Tag Archives: taxation

Jamie Dalzell

“How will you pay for it?” – The reply I’d love to hear Ed Davey give

By Jamie Dalzell | Thu 18th June 2026 - 10:18 am

Picture the scene. Ed Davey is on Question Time. He has just made the case for fixing social care, rescuing our crumbling roads, or matching our European allies on defence. And then it comes, the question every politician dreads: “That all sounds lovely. But how are you going to pay for it?”

Here is the reply I would love to hear.

“I’m glad you asked, because it’s the wrong question, and I think most people at home suspect as much. You’re asking how we’d fund twenty-first-century public services with a tax system built for a different century. Council tax based on what your house was worth in 1991. A National Insurance system designed so governments can raise your taxes without admitting it. Thresholds frozen so quietly that a nurse is dragged into the higher rate while the genuinely wealthy barely notice. That isn’t a tax system: it’s a museum with a collection box.

“So no, I won’t promise you a magic number. I’ll offer something better: a Liberal Democrat plan to reform the whole thing, simpler, fairer, built for growth, so most working people pay less. It draws together the long-held views of the Institute for Fiscal Studies, the Resolution Foundation and a long list of tax experts. What’s been missing is a party honest enough, and free enough, to act on it. That’s us.”

Of course, Ed did not say that. But there is no earthly reason he could not.

Everyone is stuck in the same trap

Every party is trapped by that question, because every party plays the same rigged game. Promise not to touch income tax, National Insurance or VAT, two-thirds of all revenue, and you’ve boxed yourself into the same dingy corner. What’s left are the levers nobody defends in daylight: frozen thresholds, stealth raids on savers, and a council tax so out of date the Resolution Foundation calls it “the modern poll tax.”

Labour walked straight into that trap, exactly as the Treasury Select Committee warned in 2021, and the Conservatives before them. The script never changes: impossible promises, then the lever voters can’t see, then the U-turn. November’s threshold freeze, billions raised quietly through fiscal drag, is the latest verse of a very old song.

We don’t have to sing along.

Why this is our fight to lead

There’s a reason this argument belongs to us. Reforming the system means saying the system itself is broken, and neither Labour nor the Conservatives can say that, because they built it and still defend it. We can.

We also have form. Our biggest coalition achievement, taking millions of low earners out of income tax by raising the personal allowance, was a tax idea, and a member-led one. A platform that scraps council tax for a fair property tax, ends the National Insurance con by taxing all income the same, and cuts the bill for most modest households is exactly that kind of idea: liberal to its bones, on the side of the person trying to get on.

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Simon McGrath

We need a tax rise to fund additional defence spending 

By Simon McGrath | Fri 12th June 2026 - 1:30 pm

I am an “Orange Book”  Lib Dem – I think we should have taxes as low as possible because people make the best decisions about how to spend their own money. That doesn’t of course mean that we don’t need taxes – there are lots of things the state needs to do to ensure everyone a decent society – and   tax as a % of GDP is currently a Post war high. 

But it’s very clear that our failure to adequately fund our Defences is putting our future as a safe, democratic nation at risk. John Healey’s resignation letter could hardly be clearer: 

You   spelled out the threats last week: “It is our intelligence assessment, and the assessment of other countries in Nato, that there could be an attack by Russia on Nato as soon as 2030. 

And he says the proposed backloaded plan 

falls well short of what is required for defence and the country at this dangerous time

Ed Davey has called for an extra £20bn to be funded via ‘Defence Bonds’ but there is no clarity  how these differ from any other Government borrowing nor does it seem sensible to add yet further to the UK’s massive debts. 

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Vince Cable

Vince Cable writes…Labour and Fiscal Rules

By Vince Cable | Wed 10th June 2026 - 11:55 am

The nation waits for the people of Makerfield to decide whether Keir Starmer will face a challenge from his most plausible and electable Labour critic. Were Andy Burnham to emerge victorious and to challenge for the party leadership, this would signal a shift to what is being called the ‘soft left’.

One of the most deeply held convictions of those in this political space is that the government is being held back from more ‘progressive’ policies by unduly restrictive fiscal rules which exist to reassure ‘the bond markets’ that the UK is a trustworthy, reliable borrower.

Andy Burnham’s position on the …

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Iain Donaldson

A Federal Britain: 3. Fiscal Federalism and a complete constitutional settlement

By Iain Donaldson | Sun 7th June 2026 - 11:55 am

Fair representation is the first pillar of constitutional renewal. Federalism is the second. The third and final pillar is fiscal federalism.

Without financial autonomy, political devolution is incomplete. Without it, devolution is symbolic. With it, it becomes real.

The United Kingdom remains highly centralised not only politically but financially. Most revenue is collected by Westminster and redistributed through complex grant systems. This creates dependency, weakens accountability, and encourages short-term decision-making. Governments often spend money they do not raise and raise money they do not directly spend.

A durable federal settlement requires power, responsibility, and funding to be aligned.

Under fiscal federalism, state governments in Scotland, Wales, Northern Ireland, London, and the English regions would control meaningful portions of major tax bases, including elements of income taxation, business taxation, and consumption taxes. They would gain genuine responsibility for shaping economic development and funding public services.

