It is no secret that the party is narrowly focused on retaining the 72 seats we won at the last general election and expanding further into triple digits. Local election results in those constituencies are a sign that it seems to be working. Recently, the Guardian published a sensible editorial pointing out that it is imperative for the Lib Dems to achieve this goal to keep an unholy Tory-Reform alliance at bay in the next general election. Furthermore, it will maximise our influence over a Labour minority in a potential hung parliament. So yes, in our FPTP system, and facing the dire threat of Reform and Reform-lite, this ruthless commitment to target seats is the correct one.
However, pursuit of this goal has led to an overabundance of caution that is diluting the party’s messaging and enabling us to fade further away from the national conversation. We seem to have leapt at the opportunity to snatch Kier Starmer’s fabled Ming Vase and have been hobbling around with it for the past two years – afraid of saying anything too bold, too radical or too liberal. This matters because if we are ever to make progress across the whole country, we need to be present in the national political agenda to give our local activists something to build off. If we don’t establish the party’s identity now, a potential coalition may simply reduce us to the yellow branch of the Labour party and could prove existential in the event we do get PR elections. Moreover, and perhaps most importantly, if we don’t actively go out and preach the liberal solutions to our country’s problems, we actively concede the intellectual ground to our conservative opponents.
The good news is that there is no reason to view the realities of FPTP and the desire to be bold as mutually incompatible. We don’t need to be shouting populist claptrap at every moment to offer a more compelling vision, and a more radical vision, to the country. Instead, we need to articulate our policies and beliefs more effectively – and immediately (especially if we do think there may be an early general election).
Take for example our policy on Europe. Everyone here knows that our next election manifesto will say something akin to ‘We support rejoining the European Union, when conditions are right, and in the meantime will seek membership of the customs union and single market. Brexit has done profound damage to our businesses and international relationships, and we need to start rebuilding them now”. We could have been bold, straight out of the gates in late 2024, and explicitly said this to the public (giving them 3-5 years for the message to sink in). Instead, we had a period of saying we’ll just join the customs union. Recently we added in the single market. And thanks to our tortoise-like pace, Andy Burnham has out-flanked us by being the first out the gate to float the idea of rejoining and is taking ownership of that political space as a result. Yes, we should be deeply sceptical of the PM’s commitments on Europe – and hold him to them! But we missed 2 years of opportunity to re-embed our party as the unambiguous home of pro-Europeanism and now we must play catch-up. There isn’t a particular electoral harm either given our current voters, and current conservative voters in our target seats, tend to view Brexit dimly.
Another example is on tax. The “big ticket” item at conference was increasing the tax-free personal allowance to £15,000. In 8 years’ time. Funded by growth (aka not reliably funded). It’s a bit underwhelming. If we are trying to establish our credentials on tax, we should have been bolder, with a much broader and ambitious package – promising to fix the broken tax system full stop. For example, at the same conference, our treasury team published a paper outlining how to get the country growing again – including a myriad of additional suggestions to improve the tax system. It identifies punitively high marginal tax rates as a serious barrier to economic growth – which is true (as well as a major disincentive to start a family given the withdrawal of free childcare) Pledging to partially fix this problem through universal childcare entitlement is the sole sensible suggestion to come out of the Tory conference (shamefully they then suggested funding it through nonsense civil service cuts). If we were bolder, we could have beaten them to it by committing to making childcare and the personal tax allowance universal (after all, there is a liberal case for universalism) and fixing the distortionary, inhibitive effects of high marginal tax rates on the workforce and tax regime. The cost could be partially offset through a small increase in the additional rate of income tax if we were concerned about being too generous to higher earners.
Personally, I’d go even bolder and promise to roll employee national insurance into income tax, scrapping the system where landlords and wealthier pensioners pay lower tax rates than workers and raising £20 billion/year. This is more than enough to fix punitive marginal rates and to unfreeze the tax-free personal allowance – allowing us to avoid taxing the state pension.
If we really wanted to spur growth and investment, we could scrap stamp duty on shares. Or replace regular stamp duty with an annual property tax. Alternatively, we could have reminded people of our belief in abolishing and replacing business rates, our proposed capital gains tax reforms, reversing Labour’s employer NI hike, reversing the Tory cuts to banking levies, etc. My point is not to argue that the party should have adopted all these ideas (even if I would like it personally)! But that we had a rare opportunity at conference to offer up a more radical and bold plan on tax that showcased our ambition to change our country for the better – but we didn’t grasp it.
