Reform would be an economic disaster (trust me, I worked for Liz Truss)
I’ve seen first-hand what happens when politicians promise huge tax cuts without acknowledging difficult trade-offs – and that’s exactly what we’d get from a Reform government, says Sir Simon Clarke
It’s time to take Reform seriously, because one day soon, they might run our country. Stranger things have happened. Look at France, where the traditional centre-right and left have been all but wiped out by Macron’s new party and the hard-right National Rally. Look at Germany, where the AfD are now the opposition. Look at the United States, where the Republican Party has been entirely recast in the image of Donald Trump. Politics can change very suddenly.
Surfing a wave of justified frustration about the state of Britain, Reform didn’t just win this month’s elections – they smashed them. They won new Mayoralties in Lincolnshire and East Yorkshire. They took control of Derbyshire, Kent, Lancashire, Lincolnshire, Nottinghamshire, Staffordshire and Durham Councils. They won the Runcorn by-election, one of Labour’s safest Parliamentary seats. National opinion polls now give them a commanding lead, with the support of up to a third of voters. Labour and the Conservatives are camped just above and below 20 per cent respectively.
With Reform’s success should come scrutiny. Much of this will inevitably focus on their plans to lower immigration. But to do this is to miss the real problem: Reform would put the UK on the path to financial ruin.
Their economic plans do a disservice to the back of Nigel Farage’s fag packet
Their economic plans do a disservice to the back of Nigel Farage’s fag packet. Last week, devastating analysis from Panmure Liberum set out how enacting Reform’s 2024 manifesto would create an £80bn black hole in the public finances, triggering what economist Simon French warned would be “the high probability of an immediate and violent sterling crisis”.
The imbalance in Reform’s plans is staggering. Taxes would be slashed, including almost doubling the income tax threshold to £20,000, scrapping stamp duty below £750,000, abolishing inheritance tax for all estates under £2m and lowering fuel duty by 20p a litre. Meanwhile spending would soar: NHS waiting lists would be reduced to zero, defence spending would rise to three per cent of GDP, ten thousand new jail spaces would be created…and the list goes on.
Reform’s pledges to pay for this are full of glib references to £50bn of savings from “wasteful spending”. But eliminating renewable energy subsidies and scrapping the largely-built HS2 wouldn’t begin to pay for what they are promising.
Reform will lash out at everyone who points this out. Richard Tice, Reform’s would-be Chancellor, called Panmure’s analysis “juvenile claptrap”. But I know of what I speak about the danger of not acknowledging the hard choices needed to fund major tax cuts, having been close to the heart of events in Liz Truss’s campaign and then short-lived Government in 2022.
Reform’s ambitions are on a much bigger scale than Truss’
Liz was not stupid, or wicked. She wanted to create a more dynamic, lower tax economy – a perfectly sensible goal. But when I gave my support to her leadership campaign in July that year, she accepted the need for a new Comprehensive Spending Review to identify the savings to pay for her tax plans. And fatefully, over the course of that summer she gradually decided that for tactical reasons she didn’t want to get bogged down in a series of fights about spending reductions – those could come later. And then just before her mini-budget, she got bounced into an expensive energy bailout to protect household finances. We all know how things ended.
If you take just one fact away from this article, let it be this. Panmure’s analysis shows that the scale of what Reform want to do is two to three times larger than what Liz attempted three years ago. Their approach would inevitably see the financial markets call time on our already over-indebted country, with horrible consequences for families, businesses and public services alike.
A potential disaster is on the horizon. Let’s call it out for what it is, before it’s too late.
Simon Clarke is the Director of Onward, the centre-right think tank. He served as Chief Secretary to the Treasury under Boris Johnson.