In return, they would assume responsibility for major domestic functions including health, education, housing, transport, infrastructure, and regional economic development.

This alignment is crucial. Those who make decisions should manage the consequences. Citizens should be able to see clearly who raises revenue, who spends it, and who is accountable for outcomes.

Local government would also gain stronger fiscal powers. Councils could make greater use of land value taxation, tourism levies, congestion charging, and other locally appropriate revenue sources. This would reduce dependency on central grants and improve responsiveness to local priorities.

National solidarity would remain essential. Fiscal federalism is not a race between regions. A federal equalisation system would ensure that wealthier areas contribute more to support less prosperous parts of the country. This preserves cohesion while allowing genuine autonomy.

Such arrangements are common in successful federations because they balance fairness with decentralisation. Regions gain freedom to innovate and tailor policies to local conditions, while citizens retain the benefits of belonging to a wider national community.

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Tanya Park

Why Liberal Democrats need a principled position on Farm Inheritance Tax

By Tanya Park | Sat 27th December 2025 - 8:55 am

Labour’s capitulation this week- raising the Agricultural Property Relief threshold from £1 million to £2.5 million after fourteen months of pressure – reveals the weakness of defending arbitrary numbers rather than principles.

This should matter to Liberal Democrats. We’ve opposed Labour’s reforms without offering an alternative. “Scrap the tax” isn’t liberal – it’s opposing for opposition’s sake. We’re ceding ground to Labour’s incoherent incrementalism and Conservative privilege defence.

The opportunity Labour has created

Labour doesn’t know what problem they’re solving. The threshold they inherited was unlimited. They proposed £1 million. Now it’s £2.5 million. They claim to protect “ordinary family farms” while targeting “the wealthy” – but can’t explain why the right number changed by 150%.

This creates space for Liberal Democrats to articulate principled reform. Not “tax more” or “tax less,” but “tax the right things for the right reasons.”

What we should be arguing

The real conflict isn’t “protect farmers versus raise revenue.” It’s tax dodgers versus working farmers.

Current Agricultural Property Relief gives 100% inheritance tax exemption to all agricultural land – whether farmed or held as a tax shelter. Wealthy investors buy farmland to save 40% on inheritance tax, inflating land prices and locking out genuine farmers.

A liberal approach distinguishes between productive farming and passive wealth. Tie relief to behaviour (actual farming), not asset class (land ownership). The mechanism: link inheritance tax relief to the percentage of income from farming. Work the land, pay nothing. Use it as a tax shelter, pay tax.

This protects working farmers better than Labour’s threshold – someone earning their living from agriculture pays nothing regardless of land value. And it removes the tax shelter incentive driving unaffordable land prices.

Why this matters for Liberal Democrats

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Alastair Bowman

How to save hundreds of billions of pounds

By Alastair Bowman | Fri 25th July 2025 - 2:41 pm

Central banks raise interest rates to control inflation.  UK debtors have paid a ballpark £500 billion since rates began rising in November 2021, mostly through higher mortgage and credit card payments, averaging 7% of GDP each year.  The banks keep a chunk, and the rest goes to their clients, with taxes collected along the way.  The average UK saver is getting a few hundred pounds in interest each year but the vast majority of that half trillion (and rising) is going to the already rich.

Yet over half of UK owner-occupation is outright ownership.  Their savings grow from any interest rate increase intended to curb inflation by making us poorer.  The pain inflicted on mortgage holders and other debtors (including government) is all the greater to compensate for the extra purchasing power going to the already rich.  Their higher propensity to save reduces demand temporarily, later adding to the annual £100 billion in inflationary inheritances that the debtors must also counter.

There is a better way.  Inflation management requires pain, but if we inflict it through higher taxes instead of higher interest rates we can use the money to pay off the national debt and restore public finances.  £500 billion exaggerates the savings we have missed in recent years if less pain is needed because tax changes are more immediate and better targeted, but less pain is its own reward.  Paying off the national debt locks the money away, instead of redistributing it to the already rich, which is both counter-productive and highly regressive.

Later in the cycle, as tax rates are cut to stimulate the economy, tax revenues would still accrue relative to the position pre-tightening, only more slowly.  Interests rates would remain the backstop against inflation, deflation, and government profligacy.  Good fiscal governance could see the interest rate unchanged throughout the economic cycle, increasing stability and reducing costs.  Corporations would invest more, easing inflationary pressures.  Currently investment is often cut when companies are hit as collateral damage by interest rate hikes aimed at changing consumer behaviour.

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Mark Corner

The case for taxing the super-rich more

By Mark Corner | Thu 10th July 2025 - 10:46 am

Chris Perry is absolutely right to suggest in Lib Dem Voice that ‘Widening income inequality and increasing poverty are the great social evils of our time.’ But part of addressing the issue has to involve imposing an additional tax ‘burden’ on the very rich.

In the run-up to the General Election last year Ed Davey defended the Lib Dem proposal to raise an extra £5.2bn from capital gains tax, with a new rate of 45 per cent for gains of more than £100,000:

Most people will pay the same or less. If you are very, very wealthy — 0.1 per cent of the population — you will pay a lot more tax. Multimillionaires and billionaires will pay a lot more.