As a party, we have always struggled for media attention. This isn’t entirely our fault as the media constantly sideline us – shifting the goalposts on which parties merit coverage. There isn’t a reliable and sensible way to get more traditional coverage either (a new leader would face the same problems). This means it is critical that we use the coverage we do get much more effectively (e.g at conference, and in our responses to current affairs). And we must urgently step up our efforts on social media; the current situation is not inspiring. We can’t keep blaming the algorithms if we don’t offer up anything interesting in the first place. We should be bolder with our policy offer, take the arguments of the day directly to our political opponents and show the country why they need the Liberal Democrats.
* James Hill is a Lib Dem member (for 7 years) in Oxford East
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23 Comments
“ Personally, I’d go even bolder and promise to roll employee national insurance into income tax, scrapping the system where landlords and wealthier pensioners pay lower tax rates”
So, people pay National Insurance contributions to build their entitlement to a State Pension and working-age social security benefits. Once pensioners have paid enough contributions to earn their pension, and will no longer need working-age social security payments, they stop paying National insurance – quite rightly.
NI is income tax by another name, so putting it together with income tax makes sense. NI is not put in a fund to pay future pensions. Today’s pensions are paid from today’s taxes. How about replacing both stamp duty and council tax with an annual property levy? And extending VAT to everything? I believe it is currently only charged on about half of sales.
To make those changes work would need changes in rates, no doubt, and increased Universal Credit.
Lib Dems could be a little bolder by actually discussing what goes on in the EU! Those who are in favour of rejoining should be prepared to do that
https://www.lemonde.fr/en/international/article/2026/10/20/italy-spain-belgium-portugal-social-unrest-spreads-across-europe-amid-soaring-energy-prices-and-a-housing-crisis_6759435_4.html
To add to Jenny’s comment, you can build entitlement to a state pension without paying a penny. You can get NI credits if you are claiming benefits for being ill or unemployed, have young children and are not working, or if you are a grandparent providing unpaid childcare.
There is zero link between what you actually pay in, and what you get out. Because it’s just another tax falsely cosplaying as an insurance scheme.
@Nick Baird
“ There is zero link between what you actually pay in, and what you get out”
Clearly a false claim. For example, someone who leaves the UK in their 20s to work abroad and only returns to the UK when they retire, will receive a minuscule state pension as they will neither have paid contributions or had payments credited for some of the reasons you describe.
However, the bigger point is that you appear to be using the fact that UK taxpayers pay the NI contributions on behalf of the ill, unemployed, and those not working due to having young children, to suggest that the State pension is unrelated to contributions. Maybe the unemployed should not be credited with contributions in this way and should get the State Pension their actual contributions merit? I don’t you would support this.
Nick Baird is correct that there is no link between the amount of national insurance you pay and your state pension entitlement – aka state pension entitlement is independent of the rate. This is why the rate of national insurance has been increased for increased health spending (e.g Gordon Brown/Rishi Sunak) and cut for pre election bribery (Jeremy Hunt) with no effect on the state pension. As Jenny puts it, the rate of NI is simply additional income tax just for workers. The only thing that counts towards entitlement is the number of years you work for (or have qualifying exemptions). You could hypothetically make national insurance 0% and still retain the system of qualifying years – and it would be trivial to move tracking years through income tax instead.
It is also the case that the state pension, along with elderly health and social care provision, costs far in excess of working age benefits – so it is entirely fair that wealthier pensioners should contribute as much as working age taxpayers (via the same effective income tax rates) for the costs of their own care.
And I also agree with Jenny that a broadened and simlpified VAT regime would be very beneficial.
Another article on “The Lib Dems should be bolder. Here’s how….” Followed by …
Five long paragraphs on what we are doing wrong,
and then,
1) one short paragraph on Lib Dems combining Employee NI with Income Tax to make pensioners pay more tax. To quote Sir Humphrey “That’s a courageous policy, minister” and another on
2) Lib Dems to abolish Stamp Duty on share purchases. Well that’s really bold and radical and will definitely put us on the front page.
or perhaps not.
@ David Evans Well said, David. Completely agree ……… but you missed the third one, “A Gail’s and a Waitrose in every town in the Frozen North”.
