Nigel Farage’s “fantasy” economics will lead to a Liz Truss-style economic meltdown, Sir Keir Starmer will warn on Thursday, after the Reform UK leader set out a swathe of policies which would cost the Treasury billions.
The prime minister is expected to urge the public to reject Reform UK’s calls to use “family finances” as a gambling chip on “unfunded tax cuts”.
It comes after the Institute for Fiscal Studies (IFS) said the party’s pledge to increase the income tax personal allowance to £20,000 a year could cost between £50 to £80 billion a year - casting doubt over how Reform UK would pay for it.
Speaking at a press conference in central London on Tuesday, Mr Farage said his measures were “aimed at British families” as he announced plans to scrap the two-child benefit cap and fully reverse the winter fuel payment cuts.
Responding to Mr Farage’s speech, the IFS said the announcements on winter fuel payments and the two-child benefit cap were “dwarfed” by the change to income tax personal allowance.
Speaking to BBC Radio 4’s World at One, senior IFS economist Stuart Adam warned: “If they’re going to be a party of government, they would have to make those numbers add up”, questioning how Reform would pay for the tax cuts.
On a visit to meet workers at a manufacturing business in the North West, Sir Keir is expected to brand Mr Farage’s policies a “mad experiment” and warn they will spark the same chaos as Ms Truss’s disastrous mini-budget.
The former Conservative prime minister, who lasted just 49 days in office, sparked gilt market free fall and a run on sterling after introducing unfunded tax cuts in 2022.
He will say: “In opposition we said Liz Truss would crash the economy and leave you to pick the bill. We were right. And we were elected to fix that mess.
“Now in government, we are once again fighting the same fantasy – this time from Nigel Farage.”
Sir Keir will add: “Farage is making the exact same bet Liz Truss did. That you can spend tens of billions on tax cuts without a proper way of paying for it.
“And just like Truss, he is using your family finances, your mortgage, your bills as a gambling chip on his mad experiment.
“The result will be the same. Liz Truss bet the house and lost. £45 billion in unfunded tax cuts, with no means to pay for them.
“Markets reacted, the economy tanked and we’re all still paying the price for mortgages, rents and bills that spiralled out of control. I won’t let that happen.”
Short-lived Conservative prime minister Ms Truss’ mini-budget spooked the financial markets in 2022 and led to a spike in mortgage rates.