More recently, Lord Kinnock, who was Labour leader from 1983 to 1992, suggested that imposing a 2% tax on assets valued above £10m would bring in up to £11bn a year.

The refusal of Keir Starmer to rule out a wealth tax in Prime Minister’s Questions on Wednesday, July 9th (whereas Rachel Reeves did rule out such a tax in 2023 before Labour came to power) suggests that it is at least being seriously considered by the government. It should be.

Opponents of such a tax stress that ‘wealth creators’ should be encouraged, not discouraged (but they will still keep huge amounts of money – and not all of them created their wealth), that if they are subject to higher taxes, they will flee the country and apply their talents elsewhere (Really? So all CEOs want to live in the USA?) and that if they are taxed too highly, they will find ways of avoiding tax altogether (they already do – which is why the Lib Dem manifesto last year put so much emphasis on dealing with tax evasion). It’s even been argued that cutting taxes on the very rich will supercharge the economy and lead to increased growth which can then be spread to all. Trump’s ‘Big Beautiful Bill’ uses this argument, and we will see where that leads him when people cease to be distracted by his foreign policy ‘initiatives.’ Liz Truss tried it three years ago with her own tax-cutting budget. And we saw where that led her. It spooked the markets and effectively ended her tenure as Prime Minister.

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Caron Lindsay

William Wallace writes..British Politics in a national and global emergency

By Caron Lindsay | Wed 2nd April 2025 - 1:55 pm

Martin Wolf, as so often, had it right in the Financial Times the other week.  He argued that in the multi-headed crisis we now face, the proper response of government is to tell the voters that this is both a national and a global emergency and that national economic and fiscal policies will have to take these exceptional circumstances into account.  The impact of Trump’s tariffs on the global economy could plunge us all into a deep recession.

Labour knew when they came into office that Russia’s attack on Ukraine had raised difficult questions about replacing stocks of equipment and munitions and increasing Britain’s defence capabilities.  They also had a good idea of how far the Conservatives in office had run down public investment and juggled financial figures to avoid recognising that state revenues did not match public spending needs.  It seems however that full realisation of the depth of the investment and income deficit only came when they were in office, well after they had boxed themselves in by promising not to raise any of the three main sources of taxable revenue.  And they had not predicted the third shock, which has hit them six months after taking office: the impact of Trump’s second presidency on the global economy, on transatlantic relations and on the conflict in Ukraine and the Middle East. 

These three crises together have undermined Labour’s growth strategy, and are likely to force it to choose unwillingly both further spending cuts and higher taxes.  Yet here, as elsewhere, Labour remains timid and uncertain in making hard choices, let alone in persuading the public to accept them.  Opinion polls show that most voters don’t yet support increased spending on defence, because they don’t yet see the Russian attack on Ukraine as directly threatening Britain.  Most aren’t happy about cuts in welfare, but are content for overseas aid and other budgets to be squeezed to provide some of the funds needed rather than higher taxation.  

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Lord William Wallace

What’s our line on public spending?

By Lord William Wallace | Wed 14th August 2024 - 11:55 am

What should be our overall party line on taxation and public spending? We have a new government that came into office promising not to raise any of the major revenue-raising taxes. It claims that it has now discovered far larger holes in public spending plans than it had expected. The reality is that the Conservatives and their media allies managed to focus attention in the run-up to the election entirely on the level of taxation, without addressing what that implied for public services and long-term investment.

So Labour are now stuck. They knew well before the election (as the Institute for Fiscal Studies (IFS) and even the business pages of the Times were telling them) that government spending projections were unreal, that maintaining Tory plans would necessitate cuts in core programmes, and that Jeremy Hunt’s reductions in national insurance were almost criminally irresponsible. But they didn’t dare to be honest with the voters, for fear of the Tories branding them as a ‘tax and spend’ party.

We have been here before. Tony Blair similarly promised before the 1997 election not to raise overall rates of tax. We Liberal Democrats were braver, promising ‘a penny on income tax’ to raise the quality of education. I was then chairing our manifesto group, and vividly recall a Labour adviser telling me that we were mad to do so; ‘voters will never support a party that talks about raising taxes.’ But voters don’t want to vote for cuts in schools, health services, police numbers, courts and prisons either. It turned out to be the most distinctive theme of our campaign.

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Lord William Wallace

William Wallace writes.. .Tax Cuts versus Public Investment and Services

By Lord William Wallace | Fri 14th June 2024 - 9:38 am

The Conservative Manifesto confirms that they have dug in on tax cuts as their core offer to the voting public.  They know that this is an illusion, on which they would not be able to deliver if they won.  Opinion polls show that most of the public don’t think it’s realistic.  An IPSOS poll in early June found 68% of the public describing public services as ‘underfunded’ – confirming similar responses in multiple polls over the past year. 

Labour have been so frightened of the Daily Mail that they have committed themselves to holding almost all major sources of revenue to current levels.  They promise instead to fund increased spending out of future growth – a dubious prospect when UK growth is currently minimal and the global economy is being hit by wars in Ukraine and Israel and by the threat of a China/US trade war.  This has made the campaign so far surreal, with the Institute for Fiscal Studies (and the Institute of Government, and BBC Verify) pointing out the widening gap between promise and necessity, and with both major parties refusing to engage on where future cuts must fall.  Happily our manifesto has focussed on fair tax rather than low tax, and received compliments from the business pages for daring to do so.

