Keir Starmer hits back at Reform’s ‘fantasy’ economic policies
Keir Starmer has hit back at Nigel Farage’s “fantasy economics,” after the Reform leader laid out a suite of fresh policies aimed at attracting voters away from Labour.
In a speech to workers in the North West later today Starmer plans make the case against Farage’s economic credibility, likening the proposals to the Liz Truss mini-budget.
“Liz Truss bet the house and lost. £45 billion in unfunded tax cuts, with no means to pay for them. Markets reacted, the economy tanked and we’re all still paying the price for mortgages, rents and bills that spiralled out of control,” Starmer will say.
“We were elected to fix that mess. Now in government, we are once again fighting the same fantasy – this time from Nigel Farage.
“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.”
This follows a speech by Reform UK leader Nigel Farage on Tuesday, where he unveiled policies seeking to bolster the party’s credibility as the main opposition force to Labour.
But the proposed changes, which comprised tax breaks for married couples, jettisoning the two-child benefit cap, and chiseling away at a glut of government expenses, have raised questions over whether the sums add up.
Reform not ‘right on the money,’ economists warn
Starmer will refer to the Institute of Fiscal Studies’ (IFS) estimate that a hypothetical Reform government’s budget could lead to a fiscal black hole of £50bn to £80bn.
Deputy Director at the IFS, Helen Miller, summarized Farage’s new plan as “very large tax cuts to be paid for with very large spending cuts.”
Reform’s “high-profile giveaways,” including fully reinstating the winter fuel allowance, “are dwarfed in size by the manifesto pledge to increase the income tax personal allowance to £20,000 a year, a substantial increase on its current value of £12,570,” Miller said.
This follows economists’ warnings that the Reform manifesto’s recommendations could see an “immediate and violent” Sterling crisis, caused by an “immediate” fiscal gap between £70-£80bn per annum.
Miller warned that the “unspecified cuts to public services” that would be needed to fund these programmes would “go far beyond a crackdown on waste.”
For Miller, Farage needs to first ascertain where this money is going to come from before earmarking it.
Public spending is hard
Starmer will seek to defend Labour’s achievements in office, citing economic stability, higher growth than other G7 economies and low pay rises.
But Chancellor Rachel Reeves faces a dilemma with demands for more public spending and a formal Spending Review next month set to slash departmental budgets.
The government’s Spending Review is due on the 11th June, which will reveal the allowances distributed to each department for the coming years. Departments have been asked to do their part, and tighten their belts.
Reeves has been tasked with figuring out how to balance competing demands on the Treasury, such as paying to scrap the two-child benefit cap, reported to cost £3.5bn, increasing the police force by 13,000, and constructing 1.5m new homes by the end of the decade – all at a time of continuing economic uncertainty.
Cuts have already been imposed on some departments ahead of the Spending Review. The Department for Environment, Farming, and Rural Affairs has seen its nature-friendly farming fund thinned out.
Both Reform and Labour will be seeking to balance their books in the coming months as their plans come under scrutiny, opening them up to both economic and political risk.