Talking about being on the front page. Yesterday we had a press conference led by Daisy Cooper regarding all things financial before the budget. Yet how was it reported. I have seen nowt. Are we complaining?
Nobody has yet mentioned pension credit. Many poorer pensioners get pension credit so the amount of state pension is irrelevant to them. They face an effective income tax rate of at least 100% (it can be more because you lose all kinds of benefits once you lose your last pound of pension credit). It should not be dificult to make the system fairer and simpler and that would involve reducing the maximum rate paid by the poorest pensioners and increasing the ridiculously low 20% rate for those on middle incomes.
The boldest option would be to adhere to our aims set out in the Party Constitution to be free from poverty. People living in poverty can rarely be free because they are often unable to achieve ther goals in life and reach their full potential. Where are the PROGRESSIVE taxation initiatives for a progressive Party? V.A.T. is generally a regressive tax so why extend it? Broadening V.A.T. to other goods and services would make the tax system even more regressive. We should be braver and say we want extra bands for Council Tax on higher value properties; a wealth tax of some form; and consider a higher rate of Income Tax for very high earners and their considerable perks. Progressive Tax policies are needed for a Progressive Party.
Take on Big Tech — properly. Not with user bans and age verification. Not only are these shockingly paternalistic and illiberal, but they will have the opposite of the intended effect. Our official policy of age ratings for social media platforms is rather confusing and has the same problem as any online age-gating system, which is that enforcement requires online surveillance of *all* users, regardless of age. Apart from the civil liberties issue, it actually helps Big Tech in two ways. The companies that produce these online surveillance systems (notably Palantiя) are part of the Big Tech ecosystem, so it gives Big Tech more business. It also increases the compliance cost of all online platforms, thus pushing out competition.
We need a more imaginative and liberal approach of breaking up Big Tech and putting control back into the hands of users. This means forcing companies to be transparent about how their algorithms work and enable users to opt out of them. It means forcing companies to make it easy for users to migrate their profiles between platforms. Please don’t tell me tech companies won’t stand for regulation. That’s a cop-out and anyway isn’t true. They’ll follow any rules they have to in order to operate in any country, including grassing on critics of repressive regimes. And now in the US we are seeing tech companies actually helping write the regulatory frameworks (the future rules of the Internet) that will bind them. They’re not doing this out of altruism.
@Rob Heale: You can’t really end poverty through taxation unless your tax system unless you include rebates for those without enough income to pay tax. That’s known as Negative Income Tax but it’s functionally equivalent to a Universal Basic Income (UBI) scheme.
VAT is regressive if you look at the proportion of gross income that people spend on VATable goods and services. If you look at it in terms of proportion of expenditure it’s currently progressive.
One of the advantages of a UBI is that any non-income tax change can be made progressive with a change in UBI. For instance, removing the zero and reduced rates and exemptions from VAT and increasing UBI by the the median extra amount raised per person would be both progressive and a tax raising measure.
@Peter Davies and @Rob Heale. I support the proposals and Basic Income. The huge reduction of shame and uncertainty for applicants for ‘benefits’, along with the reduced cost of running the DWP, are two strong factors.
I support taxes on wealth – even with higher earning many tax payers are not yet wealthy.
The idea that VAT is not charged on essentials seems progressive to me.
“The idea that VAT is not charged on essentials ” Sounds like a nice idea. Definitions are tricky though. Is a Jaffa Cake a biscuit? or a Cake? How about designer clothes for children? Progressive taxation is best achieved by other means, I believe.
@ Peter Davies,
“…unless you include rebates for those without enough income to pay tax. ”
I think you might mean declared or legitimate income! Others may disagree but I’m not too keen on topping up the illegitimate income of drug dealers and sex workers. Or even of those who do quite well from the more usual cash-in-hand jobs. I’m sure I could do OK just by mowing laws and walking dogs for £30 or so a time.
Then we have the estimated 2 million adults in the UK who are entirely financially dependent on a partner or family member for their income. I’m sure some of them should be given support but not all of them. It would have to be decided on a case by case basis.
@ Jenny,
“NI is income tax by another name…… NI is not put in a fund to pay future pensions.”
It feels like that but NI stands for National Insurance. There’s no reason why an insurance scheme has to be run by a private company.