Any of you who may be going to meetings with Tory candidates in the next three weeks can have a field day over the gap between rhetoric and reality.   Sunak’s party have promised to raise defence spending by 0.5% of GDP, and attacked Labour for its more cautious half promise.  Given the re-emergence of Russian threats to Europe and the current weakness of UK armed forces, such an increase is irresistible. So ask the Tory candidate what other budgets they will cut to fund this significant increase?  Education, when teachers are leaving in increasing numbers, universities in danger of bankruptcy, and apprenticeships less than half of what our economy needs?  Justice and prisons, which are already buckling from court delays, prison overcrowding, and probation understaffing?  Local government, where budgets have been squeezed to the point where key services are disappearing?  Or maybe the NHS, of all things?

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Mark Corner

A taxing question

By Mark Corner | Fri 29th September 2023 - 7:50 pm

The UK needs to spend a lot of money in order to deal with its collapsing public sector. There are daily reports of crumbling schools, poor transport infrastructure, shortages of staff and beds in the NHS and so on. Any new government is going to face the problem of where the money to restore public services will come from.

The question of how to pay for better public services is a much more acute one today than it was a generation ago when Tony Blair came to power. Partly because of this, the present Labour Party sounds almost fatalistic in its lack of ambition. The Shadow Chancellor, Rachel Reeves, talks of funding additional expenditure out of economic growth – but what growth is she talking about? She may well not inherit any growth at all if and when Labour comes to power. So Labour ministers avoid talking about any new spending commitments at all. ‘Wait and see till we’re in government’ tends to be their approach. Is that why we’re meant to vote for them? So we can wait and see what happens if we do?

In fact, it is difficult to see how a future Labour government, whatever the extra money brought in by measures like going for the non-doms, can afford to do very much. It is already giving up ending the two-child benefit cap, watering down its plans for a green revolution and refusing to say that it will spend more on education. But to be fair to Labour, what choice does it have? Isn’t the question of where money for new spending is going come from a real one?

Should the Lib Dems revisit a policy which they were the only party to advocate in 2001 (and which arguably did no harm to their electoral chances at the time), namely a small increase in the basic rate of taxation? As the recent Lib Dem conference recognised, there is a problem here. In 2001, when people were doing relatively well, promising to raise taxes a little was acceptable to a lot of people. In 2023, when there is arguably a more urgent need to spend more and public services are in a state of collapse, it is easy to understand why people might see an extra tax burden as the straw that breaks the camel’s back. Haven’t they just had to deal with inflation and rising mortgage rates? Is the government really going to take away even more of their money? It’s when a tax rise is most needed that it’s least acceptable.

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Caroline Pidgeon

Caroline Pidgeon writes: Take Back Control?

By Caroline Pidgeon | Mon 21st August 2023 - 9:05 am

For decades, I have been championing devolution; for communities to take back control over the decisions that affect their lives from the very local allocation of funding to improve an area, to wider service provision and structures.  The beauty of our local government is that it looks different in different areas, to suit local communities’ needs.  

However, no matter what the structure, funding has always been a problem for local services.  Back in 2013, Boris Johnson, as Mayor of London, commissioned Professor Tony Travers to Chair an expert panel called the London Finance Commission, which produced Raising the capital | London City Hall.  This report transformed the debate and voiced the need for London and other cities to have more financial control.

The EU referendum, and Britain now having left the EU, has made the case for devolution and fiscal devolution more urgent.  Whatever Leave voters felt they were voting for, it was not ‘business as usual’.  It was not an endorsement of centralised power, simply removing it from Brussels to Whitehall and job done.  People across the country feel isolated from the democratic process.

The referendum result not only affects the country as a whole but also within our nations, regions and cities.  The uncertainties from Brexit and the pandemic may well be better managed at a local level, with local and regional government able to respond more effectively.

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Lord William Wallace

Taxing and Spending

By Lord William Wallace | Thu 3rd August 2023 - 11:58 am

It’s astonishing that leading Conservatives are still getting away with calls for tax cuts before the coming election without any challenge as to where they will cut spending to pay for them.  Our economy is flat-lining, our public debt rising, our population ageing, our young children smaller than their counterparts across the Channel, our schools and health services losing workers to higher-paid jobs – and yet serious Conservatives think we should cut taxes and spend less?

Paul Johnson’s just-published Follow the Money: how much does Britain cost? is a clearly-written guide to Britain’s dilemmas on public spending, and the failures to invest sufficiently in public infrastructure and services in recent decades. He’s been director of the Institute for Fiscal Studies (a body respected by all except supporters of Liz Truss’s economic strategy) for many years, and before then served in several government departments, so he knows what he’s talking about.

He sets out how progressive cuts in defence spending since the end of the Cold War in 1989-90 have funded rises in welfare spending.  Without going into details on the defence budget, he underlines that defence spending is more likely to rise than fall further: the Ukraine conflict has shown has stretched the UK’s stores of equipment and ammunition have become.  He doesn’t remark that rising North Sea oil revenues in the early 1990s (and the one-off gains from privatization) allowed Margaret Thatcher to cut taxes without deep cuts in services – though in retrospect she would have been wiser to accumulate oil revenues in a sovereign wealth fund, like Norway, or allocate them to improving the UK’s infrastructure.

