Liberal Democrat Shadow Budget

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Rebecca Flair
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Liberal Democrat Shadow Budget

Post by Rebecca Flair »

Ladies and Gentlemen thank you all for coming.

What are our priorities as a nation? If you listen to the Conservative Party they will say low taxes, at any cost. If you listen to Labour they will say high spending, at any cost. The public debate has, until very recently, fluctuated between these two extremes until New Labour accepted the Conservative Party’s spending plans and decided to choke back the state every bit as much as Margaret Thatcher, Nigel Lawson, and Geoffrey Howe before them. Whilst it is refreshing that this trend has seemingly been ended by a new Chancellor it has come at yet another perfectly foreseeable cost, the tax cost to our nation. You see the Conservative Party would have you believe that the only fiscal policy worth pursuing is tax cuts, they will pursue these tax cuts not in the interests of the middle class, but in the pursuit of the interests of the very richest in our society. William Croft was elected with a mandate to cut Capital Gains Tax and abolish Inheritance Tax entirely. This would be entirely the wrong economic policy, depriving the Exchequer of finance that can be used to invest in our society and giving nobody but the Tory Party’s donors a tax cut. Labour meanwhile have ditched their pre-election generosity in favour of a return to Tory-lite spending proposals.

Of course there is a different way of doing business in a Budget, it is perfectly possible to strike a balance between spending and tax cuts which doesn’t see the Labour Party become the Conservative Party once a year or vice versa. The Liberal Democrats’ economic plan is a simple combination of fiscal prudence, retaining the surplus but not artificially inflating it for spin purposes, tax cuts for the people, and investment in our society. Under our budget plans the United Kingdom would retain a surplus of over £8.5bn or around 1% of GDP and we would keep the current surplus, that is the surplus excluding investment, at around £20bn or 2% of GDP. We believe that these are sensible figures for a surplus giving us the fiscal flexibility to invest and cut taxes whilst also paying down our debt. Under our economic plan the debt would be reduced to below £300bn for the first time in decades and the debt:GDP ratio would be cut to beneath 30% ensuring once again that we keep paying our way as a nation.

As I have said often during my leadership, the Liberal Democrats are the party of tax cuts for all. Unlike Labour who keep taxes high so that they can play at fiscal discipline or the Conservatives who cut taxes for their mates and hang the rest of us the Liberal Democrats focus our efforts in creating a fairer economy and a more just share of taxation. To this end I am able to reiterate our commitment to abolishing the Starting Rate of Income Tax but I am also able to take it further. Under the Liberal Democrats’ tax plans you will not pay a penny of tax on any income you receive under £4,473 because we are also going to equalise the personal allowances for Income Tax and National Insurance, saving the average family on the Minimum Wage with two incomes nearly £800/yr, or to put it another way giving these families an income boost equivalent to nearly 20% of their annual incomes. Families with two parents earning the average wage will also be around £800/yr better off under our tax plans. To pay for this unprecedented tax cut for all middle and lower income earners the Higher Rate of Income Tax is being raised by 5% to 45% on income over £33,441, a far lower rate than it was at for the majority of the last Conservative Government, representing a tax cut for the vast majority of taxpayers but a small tax rise for the very richest in our society. This tax rise will, in no small part, be further offset by other Liberal Democrat plans to cut the rate of Value Added Tax from 17.5% to 15%, an effective 2.5% pay rise for the entire nation as most goods will become that much cheaper overnight.

The Liberal Democrats are committed to supporting small and startup businesses providing entrepreneurs every advantage and every opportunity in their efforts to find the next big thing. To this end our budget plans abolish the Starting Rate of Corporation Tax. But tax cuts alone will not nurture the businesses of tomorrow which is why we are backing up our words with actions from central government as well. We will be investing an additional 11% into the Small Business Service, an injection of £35mn in capital to assist small businesses across the country, furthermore we are investing an additional 40% into innovation grants for businesses (£70mn) and another 9% into research councils. To help match businesses with new employees we are further investing over £100mn into the New Deal programme and job centres an investment of over 6.5%. The Liberal Democrats are the true party of business, not simply cutting taxes and leaving them to sink or swim but investing in their future with capital and expertise to provide every startup with the best possible chance of success. To protect everyone’s favourite traditional rural business we have also taken the decision to advocate for a freeze alcohol duties for five years saving a projected near 15% from the price of your pint over the next five years.

