Key facts
- Ed Davey announced a £17bn income tax cut plan.
- The plan aims to raise the income tax threshold to £15,000.
- The higher rate tax threshold would also be increased.
- The tax cuts are contingent on rejoining the EU's single market and customs union.
- The proposal is expected to be funded by increased economic growth.
- The tax cuts would be implemented in the final year of a parliament, potentially by 2034.
Liberal Democrat leader Ed Davey has announced a plan to cut income tax by £17 billion, a move aimed at attracting former Conservative voters. The proposal, detailed at the party's annual conference in Brighton, includes raising the income tax threshold to £15,000 and increasing the level at which the 40p higher rate is paid by approximately £6,000. Davey argued this would allow people to spend their own money rather than the state dictating terms, criticizing "post-Brexit stealth taxes" like frozen thresholds.
The funding for these tax cuts relies entirely on projected economic growth stemming from rejoining the EU's single market and customs union. The party's advisers believe that addressing the cost of living through tax cuts, even if delayed until the final year of a parliament (potentially 2034), directly resonates with voters. In the interim years, tax thresholds would be adjusted for inflation.
The plan marks a shift in the party's fiscal approach and may cause unease among some MPs seeking a more comprehensive vision. Davey also touched on other policy areas, including a proposal for a global treaty on AI development. He contrasted the Lib Dems' approach with Reform UK's pledge to increase the personal tax allowance, which he stated would come at the expense of vulnerable people.
Davey also strongly criticized the far-right, comparing groups to historical fascist movements and linking them to well-funded entities and "cynical politicians" like Nigel Farage, whom he accused of promoting hatred for personal gain. He warned against a "Farage's Britain" mirroring "Trump's America" and highlighted significant donations to Reform UK from crypto billionaires.