North Sea oil revenues are now running down; and privatization has long since run its course.  So any government is faced with hard choices, about the level and distribution of taxation and about priorities in public spending.  ‘There are no easy solutions to the problems we face.  Tax cuts do not pay for themselves.  Debt cannot rise forever.  Spending implies taxing.  Economic constraints are real.’  (Tell that to Liz Truss and Boris Johnson.)

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John Knox

Paying for Social Care

By John Knox | Sun 15th January 2023 - 5:00 pm

The current crisis in the NHS should be persuading us to re-consider the idea of a 10 per cent retirement levy to pay for social care. Everyone knows that bed- blocking is at the root of the over-crowding in our hospitals and the long waits for ambulances and in accident and emergency departments. But “delayed discharge” cannot be solved without more resources in home care and nursing homes. Massively more resources.

The lack of political courage over this issue is shameful, from all parties. Back in 2011, the Dilmot Report called for something to be done. Since then, Andy Burnham’s attempt to introduce a 10 per cent retirement levy was abandoned, even by his own Labour Party. It was ignored by the Coalition. Theresa May and Boris Johnson made various suggestions but quickly backed away from them. And Rishi Sunak thinks that by spooning out a little more money for the NHS will solve the problem.

The issue is much bigger than that, with Britain’s population aging as fast as it is. Age UK reckons we need £10bn a year extra to fund a National Care Service similar to the NHS. To raise that kind of money, we need a radical solution. An obvious source of money is a tax on wealth, and most pensioners have plenty of it.

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Lord William Wallace

Breaking the taboo on increasing public investment

By Lord William Wallace | Thu 5th January 2023 - 7:21 am

You probably missed the Conservative Way Forward paper published on December 10th which argued that cutting the money allocated to equality, diversity and inclusivity staff and training in the public sector could save enough ‘wasteful’ spending to allow for tax cuts. You’re more likely to have noticed when the Daily Mail splashed the story across its front page the following week. You may also have seen this week’s coverage of the Taxpayers Alliance report that prisons have spent £11m over the past two years on equality, diversity and inclusivity staff and training, presented as another ‘gross’ waste of government spending.

The constant trickle of ‘studies’ like this has a clear purpose. They tell voters that waste in the public sector comes from politically motivated spending on ‘unnecessary’ projects. They distract from the money ministers spend on outsourcing to consultancies and private contractors, who overcharge for their products and services (and contribute to right-wing think tanks and the Conservative Party in return). And they justify continuing calls for tax cuts, rather than addressing the long-term need to increase public spending in response to Britain’s economic, educational and demographic challenges, and to the need to move towards a more sustainable economy and society.

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Lord William Wallace

Should we take a risk and be honest about taxation?

By Lord William Wallace | Tue 15th November 2022 - 10:55 am

Embed from Getty Images

Liberal Democrats, we have a problem. As Max Wilkinson has commented in a recent posting, soft Conservatives are turning to us partly because the government has broken its promises not to raise taxes. But we are committed to decent public services, staffed by people who are decently paid; and after 20 years of cuts in services and real reductions in public service pay, quality can only be regained by substantial and sustained increases in spending. Furthermore, public service workers – people who believe that life is not only about money but also about what you put back into society and community – are among our natural supporters.

So what, under the current fiscal and economic crisis, do we say to potential LibDem voters about tax?

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Caron Lindsay

Just deserts at Conservative Conference

By Caron Lindsay | Tue 4th October 2022 - 7:30 am

Last week Ed Davey called on the Conservatives to cancel their Conference and sort out the economic mess they had created.

After days of rebellion, doom and u-turns, I bet they wish they had listened to him.

They aren’t getting the best press, that’s for sure, but then they don’t deserve it.

Kwasi Kwarteng’s feeble attempts at humour in his speech belie any contrition. And I doubt many of those who are now condemned to years of high mortgage payments will feel that either he or Liz Truss truly do get it.

The u-turns on the 45p tax rate and the publication of the OBR forecasts, although major events, are not the only things that need to change.

The Conservatives are showing themselves up as way nastier than they were when Theresa May gave her warning to Conservative Conference a whole twenty years ago.  This generation of leaders seem to have taken it as encouragement to become even worse.

For example, party Chairman Jake Berry had this to say to people struggling to pay their bills this Winter:

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Lord William Wallace

William Wallace writes: Higher Public Spending: the big political taboo

By Lord William Wallace | Tue 31st May 2022 - 11:56 am

A recent Financial Times op-ed  argued that the UK should now recognise that the Ukraine conflict has imposed aspects of a war economy on the UK – shortages, rising prices, disruptions in supply – which require serious changes in economic policy.  The business pages of the serious press urge higher public investment, spending on education and apprenticeships to raise our woefully-low labour productivity, and government intervention to promote innovation, resilience against supply-chain shocks and sustainability.