But of course I could stand here and talk about tax policy for the next week, I could continue to outline how our income tax policy combines the best of all Worlds, how our cut to VAT will give families far more disposable income, and how we are nurturing the next generation of businesses right here and right now but just as important as our tax plans are our spending plans because it is in these plans that you will see where the three parties’ priorities lie. Straight off the bat we are advocating a triple lock scheme for all pensions. Pensions would increase by inflation, earnings, or 2% every year, whichever is highest, rapidly abating the unacceptable scandal that is pension poverty and has persisted under Governments of both colours for decades. Furthermore all welfare benefits will be increased by inflation +1% under our plans ensuring both that work pays more with an average wage increase of over 4% but also that living standards for the poorest in our society are able to continue to enjoy rising living standards like the rest of the nation. The only exceptions to this is Disability and Sickness benefits which will rise at the same pace as earnings. All in all this represents an investment of over £5bn into social security, a 2.4% real terms increase.

Of course no Liberal Democrat Shadow Budget would be complete without talking about localism. Devolution is an important principle for all Liberal Democrats so we are ensuring that it can be made to work for local people. We are investing an additional £1.45bn into local and national transport solutions including £200mn earmarked for local rail projects, £100mn earmarked for local road investments, and £11mn for airport grant funding. The rest is unreserved and shall be available to be allocated to local government and national priorities. But beyond that the Liberal Democrats are committed to working with local governments to deliver better value for local taxpayers which is why we would pursue a policy of freezing Council Tax in real terms in exchange for over £2.75bn in additional funding seeing councils get a real terms funding increase without breaking the banks of their local taxpayers with the 12% Council Tax hikes we’ve become accustomed to under New Labour. The Liberal Democrats will also invest £8.5bn over the course of 10yrs to reopen 50 Beeching Cut stations on pre-existing lines and to correct one of the greatest economic mistakes of the past decades. Under a Lib Dem Government we would end rail privatisation by allowing the contracts to expire and opting not to reissue the tenders, bringing them back to the public sector at no additional cost to the taxpayer. These investments will ensure that the needs of local citizens, not the bank balances of transport companies, will be of paramount importance when deciding our rail needs.

On green issues the Liberal Democrats are taking the lead to get Britain ready to ourselves take the lead in the global race to build a green economy. Unlike the Tories we have rejected the idea of a Carbon Tax due to its harmful nature against businesses that are unable to adapt at the present time, as technology and industrial practices adapt we may look again but right now such a move would be economically harmful and could trap and destroy many businesses who are unable to adapt at the present time. That being said we are investing the money to double research funding for nuclear and renewable energy alongside doubled funding for energy efficiency schemes, British waterways, green research and development, and countryside and rural regeneration. We are also investing £50mn into a tree planting and reforestry scheme, nature’s own carbon capture scheme. This would double environmental funding from around £600mn to £1.2bn once all schemes are accounted for across the various departments of the budget.

Next we come to the Liberal Democrat investment in our public services starting with a public sector pay award of 5% for all public sector workers, more than double the rate of inflation.To their credit the Government have presided over a decent reduction in NHS wait times, but we can and must do more. The Liberal Democrats will be arguing for the hiring of over 2000 more doctors and 4000 new nurses to cover existing vacancies and annual staff turnover while also hiring enough staff to fill the additional vacancies created by our plan to expand capacity by over 3,000 beds in over 30 major and local new clinics and hospitals. We shall also provide procurement and maintenance budgets with a real terms increase of 5% over last year’s funding and major investments in dentistry, optical care, devolved health funding, research, training, and social care. In the realm of education we are committing £50mn in additional funding to the Sure Start programme for early years’ development along with 125 new schools, over £500mn in new grant funding, and £300mn in maintenance funding to ensure that our children get the best quality of education available. For those wishing to pursue higher education there shall be an additional £250mn in grants to higher education providers along with the abolition of tuition fees and a £600/yr increase in maintenance support for the average student. Furthermore we are doubling the Widening Participation Fund to ensure that everyone gets a fair crack of the whip whatever their circumstances. Finally for the other adults pursuing more educational options we are investing £150mn into further education and adult skills.