When it was first set up, those who hadn’t contributed anything were still entitled to pay-outs, such as with the aged pension. So the process of paying out from existing contributions was established right from the beginning.
Another way of looking at it concerns the nature of government issued money. It’s an IOU of government. So whereas it makes sense for everyone else to save up Govt IOUs for their own future use it doesn’t make any sense for it to save up its own IOUs.
Govt can spend as much as it chooses to at any time. It’s choice has to be determined by the state of the economy and the availability of real resources.
In terms of the distinction between food and confectionary, the ratio of confectionary spend to food spend is higher in poorer households. Essential does not equate to consumed by poor households. Incidentally if you want a wierder example of the boundary between the two, try marshmallows. Large marshmallows are typically toasted and eaten from skewers which makes them zero rated food. Medium sized marshmallows are typically eaten without toasting and using fingers which maked them standard rated confectionary. Small marshmallows are intended for sprinkling on things which makes them zero rated ingredients. The exact maximum and minimum volume of a medium-sized marshmallow has yet to be tested at tribunal.
“If we don’t establish the party’s identity now, a potential coalition may simply reduce us to the yellow branch of the Labour party”
Who says? The leadership has now declared decisively in favour of tax cutting, defence of pensioner interest and the triple lock, and a consistently sour-minded carping attitude to Burnham. All of this nicely sets up the Liberal Democrats to opt for a second Coalition with the Tories.
“We don’t need to be shouting populist claptrap at every moment to offer a more compelling vision, and a more radical vision, to the country. Instead, we need to articulate our policies and beliefs more effectively”
Said so many times before, but not implemented. Why not?
Well, first of all, because genuinely consistent Lib Dem policies and beliefs are scarce as hen’s teeth, as witnessed by the bewildering variety of conflicting tax administration changes suggested here. And secondly, because big campaigns often tend to repel more voters than they attract, and they also tend to clarify one’s political position, either on the Right or the Left.
So much better to say nowt, keep falling off paddleboards, and be ready to plump for either Badenoch or Burnham after the next election – Whoever can offer the Lib Dems the best deal.
@ David Evans I’m not saying that those two tax proposals would magically change our standing, or that they specifically need to be adopted. But that when we have the opportunity to discuss our plans (at Ed’s conference speech, Daisy’s recent press conference etc) we present small incremental changes that don’t actually reflect our ambitious desire to get the economy growing and fix our country’s problems. Take Daisy’s press conference for example. It was fine, it reannounced some of our cost of living policies that its rumoured the government will adopt anyway. But we told the press it would be a major intervention – which it wasn’t, and hence we can’t really complain it didn’t get a lot of coverage. If we truly were to make a major intervention, why not present a wider range of economic policies (including from our recent growth paper which was the first question from a journalist!) in an alternative, liberal budget that puts Labour’s inevitable budget of minor tinkering to shame. That would be major.
@Peter Davies I agree, I think higher rates of pension credit should be looked at – would be a much more effective, targeted and cheaper way to reduce pensioner poverty than the triple lock is. And all cliff edges in the benefits system, whether pension credit, universal credit, carer’s allowance etc should be heavily tapered to avoid punishing people for earning small amounts more.
@Rob Heale The problem with VAT, is generally when rates are lowered, the savings are not passed on to consumers and instead pad out profit margins. This has meant everytime VAT has been reduced on certain items, it has permanently eroded our tax base, along with making the VAT regime incredibly complicated (as @Jenny Barnes points out). It would be better to broaden VAT, simplifying the system, and to help those on low incomes through increasing universal credit instead – we certainly shouldn’t keep cutting VAT. And I disagree with increasing income tax for higher earners even further. They already shoulder an huge proportion of tax receipts, and the introduction of another band at very high incomes (let’s say £200,000) would simply lead to salary-sacrifices/reduced working hours, probably harm growth and ultimately raise very little money.
@David Allen There is 0% chance that the result of the next election is a Tory-Lib Dem coalition. And the tax cut proposed by Ed has also been proposed by the trade unions – famously Tory institutions that they are. I agree the reflexive defence of pensioner interest and “sour-minded carping” of Burnham is unwise, and there are a wide range of policy views in the party. But the leadership is consistent in prioritising economic growth – through Europe, and through tax and energy, and there is a raft of policy to that effect. I am simply arguing that they should fuse that into bigger more ambitious message when we do have the rare opportunity to talk to the country.