Defenders of the NHS point to its much lower spending and staffing per head than comparable European countries half that of Germany and the Netherlands, far fewer doctors and nurses per head and less than half the number of hospital beds – which as the Financial Times says ‘reflect political choices, not what is affordable.’  State schools have been similarly underfunded for many years.  Teachers’ salaries, like nurses’, have been held down to a point where recruitment and retention is difficult.   Conservative MPs and others call for higher defence spending in response to the Russian invasion of Ukraine.  Anyone serious about the ‘levelling-up’ agenda knows that it cannot succeed without a very substantial and long-term financial commitment: an additional 1-2% of GDP over a decade or more.

Yet Conservative MPs, backed by almost all political commentators outside the Guardian, still call repeatedly for cuts in taxation.  Their reactions to Rishi Sunak’s latest emergency package have expressed dismay at the rise in taxes it involves.  Sunak is still promising them that he will find a way to cut taxes before the next election, although neither he nor anyone else says anything about what cuts in spending that would imply.  And the Labour Party is silent on the subject, fearing that the Mail and the rest of the Tory press would love to label them again as ‘the high tax party’.  I saw a Labour leaflet in Wandsworth in the local election campaign that promised that if Labour won control of the Council it would keep Council tax at the same low level – a similar promise to what Tony Blair pledged for national taxation in 1996-7.

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Antony Hook

Ordinary families are paying more so banks’ owners can pay less

By Antony Hook | Thu 17th February 2022 - 9:05 am

It is budget setting time for councils across the country.

Local councils of all types have to decide what rate of Council Tax to set and budget how they will spend their revenue and capital over the coming year.

Everyone in local government knows how tough things are. Local services are under resourced, struggling and sometimes failing. At the same time, ordinary families face a huge cost of living crisis from rising bills that many in Westminster do not seem to understand.

In Kent County Council, where I lead the Liberal Democrat group, the ruling-Conservatives are raising Council Tax by 3% and cutting services by £28 million.  Inflation, such as rising energy bills and increasing need to help a growing but ageing population take their toll and leave gaps in the budget.

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Mark Valladares

Corporation tax – is Rishi Sunak having a Laff(er curve)?

By Mark Valladares | Mon 15th March 2021 - 10:05 am

It was Private Eye, perhaps unsurprisingly, who nailed the Conservative U-turn on corporation tax rates. They note Boris Johnson’s quote at the Conservative leadership hustings on 5 July 2019 that;

Every time corporation tax rates have been cut in this country it has produced more revenue.

Perhaps Rishi Sunak wasn’t listening, or perhaps he thinks that the Laffer curve is a bit old hat, but the proposed increase in corporation tax effectively reverses most of the Coalition Government’s cuts in tax rates – George Osborne inherited a basic rate of 28% and a small profits rate of 21%. If the Laffer curve …

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Laurence Cox

Looking at the other side of the ledger

By Laurence Cox | Mon 12th October 2020 - 9:02 am

Often articles here in LDV advocate new spending commitments but rarely look at their costs, or consider what a fairer taxation system looks like. I like to start with what I call Harold Wilson’s ‘pound in your pocket‘ principle. Wilson was reassuring the public that devaluation didn’t mean that their £ was worth less in sterling, but I take a deeper message from it:: the ‘pound in your pocket’ buys exactly the same however you came by it, whether that was by working for it (earned income), from rents, interest or dividends on savings (unearned income) or by selling …

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Lord William Wallace

Lord William Wallace writes…Winning the argument on higher taxes

By Lord William Wallace | Tue 6th October 2020 - 8:55 am

We need to focus on how we handle issues of taxation.  Opinion polls now show, for the first time in decades, that more voters favour raising taxes than cutting them.  That does not mean, of course, that such a majority is in favour of themselves paying more tax; there’s a natural tendency to support increases that fall on others, above all on the richest.  

Even before the COVID-19 pandemic struck, it was evident that the UK’s tax base was too low.  An ageing population, low levels of public and private investment, salaries in the public sector kept lower than in the private, local government, schools, hospitals, prisons and police all strapped for funds, all indicated the need for higher public spending.    The massive public spending which the pandemic is requiring – and will continue to require for months to come – adds to the pressure for an overall increase in taxation.

This is an existential issue for the libertarian right, strongly entrenched in the Conservative Party and its associated think tanks.  The mantra of the Taxpayers Alliance, the Institute of Economic Affairs (IEA), and others is that it’s impossible in the UK to raise more than 40% of GDP in tax, at most, and that for the economy to flourish public spending should be reduced to around 35%.   Their aim, of course, is to curb public spending by reducing public revenue.  Rishi Sunak has just promised to bring ‘the overwhelming might of the British state’ to bear on the pandemic and its economic legacy, in his speech to the virtual Conservative conference.  That’s anathema to his party’s right-wing.

The Institute of Economic Affairs has just published a new briefing paper which addresses the COVID-19 debt burden, the UK’s problem of low productivity, and recommends – deregulation and tax cuts, rather than increased investment in education and training for our workforce and in public infrastructure.  I thought the Laffer Curve had been discredited long ago; but the IEA depends on the illusion that cutting taxes increases growth to resolve the contradiction between cutting revenue, promising a balanced budget and raising public spending.

