Farage floats plans to slash £50bn from departments and cut taxes

IFS says Reform proposals – which also include eradicating NHS waiting lists – "don't add up"
Nigel Farage launches the Reform UK manifesto Photo: Reform UK/YouTube

By Jim Dunton

18 Jun 2024

Nigel Farage's Reform UK political party has set out plans to cut departmental and agency budgets by £50bn a year at the same time as raising the threshold for income tax to £20,000 a year and paring back the main rate of corporation tax.

Reform says asking departments, quangos and commissions to "save £5 in every £100 spent" would deliver the £50bn target and that a further annual reduction in "wasteful government spending" of £41bn would be possible.

The party's "Our Contract With You" manifesto says the figure could be achieved by cutting Official Development Assistance by 50%, saving £6bn a year, and stopping the Bank of England paying interest on quantitative easing reserves to commercial banks, saving £35bn.

Reform does not specify areas for departmental spending cuts, but insists the public should not face deteriorating services as a result of the savings. It suggests that part of the party's efficiency drive will come from replacing civil service leaders with "successful professionals from the private sector, who are political appointees, who come and go with the government".

"Every department must slash wasteful spending, cut bureaucracy, improve efficiency and negotiate better value procurement without touching frontline services," the manifesto says.

The 28-page document also includes £141bn in spending pledges, such as hiking the income tax threshold, scrapping inheritance tax on estates worth less than £2m, reducing corporation tax from 25% to 15% over three years, and raising the VAT threshold for businesses to £150,000.

Reform is also offering to exempt frontline NHS and social-care workers from basic-rate income tax for three years in an effort to retain essential staff in their current roles.

Other policies include eradicating the NHS waiting lists, scrapping net zero carbon-emission targets and related subsidies, cancelling all of HS2, reopening closed magistrates courts and starting to build 10,000 additional prison places. The party is also pledging to deliver an additional 40,000 police officers and 30,000 armed-services personnel over the course of a five-year parliament.

Under Reform's manifesto proposals, the Department of Work and Pensions would be required to scrap remote assessments for some benefits and work capability assessments.

Unlike the Liberal Democrats and Labour, Reform has not set out detailed proposals to improve HM Revenue and Customs' tax-compliance work. But it does criticise the department for failing to collect tens of billion of pounds in taxes last year "due to understaffing and bad management". "Improved HMRC competence would deliver lower taxes to British workers," it says.

New departments and "anti-corruption unit"

The Reform manifesto also pledges machinery of government changes. A new Department of Immigration forms part of its plans to stop small-boat Channel crossings, while a standalone Department for Veterans would be created.

It said: "A properly funded and resourced whole department is essential to guarantee no veteran goes without and that our former servicemen and women play a leading role in our society and economy."

Elsewhere, the Reform manifesto proposes to improve defence procurement by launching a joint-acquisition corporation to "ensure world class procurement".

Infrastructure delivery would be overhauled by the merger of the National Infrastructure Commission and the state-owned UK Infrastructure Bank.

A further Reform manifesto proposal includes an "anti-corruption unit" designed to keep officials in check.

"We will ensure that public officials face sanctions if they break the rules, including prison," the manifesto says. "Our new anti-corruption unit will have legal powers to investigate past and future scandals."

Reform figures "don't add up" says IFS

An analysis of Reform's manifesto proposals conducted by independent think tank the Institute for Fiscal Studies said its spending reductions would save less than stated, and the tax cuts would cost more "by a margin of tens of billions of pounds per year".

IFS deputy director Carl Emmerson said Reform's estimates put the cost of tax cuts at nearly £90bn a year, while its spending increases would come with a £50bn annual price tag – covered by spending reductions in the region of £150bn a year.

Emmerson said the true cost of the proposed tax cuts would be significantly in excess of £90bn a year.

"Reform UK plans to cut the rate of corporation tax from 25% to 20% immediately, and then to 15% in year three of the parliament," he said. "The manifesto costing of £18bn a year over the course of the next parliament for all its business tax cuts is less than half of what official estimates suggest the long-run cost of just this cut in the corporation tax rate to 15% would be."

Emmerson said the £17bn-a-year proposed increase for the NHS was "not nearly enough" to meet Reform's "incredibly ambitious commitment to eliminate waiting lists within two years".

He added that aiming to cut £50bn a year from departmental budgets would not be possible from efficiency alone.

"Saving this sum would require much more than a crackdown on waste; it would almost certainly require substantial cuts to the quantity or quality of public services," he said.

Emmerson concluded: "Even with the extremely optimistic assumptions about how much economic growth would increase, the sums in this manifesto do not add up. Whilst Reform’s manifesto gives a clear sense of priority, a government could only implement parts of this package, or would need to find other ways to help pay for it, which would mean losers not specified."

At the manifesto launch, Reform leader Farage acknowledged that the party's proposals did not represent a serious plan for government after next month's general election.

"This is not something with which we're going to govern the country," he said. "That's not possible in this election. Although this election is, for our party and for me, the first important step on the road to 2029."

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