In terms of the Foreign Office the Liberal Democrats are committed to a peaceful and secure British nation that plays our part on the World stage. As part of our drive to increase foreign aid funding we are releasing £230mn in funding for international aid to increase our Aid as a percentage of GDP to 0.3%, this would increase every year were we calling the shots. We have also made £450mn available for military training, procurement, and maintenance budgets to ensure that our troops have the best possible skills and equipment at their disposal while they protect our lives abroad.

Finally the Home Office would receive a shakeup where the Liberal Democrat budget to be taken up by the Government. We would hire 4,000 police officers every year for five years with an aim to put bobbies back on the beat and visible in our communities, we would also match the Macpherson Report’s recommended training in unconscious bias for our police officers and will continue to look at ways to harmonise police relations with minority communities. We would also hire 2,000 more firefighters every year for five years to keep driving down fire risks and invest in our firefighting capabilities. We would invest £50mn in the first tranche of funding for our national fire and carbon monoxide alarm programme aimed at ensuring that the least well off have access to invaluable life saving equipment in their homes. We would also bring a new attitude to dealing with crime. Our Shadow Budget invests £375mn in building 5,000 new prison cells to crack down on overcrowding in the short term but it also doubles rehabilitation funding. A long term solution to prison overcrowding and reoffending must take into account the revolving door approach to justice which we have in this country. Individuals are often let out of jail, reoffend, and then come right back into prison through the same door they left 6 months ago. Increasing rehabilitative funding will cut reoffending and therefore drive the prison population down in the long run. We are also increasing legal aid by 25% under Lib Dem plans as part of plans to upscale legal aid and make higher quality legal representation more affordable for everyone because everyone should have access to justice, not simply the high income individuals who can afford a good lawyer on retainer.

Ladies and gentlemen this budget marks a radical departure from many which have come before it, it is a budget of pragmatic solutions to long standing problems. We are cutting taxes for the vast majority of people in this country, bringing down prices with a VAT cut, and making it easier than ever to start your own business. Equally however we are investing billions in our public service. An 8% real terms injection of funding for the NHS, over 10% real increase for education, and an over 11% real terms increase for the Home Office. These are our policies and our priorities for you, the people of the United Kingdom, so that we can live in a society where taxes are low but public services are well funded. The Tories want you to believe that the only way to end the economic slowdown is to cut taxes at the top, Labour would have you think that the only way to run an economy is with a huge surplus and Tory spending plans, but the Lib Dems believe in balance and moderation which is exactly what’s borne out in this Shadow Budget.
Rebecca Flair
MP for Westmorland and Lonsdale 2010 - Present

Leader of the Liberal Democrats 2015 - Present
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Re: Liberal Democrat Shadow Budget

Post by Rebecca Flair »

Rebecca Flair
MP for Westmorland and Lonsdale 2010 - Present

Leader of the Liberal Democrats 2015 - Present
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Blakesley
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Re: Liberal Democrat Shadow Budget

Post by Blakesley »

A lot of my comments elsewhere apply here, so this might be a little brief.

Ms Flair does a good job outlining the Liberal Democrats Shadow Budget and telling us every last detail about it. This is an acceptable strategy. However, it's going to cause a lot of people to miss what you're offering. This is the compounded tyranny of numbers. "inflation +1%" is the technical language that might get used in Parliament, but it's really not the right language for dealing with the press or trying to sell a narrative around your spending plan. There are a lot of policies thrown out that can be summarised as "we tax less than Labour and spend more than the Conservatives" without telling voters what they necessarily mean for them. And that's a key summary and the problem. "We tax less than Labour and spend more than the Conservatives" isn't a message about you, it's about them. And ultimately, you want your message to be about you - especially when revealing an ambitious proposal.

Liberal Democrats +5

Rebecca Flair +1 XP
Blakesley
Treasury | Labour
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