So what should we be saying in this right-wing dominated debate?  Starmer’s Labour is likely to be as cautious about sticking its neck out on this as on Brexit and other issues. Pledging an extra penny on income tax signals our willingness to raise revenue to underwrite higher public spending; behind that our economic team can prepare detailed proposals on other taxes, allowances and charges to support our next manifesto.  Green taxes, capital taxes (including on houses) must also be part of the mix.  If we were still in the EU, we would be coordinating our approach to the high-tech tax-avoiding companies, as well.

The IEA argument that a higher level of tax is unsustainable rests on their claim that tax avoidance blocks further revenue.  So we should go for the City of London’s tax avoidance industry, and call for the government to ‘take back control’ of the offshore network of UK dependencies and territories which facilitates its operation.  Germany and the Netherlands support successful mixed economies with levels of public revenue and expenditure several percentage points higher than the UK; so also does Canada, among English-speaking countries.  Many of the Conservative Party’s biggest donors are non-doms or offshore billionaires: we should highlight the close links between leading Conservatives and these major tax avoiders.

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Adrian May

Time for a Corporate Responsibility Levy?

By Adrian May | Wed 13th May 2020 - 10:27 am

We are witnessing a long-term trend for wealth to be within the control of super-rich individuals and large corporations.

I remember when the Liberal Democrat manifesto was an extra 1% on Income Tax, earmarked for education. It then now 1% on Income Tax, earmarked for the NHS. The problem with such a policy is that it requires the voter to behave in an altruistic way. It may make sense, it may be socially responsible, it can be espoused in a self-righteous way, but when a swing voter steps into the booth to put an X in the box, many factors …

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Mark Valladares

We’ve had an e-mail from the Taxpayers’ Alliance…

By Mark Valladares | Thu 7th November 2019 - 11:05 am

Naturally, here at Liberal Democrat Voice, we receive a great many approaches from individuals and organisations, inviting us to publish something from them on our site. Many of them are the usual spam, telling us how wonderful the site is, how much they enjoy it and that an article on property renovation is exactly what our readers would most need. Oddly, we tend to ignore most of them so, if you’re one of those people, and you are reading this, please stop.

Yesterday, we had an e-mail from a (presumably) young man at the Taxpayers’ Alliance, headed;

New polling from the TaxPayers’ Alliance shows tax cuts are key to winning working class votes

I can almost hear you thinking, “Well, there’s a surprise!”. But I’m a generous soul, and so I responded, noting that, whilst the polling appeared to quite conclusively demonstrate that voters want to pay less tax, there didn’t seem to have been much effort to spell out the consequences, i.e. more tax in other areas or cuts to public services. The (probably charming) young man replied by saying that their methodology was the same as the NHS spending polling over the summer – and the recent Oxfam/Tax Justice UK poll from September on wealth taxes – i.e. they had tested propositions, not the implications of each proposition.

You may conclude, as I did, that he hadn’t really answered the question. And so, gentle reader, I turned down his offer to write something for us.

However, the polling is, in itself, interesting, if only to know how voters think when the consequences of the offer before them are not signposted. Here are the highlights as suggested by the Taxpayers’ Alliance;

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Mark Valladares

27 September 2019 – the overnight press releases

By Mark Valladares | Fri 27th September 2019 - 8:00 am
  • No-deal prep for health supplies shows Brexit must stop
  • Boris Johnson is the champion of the well-off, not the people – Davey

No-deal prep for health supplies shows Brexit must stop

Responding to the National Audit Office’s report on the Government’s preparations on health and social care supplies under a no deal Brexit, Liberal Democrats Health and Social Care Secretary, Sir Vince Cable MP, said:

This report reinforces what we already knew from the Yellowhammer documents. We know that a no-deal Brexit would have a devastating impact on the UK’s health and social care supplies.

The risk is very real that traders may not

…

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Rupinder Singh

Tory “Wafflenomics” and the Expected Macroeconomic-fiscal Costs of NO DEAL

By Rupinder Singh | Wed 7th August 2019 - 12:30 pm

In my last piece, I outlined the expected consequences of a depreciating pound and that a looser fiscal response was the only feasible short-term policy response that would be available to deal with the massive macroeconomic shocks that are likely to ensue (an uncoordinated) NO DEAL Brexit.

Three and a half questions follow:

  • What is the Boris math for the litany of fiscal promises issuing since his “inauguration”?
  • Are these spending promises feasible & credible in terms of the macro-fiscal context the UK will face in a NO DEAL scenario?
  • What should our response as LibDems be to unpick if not defenestrate the Tory Wafflenomics in the run-up to October 31st? The half-question I leave for another occasion, what should be our policy response to deal with the after-effects from November 1 should a No Deal actually take place.

Math on Boris’ Fiscal Promises and projected values

(…mind you we’re just a few weeks in..)

  • 20,000 new police officers: £1bn (one-off)
  • Rise in 40% tax threshold from £50k to £80k: £10bn
  • National Insurance contributions at higher trigger: £11bn
  • Schools: reversing cuts in Education envelope: £5bn
  • Health: Unclear but: 20 New hospitals £1.8bn + wooing female voters £2bn + ??promised £350m per week: £3.8bn – £20bn
  • social care: £10bn
  • new railway Manchester – Leeds: £2.1 – £3.6bn depending on sources, assume £3bn
  • Help to farmers: £0.5bn (but is this just for the Welsh lamb?)
  • No-Deal Planning: £2.1bn (let’s assume £100m no-deal advertising part of this budget line)
  • Unbudgeted thus far: other sectors e.g. Fisheries, medicines, food shortages, …you get the picture…cost of increased policing…

Totting these figures gives £42bn excluding the £350m/week which alone would imply a further £18bn…and per year if the red bus promise is to be kept strictly. Large numbers in absolute terms (a billion has nine zeros) but not in relative terms as the UK economy is £2 trn in value (a trillion has 12 zeros), meaning that £42bn equates to around 2% of GDP or 5% of the current budget and therefore chunky but not a huge fiscal expansion…of itself..

