Will Nigel Farage's Attempt At Fiscal Restraint Work?
7 min read
Harriet Symonds asks whether Reform UK's attempt at fiscal restraint will convince voters they are ready for government
“We want to cut taxes, of course we do, but we understand substantial tax cuts given the dire state of debt and our finances are not realistic at this current moment in time.”
With that sentence, Nigel Farage sought to cut himself free from what had become an £80bn millstone around his neck. That was the Institute of Fiscal Studies’ estimate for the potential cost of implementing Reform UK’s manifesto pledge to raise the personal tax allowance to £20,000.
In these straitened economic circumstances, there is suddenly a bidding war between the parties to win the trust and faith of not just the voters but also investors buying UK debt. Farage’s Reform UK is duly attempting to craft a new narrative of fiscal discipline and credibility.
Faced with the highest tax burden since the Second World War, the party has ditched some of its previous plans for tax cuts and instead turned its focus to reducing spending, promising deep cuts to the welfare bill.
But the change of tack comes as Reform grapples with the reality of local government finance. Despite pledging to cut taxes at council level, the party has struggled to make spending cuts, and it now appears that eight out of 13 Reform-led councils plan to increase council tax.
It is also competing with a Conservative Party that has decided to make fiscal credibility the centrepiece of its renewed political offer. What’s more, the Tories have proved they are prepared to set out far more detail on spending cuts than is usual at this time in the political cycle. That will create pressure on Farage to do likewise.
And while Farage may say in broad terms he wants to reduce spending on the welfare bill, he remains committed to lifting the two-child benefit cap on working parents – unlike the Tories – and has a number of other legacy commitments that leave him vulnerable to the charge he might talk like a Tory he spends like a socialist.
Previous commitments to nationalise the steel industry, for example, might have helped win a news cycle but have left him open to claims he can’t be trusted to make tough economic decisions.
Attempting to dispel such doubts, Farage has recently been emphasising his commitment to a small state and hymning the virtues of deregulation and free enterprise. Brexit, in his telling, has been a missed opportunity to turn the UK into what some dubbed Singapore-on-Thames.
But even as he attempts to sharpen the party’s economic pitch and woo small business, much of the policy detail and political realities of it remain unclear. For example, Farage has said the VAT threshold on turnover for small businesses is “far too low and it’s one heck of a burden”, but has fallen short of revealing whether he would make any changes to the VAT system.
So far, Reform has announced it wants to scrap inheritance tax for family farms and family-run businesses and axe the two-child cap for British working parents.
Farage has refused to say whether he would back the triple lock, a measure expected to cost around £15.5bn a year by 2030. Although the policy has become a huge drain on the public purse, it is also a political minefield that no party dares touch. If Farage is serious about scrapping it to prove his fiscal credibility, he risks losing the support of older voters who make up much of Reform’s traditional base.
The Conservative Party has already gone much further in setting out its economic pitch, announcing it would abolish stamp duty and make £23bn worth of cuts to the welfare bill. Kemi Badenoch has also sought to strengthen her party’s fiscal credibility with a new “golden economic rule” to use at least half of any savings to reduce the deficit.
In front of 300 small business owners, Farage attempted to set out his ambition to make Reform the party of small business earlier this month. The party has long sought to attract the support of entrepreneurs and business figures. Indeed, much of its senior leadership team and aides have backgrounds in business.
Businessman Lord Bamford, who has previously donated to the Conservatives, recently endorsed Farage’s party with a £200,000 donation, and the founder of Checkatrade, Kevin Byrne, has joined the party’s small business board to shape Reform policy.
But Reform has otherwise struggled to convert its support into donations. Party treasurer Nick Candy has sought to tap up the party’s business support for donations, but has heavily relied on donations from party figures, including Zia Yusuf and Richard Tice, as well as pledging £1m himself.
Fiona Cottrell, the mother of a wealthy friend of Farage and convicted fraudster George Cottrell – also known as “Posh George” – is one of the party’s biggest donors, pledging £750,000 over the last year.
Farage is hoping that the new small business initiative will encourage more entrepreneurs and business owners to stump up funds for the party. This year alone, the party received donations from businessmen such as Christopher Harborne, hedge fund manager Johan Christofferson and financier Robert Tchenguiz.
there’s no internal division
Who is steering Reform’s economic thinking during this tricky pivot? There have been reports that Richard Tice and Zia Yusuf are vying for the job of chancellor in a Reform government, but, so far, Farage has shown no inclination to give either man the job of representing the party on economic matters.
A former commodities trader and small business owner himself, Farage has been the public face of Reform’s recent economic announcements. His aides say that decision-making is shared in a tight circle that includes both Tice and Yusuf. The former has his nose in front, however.
It is understood that while Yusuf, formerly a Goldman Sachs banker, has been leading on the party’s immigration and law and order policy, Tice has taken the lead on economic policy.
“They are both pro-business, pro-deregulation – there’s no internal division,” insists a party source.
But the absence of a shadow chancellor or economic spokesperson has not gone unnoticed. Reform is still undecided over who, between Farage and Tice, will respond to the Budget later this month. If it’s Farage, it will only add to the narrative that the party is a one-man band, as well as adding to speculation that Tice – previously touted as a “chancellor-in-waiting” – could be passed over for the role.
Farage has repeatedly shown he is open to making senior appointments regardless of whether they sit in Parliament, leaving the door open for Yusuf. Or perhaps Farage is hoping James Orr, a professor at Cambridge University and friend of JD Vance, will help with the appointment. Orr was recently brought in to Reform as a senior adviser to the leader and tasked with recruiting young intellectuals to serve in a future government.
The party insists it is still too early to make decisions on its spokespeople.
Farage is rumoured to be speaking to right-wing European leaders about policy measures, but which leaders he is confiding in is shrouded in secrecy.
Although the Reform leader is known to have friendships with Italian prime minister Giorgia Meloni and Hungarian prime minister Viktor Orbán, a party source says Farage will be “cautious” about revealing any influence on policy from world leaders like Orbán, a known Putin ally. A Reform spokesperson denies that Orbán has had any influence on the party’s welfare policy.
