By Finn Donnelly
Across Europe, support for right-wing political parties has grown exponentially in recent years. Polls and elections in France, Austria, Portugal and Belgium have all shown a strong shift in voting trends towards the right.
This is no different in the UK. Reform UK is a right wing political party, born from the ashes of the Brexit Party in 2021 and led by their main spokesperson, Nigel Farage. In recent years, the party has enjoyed a boost in support across the UK with many polls suggesting it would likely gain an extraordinary number of seats if a snap election were called today. At its core, Reform aims to increase the efficiency of U.K. government expenditure As appealing as this sounds, fiscal policy requires a considerable degree of planning to be properly implemented. Critics of Reform have found many problems with the party’s proposed 2024 manifesto in regards to fiscal matters. The new approach presented by Reform in recent months has shown what they call a new maturity and realism when it comes to economic policies.
This article aims to clarify key aspects of Reform’s new economic plans and assess their feasibility. Only the economic and fiscal policies of Reform will be taken into account, all reflections on the party are produced as such.
Tax
In a recent speech, Farage delivered a description of reforms to the tax policy he would aim to implement. He spoke of the plan to raise the threshold at which people start paying income tax from £12,570 to £20,000, bringing many thousands out of tax. This would be a positive change for low earners but it comes at a cost- a sum of £40bn a year to the exchequer. When asked after the speech who or what would fill this gap in tax income, Farage said that this tax change is something he would ‘want’ to implement and asked the public to view it as more of an eventual change.
A change that Farage was firm about is his intention to reverse the inheritance tax changes on farmland set out by Labour in their Autumn budget of October of 2024, set to be implemented in April 2026. Farmers in the UK previously benefited from having no inheritance tax on their land due to the challenges and essential nature of farming. However, they will now be subject to inheritance tax. From April 26’ this is how the tax code will change; the full 100% relief from inheritance tax will be restricted to the first £1m of combined agricultural and business property. Above this amount, landowners will pay inheritance tax at a reduced rate of 20%, rather than the standard 40%. This tax can be paid in instalments over 10 years’ interest free, rather than immediately. This change was very controversial and has only made farming in the UK a less lucrative option. As it stands the UK only produces 55% of the food its inhabitants eat and this number has only declined. This makes Nigel’s bid to reverse this tax an opportunity to win over voters with this low-hanging-fruit policy. It is believed, even by critics of reform, that the farming tax should be reverted or at least changed to exclude owner-operator farms. This way the tax will not impact boots on the ground owners who keep the British farming industry alive.
The Triple Lock
Triple lock is a UK policy that protects the growth of the state pension. It works by increasing the state pension each year by the highest of these 3 measures; the previous Septembers CPI, Average earnings growth (From May to July of the previous year) or 2.5%. On trend with reform commitments, Farage declined to commit to continuing the triple lock. The triple lock is a commonly opposed policy, even by the IFS, and currently costs the UK £125BN per year– 10% of our annual budget. This number is only set to increase, it has been estimated that by 2050 the triple lock commitment would rise by £45BN. Introduced in 2010, the bill began as a policy rooted in great intentions (preventing pensioner poverty) but now it seems to be an outdated and unaffordable approach. Richard Tice has been an outspoken advocate for ditching triple lock, though he has not clarified an alternative. In a survey taken in March 2024 it was found that over 75% of Reform’s voters are aged over 44 and 39% aged over 65. This could be the reason for Farage’s lack of clarity in regards to the triple lock as a large share of his voting demographic likely benefit directly from the state pension. I expect that closer to election time we will see Reform officially draw a line in the sand on this matter. When this occurs, it will be notable to observe the implications to Reform voter behaviour, particularly in that 65+ age band.
Top Earners & Entrepreneurs
In a speech 3 weeks ago, Nigel made his position on the wealthy clear, “I want as many high- earning people as possible living in this country and paying as much tax as they legally have to because if the rich leave and the rich don’t pay tax, then the poorer in society will all have to pay more tax. It’s as simple as that.” Richard Tice has also been vocal on his ambitions to reduce taxation in the UK. He advocates for a ‘flatter system’ of taxation, meaning less tax for higher earners. Economic growth in the UK now sits below the 2-3% that was enjoyed consistently throughout the 1980’s and national debt is almost 100% of GDP. These figures do suggest that a boost in growth is necessary and Reform are clearly placing their faith in the top 1% to create this boost.
Expenditure in The Pursuit of Net-Zero
Farage has long been clear on his thoughts towards climate initiatives, so it was no surprise when he reinforced his beliefs in the speech he gave recently. He called for more drilling in the North Sea and promised that reform would be strong on prioritising cheaper energy in the UK. Reform claims that the pursuit of a net-zero UK has come at the cost of many great jobs and valuable skills which reform hopes to regain.
It is obvious that cheaper energy is always popular, but Net-Zero has proved to be an important area to voters in polls. A YOUGOV poll revealed that 60% of Britons support net-zero. However, the majority of net-zero supporters want the government to prioritise tackling the cost of living crisis prior to climate initiatives. This does lead one to believe that the UK voters could support Reform in regards to energy if the party can strike an appropriate balance between climate concerns and affordability.
In short, Reform under Farage has been successful in gaining popularity to an extent, through personality politics and a populist approach. I think the recent amendments they have made to their economic and fiscal policies make a vote for reform a much more feasible option, due to the reduction in the scope of their tax agenda. I think in previous years, reform played the game of being the new kid on the block with little to lose. This mirrored their policies, with unrealistic proposals built on false dreams of a perfect UK. And now, it seems that their success in the polls has changed the demeanour and perspective from within the party. It appears that there is now belief that Reform could secure some real political power within the UK and the manifesto has to change to reflect a more serious position.
The views expressed in this article are the author’s own and may not reflect the opinions of The St Andrews Economist.