Ukip’s economic policies fail the credibility test
When Ukip released a list of 100 of its policies in January, the words “debt” and “deficit” were not mentioned once. In fact, the only time it mentioned the word “budget” was with respect to its intention to cut foreign aid spending.
Of course, as today’s speeches by Nigel Farage and Patrick O’Flynn made very clear, Ukip really doesn't like the Department for International Development (DfID). Unfortunately, Ukip again today did little to prove its commitment to deal with the fiscal challenge facing Britain.
There was nothing especially new about the policies which Ukip unveiled either. Nor was there anything of interest in Farage’s or O’Flynn’s speeches on boosting Britain’s poor productivity or increasing housing, for example. The party promised to abolish inheritance tax, raise income tax thresholds and ramp up spending on the NHS and Defence. All things we've heard before.
These are all pretty expensive and in large part mere extensions of Conservative Party proposals anyway. Moreover, as the IFS pointed out last week, meeting the two per cent of GDP defence spending target whilst sticking to Conservative deficit reduction plans would mean that unprotected budgets would face a 16.3 per cent cut compared to a 9.4 per cent cut over the next Parliament.
Ukip’s solutions to this borrowing black hole fell rather short of what was required. For example, leaving the EU is earmarked to save £10bn but does anyone seriously think that such a saving could be made immediately? Even if it could, Open Europe’s analysis today shows that the economic implications of leaving the EU include a lot more than just the fiscal impact.
Of course, the party condemned the Government for presiding over a rising national debt but then proposed significant new spending commitments and tax cuts. At the same time, the party has also pledged to keep to the Conservative plans for deficit reduction in the next Parliament. These are, of course, compatible but only when supported by offsetting measures. Ukip failed today to provide such credible measures.
There is somewhat of a pattern in this area. It is one thing to condemn previous governments for creating an "infantalising onesie state" of welfare dependency. It is quite another simultaneously to have opposed cuts in the welfare budget. Joining Labour in claiming that reductions in housing benefit are a “bedroom tax” is one particularly egregious example. Tinkering with child benefit as O’Flynn proposed will do little to dent the bloated welfare budget.
Perhaps most revealing and most depressing, was that virtually half of O’Flynn’s speech was devoted to the evils of immigration. Indeed, the party’s economics spokesman blamed everything from the deficit to poor productivity growth on immigration.
To a hammer, everything looks like a nail.