The UK Independence Party claims in its manifesto that it is the only party to have had its manifesto commitments independently checked for their affordability. There are a series of eye-catching spending promises, which their manifesto boldly claims are fully costed and that UKIP is the only party able to eliminate the budget deficit. But all of UKIP’s savings are subject to a number of uncertainties.
The proposals include an increase in expenditure on the NHS by £3 billion, with 8,000 more GPs, 20,000 more nurses and 3,000 more midwives. Defence spending is to be protected with projected rises in real terms to come and 6,000 new jobs would be created in the police, prison service and border force. On the taxation side, inheritance tax would be abolished, the personal allowance raised to at least £13,000 with the threshold for the top 40% band raised to £56,000 and the introduction of a new intermediate 30% band for incomes in the £43,500 to £55,000 income bracket.
This amounts to around £32 billion of commitments over the lifetime of the next parliament. They would be paid for by tackling what UKIP refers to as “politically correct spending programmes”. The largest savings are identified in terms of stopping payments to the European Union (saving £9 billion), cutting the aid budget to 0.2% of national income (£11 billion) and abandoning the Barnett formula for determining how public expenditure is allocated (£5 billion) – this would sharply reduce expenditure in Scotland.
UKIP also proposes to cancel HS2 (£4 billion) and cut back various government departments, particularly slashing spending in the Department of Energy and Climate Change. Altogether, this would allow them to fund their bold plans.
A number of uncertainties
All of UKIP’s savings are all subject to a number of uncertainties. Cutting back the aid budget would probably be fairly straight-forward. But savings from abandoning the Barnett formula are less clear. It is an opaque system for funding public expenditure across the UK, long since disowned by its originator. Nevertheless, it is no simple matter to devise an alternative funding formula that would guarantee the proposed savings. That the Barnett formula has persisted reflects not just Scottish representation, but also the difficulty of devising a workable alternative.
The greatest uncertainties concern the savings from leaving the EU. The manifesto is predicated upon the assumption that a referendum would vote for exit – recent opinion polls indicate that this is far from likely. Assuming the UK did decide to leave, the manifesto assumes that the exit can be achieved within two years through “amicable” negotiations. This may be optimistic for such an unprecedented move.
It skates over the nature of the UK’s relationship after exit. This could be crucial. Norway, for example, has access to the EU’s single market as an independent country in an arrangement similar to that envisaged by UKIP for the UK. But Norway still has to contribute to the EU budget – around €550m in 2013/14. Scale this up for the size of the UK economy and the figure could easily run into billions.
Beyond this is the potential impact of a UK exit on the economy. The actual budget deficit is determined not just by the policies of the government of the day, but centrally by the state of the economy. A major change in Britain’s relationship with the EU would increase uncertainty over investment in export industries and would not encourage inward investment seeking to access the European single market.
The UK is currently running a record current account deficit with the rest of the world, and is able to fund this by attracting an in flow of capital from foreign investors. Leaving the EU would not be likely to help continue this and weakening ties with some of our largest export markets is unlikely to improve our already weak trade performance.
There are more minor queries. UKIP proposes to cancel HS2, but says nothing about the proposals in the Chancellor’s 2014 Autumn Statement to improve rail and road infrastructure across the north. Like other parties, it is sure it can save money through more efficient government spending and collect revenues by clamping down on tax dodgers.
And, like others, it aims to recruit staff to the NHS (and other public sector jobs) while controlling public sector pay. With reports of low morale amongst GPs, it is unclear how thousands more could be recruited without improving their pay and conditions. Others might solve this by recruiting foreign doctors, but we can be sure this is not UKIP’s plan.
So, while UKIP can boast of having a manifesto whose costs add up, many of these numbers must be treated with caution. The savings they suggest are not as straightforward as they would have voters believe.
Jonathan Perraton does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.
Authors: The Conversation