30-05-2025
Will Nigel Farage go the same way as Liz Truss?
Photo by'Liz Truss all over again': this is how Keir Starmer characterised Reform UK's offer to the British people at a speech in a glass factory in St Helens. What Nigel Farage is offering, the PM said, is 'billions upon billions of completely unfunded spending, precisely the sort of irresponsible splurge that sent your mortgage costs, your bills, and the cost of living through the roof'. Farage responded that this was 'Project Fear 2.0'.
The politics of this are interesting. Labour's presence in parliament is more than 80 times the size of Reform's. Keir Starmer has 403 MPs. Farage has five, two of whom have majorities of fewer than 100 votes (Sarah Pochin won the Runcorn and Selsby by-election by six votes). Reform is polling very strongly and claimed a large popular vote in the general election by fielding paper candidates across the country. But it is not the opposition. Why act as if it is?
One explanation was suggested by a line in Nigel Farage's speech on Tuesday: the actual opposition, the Conservative Party, have 'had a good 200 years', Farage said, 'but they're done'. It's obvious why Farage wants the public to accept this. But it might also be in Keir Starmer's interest. Since the Labour Party was formed in 1900, the Conservatives have been in power (if you include coalitions) 66.4 per cent of the time. Labour wins when voters tire of what has been, since the mid-19th century, the usual party of government.
So, while the polls say Reform is a real threat to Labour, it is perhaps not entirely unreasonable to argue that when Keir Starmer acts as if Nigel Farage is leader of the opposition, he is presenting voters on the right with a choice that might take a large chunk out of the Tory vote. The calculation may be that the damage Reform can do to Labour is less than the damage Reform can do to the Conservatives.
If this is part of Labour's strategy then it also implies a confidence that the more power Reform gains, the more its threat is defused, because it'll trash the place just like Liz Truss did. Hence Starmer's (and Ed Davey's) warning that Farage in power would 'crash the economy'.
I wonder how durable the Truss Crash Effect will be. Which bills were sent 'through the roof', as Starmer put it, by Liz Truss, and how? It was Truss who, in her historically brief tenure as PM, introduced an energy price guarantee to limit bills against a spike in wholesale prices. Water bills remained the same under Truss (they have since risen by 26.1 per cent). The steep inflation experienced during Trusstober 2022 was exogenic (caused by circumstances external to the UK); whatever you think of Liz Truss, she did not invade Ukraine.
Do you know anyone who lost their job as a result of the Truss-Kwarteng omnishambles? Apart from Liz Truss and Kwasi Kwarteng, obviously – anyone with a real job? There was no steep dive in GDP, no mass unemployment. If the 'crash' was the bond market reaction, then let's check the yield on a ten-year UK gilt: higher now than it was during the Trusspocalypse. Does that mean Keir Starmer is also 'Liz Truss all over again'?
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In Farage's speech earlier this week, he offered to make tens of billions of pounds' worth of tax cuts, just as Truss did. A lot of people, including me, would argue this is a terrible idea. But Truss defenestrated herself by ignoring the Bank of England, the OBR, the Treasury, and anyone else who could have helped her implement her economic plan without causing market turbulence that threatened to explode the arcane plumbing beneath pension funds. It was not the prospect of lower taxes that ruined Truss, but her failure to announce the austerity that would have made her borrowing appear sustainable to the market. Donald Trump is currently pursuing a much more damaging agenda than Truss promised and he has yet to be deposed by the bond market (still, you never know). Like Trump, Farage is a populist who runs on easy answers: slash public services, abandon any attempt to address the climate crisis, maybe sell the NHS. The bond market would not necessarily reject such policies.
That's the thing about the bond market: it is a predictor of the path of inflation and government borrowing. It has no interest in good government. Voters want more from Labour than a promise to just handle the beast more carefully than anyone else.
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here
[See also: Neo-Nazi safari]
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