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Steve Trevethan

On Policies, Perceptions and Potentials

By Steve Trevethan | Wed 8th May 2019 - 12:30 pm

In theory, theory and practice are the same. In practice, they are not. (Anon.)

“Lack of social mobility” and “austerity” confront us. Perhaps much of what we might, and might not do, depends upon information, perceptions and attitudes?

In 2019 our public spending is about 38% of GDP, with the USA at about 36%, Germany at 42%, France 56% and Italy 36%.

In 2010 our national debt to GDP ratio was 53%. In 2018 it was 87%. Equivalent 2017 figures are: France – 98.5%; Germany – 64.1%; Japan – 222.3%; USA – 103.8%.

Since 2010, more than £30 billion has been cut from welfare payments, housing subsidies and social services. About 66% of “poor” children are in families with at least one parent working. Between 2012 and 2019, the number of children fed from food banks has more than tripled. Since 2010 homelessness has increased by 169%. The slowdown ln UK life expectancy is one of the highest in the G20 countries.

The above data, our own experience of people begging and living on our streets, and reliable reports that needed, skilled workers (such as nurses) use foodbanks, indicate that “austerity” has done great social harm.

Ten years on, the “deficit” is far from being removed, £billions of welfare budget cuts are planned and “austerity” has resulted in the slowest UK economic recovery in a century.

Perhaps we now need to campaign for its cessation and, if possible, its rectification? (The Institute for Fiscal Studies estimates that “rectification” needs expenditure of at least £12.4 bn above current budgetary projections.)

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Lord William Wallace

Time for higher taxes!

By Lord William Wallace | Mon 11th March 2019 - 8:15 am

Calling for higher taxation used to be one of the deepest taboos in British politics. When I was drafting the 1997 Liberal Democrat manifesto, under Paddy Ashdown’s firm direction, I can recall a Labour acquaintance (we were actively talking to Labour then, since they were not sure they would win an outright majority when the election came) telling me that ‘you must be mad; no-one will ever vote to pay more’. The promise of a penny on income tax to increase funding for education turned out to be a vote-winner for us; but New Labour never dared to commit to …

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Mark Valladares

8 January 2019 – today’s press releases

By Mark Valladares | Tue 8th January 2019 - 11:50 pm

It seems that, no matter how late I publish this feature, the Press Team are still up and working. Last night, the final press release came out at 11.58 p.m., so is included in today’s batch…

  • Drone reforms are vague and lack resources
  • Social housing neglect due to lack of political will
  • Dover delay is a national embarrassment
  • Cable: Bumbling Govt taking ‘Dad’s Army’ approach to Brexit
  • Lib Dems: Govt defeat shows no deal not an option
  • Lib Dems: Drone sighting shows urgent need for regulation
  • Lib Dems defeat Govt on loan charges

Drone reforms are vague and lack resources

Responding to the Government annoucement that the police will …

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Tom Morrison

Transparency after Brexit?

By Tom Morrison | Fri 4th January 2019 - 2:57 pm

 “This agreement is a further step towards more openness and better cooperation, facilitating fairer and more effective taxation throughout the EU.” 

With those words, Pierre Moscovici, the commissioner responsible for financial affairs and taxation declared Europe as a ‘hallmark’ of financial transparency and openness. 

Last March, the member states of the EU reached an agreement to create a more transparent environment for tax advisers, accountants and other financial workers and services. Amongst a context that saw leaks from the Panama papers, this agreement set a standard in how financial corruption and tax avoidance would be tackled, shining a light on those that attempted to subvert their financial responsibilities. The process would be up and running in 2020, with information being exchanged between member states from October that year.

It is imperative that the United Kingdom does not renege on this responsibility, regardless of what happens post-March 2019. 

Corporation tax is a necessary evil. Whilst the drive for economic growth and profit has seen companies flourish, innovate and create jobs – those same companies are built on the foundations laid by our society. 

Our schools train the workers of the future, our infrastructure allows for the smooth movement and running of day-today business activities, and our emergency services protect property and keeps workforces in good health. All of these things cost money and taxation is a fair way to pay for these ‘hidden’ expenses. 

To avoid paying what is right is nothing short of theft. The EU’s transparency directive was a logical way of ensuring that there would be no hiding place for individuals or organisations not paying their fair share.

Therefore, the Liberal Democrats need to ensure that there are plans in place to ensure that these directives are not lost, regardless of what happens with Brexit.

Let’s put this in perspective: The UK has the largest number of offshore entities in Europe with around 18,000. The second largest is Luxembourg with nearly 11,000. With the UK economy predicted to fall next year – imagine the financial support available if some of these organisations paid what was fair?

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