer is that you can’t control the welfare budget without a policy on the old age pension – about half the budget – and if you think you’ll be in power in a mere two years, you’d better get yourself a policy.

Ah, but what about those cushy, gold-plated, inflation-proof public sector pension schemes? Farage thinks the pension managers’ fees are “exorbitant”, and the schemes are too generous anyway. Perhaps, but any savings from Reform would take decades to materialise, assuming he doesn’t want to break contractual obligations. Besides, they’ve already been watered down, and teachers, in particular, value them as one of the few compensations for taking on careers with long hours and miserable salaries. Doesn’t add up, and certainly not without Farage coming up with specific numbers.

He also wants lots of deregulation to boost growth. Again, sounds plausible, but maybe not his enthusiasm for the cryptocurrency sector, which, to many of us, just looks like the biggest Ponzi scheme of all time and something the Bank of England should have nothing to do with.

Deregulation can, of course, boost economic growth, but at the cost of increasing risks to the health of the financial system, as we discerned when the banks and building societies went bust in 2008, and the taxpayer was left with the bill. Without wishing to sound like some churlish bureaucrat, deregulation also gave us the Grenfell disaster, mad cow disease and sewage on our beaches.

Most of the rest of Farage’s speech was a rehash of the usual Reform nonsense. Instead of investing in cheap green energy, they want fracking (rebranded as “onshore gas”), even though that would still tie us to world fossil fuel markets. They want business people, unaccountable to parliament, to run government departments, which requires an entirely different skill set. They blame immigration for low growth, even as we suffer labour and skills shortages.

And, of course, more Brexit. Farage seems unwilling or unable to comprehend that leaving the EU has badly depressed investment and productivity growth (and will continue to do so), or that the national debt actually ballooned during the Covid crisis for obvious reasons – nothing to do with disability benefits or migrants. Not even noticing that elephantine factor in national indebtedness suggests a man with a poor grip on the big picture.

How much will Farage spend on nationalising and subsidising “strategic” industries? How many sick and disabled people will lose their benefits? What will be spent on health insurance for people who can’t get coverage when the NHS is replaced with private medical insurance? What will those private health insurance premiums cost British families? What impact will deporting 600,000 people have on the economy? How will he build the affordable homes that he airily promises? As Farage often says: “No idea!” It hardly inspires trust.

In short, Farage remains the perennial snake-oil salesman of British politics. He is the man who, with Brexit, did as much as anyone to break the economy and to fracture civil society by scapegoating migrants. He now claims to have the plans to fix what he himself has destroyed.

As we approach next year’s 10th anniversary of the EU referendum, we would all do well to remember what happened last time Nigel said he had all the answers.