I always find it odd that, when we have had hundreds of Lib Dems discussing policy for days, we then have the leader announcing a major new policy in his speech, just as everyone’s about to go out the door.
In Spring it was a new British nuke, which we’ve mercifully not heard much about since. However the tax cut policy announced yesterday might have more longevity.
Basically we are going back to one of the really popular ideas from the coalition years, and raising the threshold at which you pay tax to £15,000. This is the idea initially brought forward by my Lib Dem Women colleague Lizzie Jewkes and which was talked about in a New Statesman podcast just last week. Lizzie was described as an “ordinary woman” and anyone who knows this very lovable force of nature will know she is as far from ordinary as you can get.
When we were in coalition, the Tories constantly claimed credit for this policy because it was so popular without mentioning that it was our idea, of course.
Anyway, the other proposal is that we would raise the threshold at which you pay the 40% tax rate to £56,000.
This would all be paid for by the benefits of rejoining the single market and customs union, proposals which we can probably all get behind.
The detail is set out n this article on the party website.
The Liberal Democrats will take 2.5 million people out of paying income tax altogether by raising the tax-free personal allowance to £15,000.
Our bold plan would put £680 back in people’s pockets, and also take 750,000 ordinary people out of paying the higher 40p tax rate.
People are struggling in a cost-of-living crisis. The Conservatives put their taxes up by stealth, and Labour have made it worse – the equivalent of a 3p rise in income tax.
There’s no way to end the cost-of-living crisis without cutting income tax. Liberal Democrats have done it before – cutting taxes by hundreds of pounds and taking 3.4 million people out of paying income tax altogether.
We’ll do it again now, taking 2.5 million people out of paying income tax and giving most people a £680 tax cut, by raising the tax-free personal allowance (and the national insurance threshold) to £15,000.
We’ll also raise the point at which the higher 40p rate of tax kicks in, taking more than 750,000 people out of paying it. Millions of ordinary people – including nurses and teachers – should not be paying a rate designed for stockbrokers and merchant bankers.
Unlike Reform, who claim they’d cut taxes by slashing £22 billion of support for disabled people, we’d pay for these tax cuts through the proceeds of growth when we tear down the damaging Brexit trade barriers.
Our plan for a new Growth and Defence Partnership with the EU is forecast to secure a growth dividend worth £27 billion a year. And we will give £17 billion of it straight back to the British people in the form of our tax cuts.
There is no doubt that most people could use an extra £700 ish per year as fuel costs rise and inflation looks set to bite again.
But is that the best use of the European dividend? Could it be better invested in improving this country’s infrastructure or public services?
Or is it a good idea to give something to a fairly large group of voters to build the range of votes we need across the country to advance?
What do you think?
* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings. You can find her on Bluesky at caronmlindsay.bsky.social
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50 Comments
I think it was absolutely terrible on so many levels – unaffordable, unworkable, completely at odds with both the economic reality as it is and how the Lib Dems should operate as a party. I’d been thinking before the conference that, on balance, Ed Davey wasn’t the right person to lead the Lib Dems into the next election despite the success of 2024, and this policy has not only cemented that view for me, but also driven me to the brink of resigning my membership.
I donated £125 during the general election campaign to the party, and there’s no chance of a repeat while he and the others in his closed shop simultaneously announce economically illiterate policies and do nothing to advance or defend the cause of liberalism and liberal democracy (small ‘l’, small ‘d’).
Bad policy by leadership decree. Ill conceived in so many ways,
I agree with Peter Taylor. Ian Dunt’s latest blog and the ensuing comments (https://iandunt.substack.com/p/ed-davy-speech-just-not-good-enough?utm_source=share&utm_medium=android&r=i6kt4) outlines everything that’s now wrong with the Liberal Democrats under Ed Davey’s leadership. We don’t want a repeat of the Charles Kennedy scenario in which a leader that had made a great contribution to the success of the party had to be forced out in public. It’s time for Ed Davey to pass on the mantle of leadership to someone with fire in their belly.
Tax policy is one of the most important areas of policy. An FPC working group should be studying all the evidence and putting a well thought out and detailed paper to conference. Regardless of what we think of the policy, bypassing party democracy in this way is unacceptable.
Well Ed got his 5 minutes of fame in terms of returning to an old policy on tax threasholds a policy i support as it effects low income households and pensioners both suffer from low threasholds ,however he was over shadowed by Burnshams visit to UN and meeting with Trump . The impact was lost by 6.00pm news .
Daisy Cooper as economy spokeperson will have to do the heavy lifting to give this more profile . lets see what additional traction we get by November and if it really moves the cutting through agenda the members want .
The party needs a radical leadership which can listen and appeal to the whole of the UK not just to a small comfortable bit of it.
In principle, I agree with the policy. Although, i see the point that these conference policy announcements fly in the face of party democracy, all party leaders (without exception) love to make headline catching announcements in their conference speeches and I thought today’s Guardian was approving of the idea. The policy could form part of the party’s tax manifesto at the next election as part of a strategy of moving tax from income to accumulated wealth and land.
Ed is quite right in saying that to influence policy and make serious changes in the UK we need a united party. By-passing party democracy is what all leaders do but it can go too far and threaten that unity while diluting the enthusiasm of activists. For me this is far more worrying than any adjustment of “fire in bellies”.
David Evans: It his actually a good policy that we introduced in government and should do again, because it really helps the low paid. However, I do object to the way it was announced without any reference to party democracy.
Graham Evans: I think Ed has quite bit of mileage left. The decapitation strategy of Labour and Conservative has not served them well has it? You should read Rafael Behr in today’s Guardian, not a man normally sympathetic to the LibDems, who is pointing out that it is easy to ignore the LibDems but that our current seat strategy could well see us holding the balance of power in 2029.
I agree with David Raw. It’s time for Ed Davey to retire.
Mick Taylor: The last time we held the balance of power it was a disaster for the party and it has taken us almost a decade to recover and that only in seats, not votes. We are little better now in our share of votes than we were in 2019. In 2010 we went into the coalition negotiations totally unprepared compared to the Tory negotiators, and had no strategy for the parliament ahead. Kicking out a few policy ideas in a leadership speech doesn’t amount to preparation for holding the balance of power.
Decapitation strategies have mixed results. Decapitating Kennedy was necessary but didn’t have to be so messy had Kennedy recognised the extent of his alcohol problems, and Ming Cambell’s capitation at least produced a charismatic leader to whom younger voters could relate, even if his time in office was less successful. The Tories kicked out IDS and allowed Howard to do the groundwork in preparing the Conservative party for recovery and government. Even the decapitation of Blair might have worked had Brown not freaked out about economic proposals from Osborne.
We may not like Polanski, but his election was essentially a repudiation of the continuity approach offered by his rivals for the leadership of the Green Party, and its success in wining seats which Liberals Democrats once held in metropolitan areas should be a wakeup call to the Liberal Democrat leadership.
I was deeply disappointed. So now we’re a tax-cutting party? What about the dire state of public services? This is exactly the issue I raised in my article at the weekend – no wonder people can’t figure out what we stand for when policy is thrown around haphazardly like this. https://www.libdemvoice.org/lib-dems-need-a-25year-vision-that-sets-out-how-well-change-britain-80465.html
@Mick Taylor
“our current seat strategy could well see us holding the balance of power in 2029”
Which is of course what matters more than anything else.
If we hold the balance of power we stop Farage AND stop Badenoch we get a chance (again) to make progress in stopping enslavement by reason of poverty, conformity and ignorance.
It is that freedom from enslavement that enables people to be free (*) to do (*) and say what they want. in my opinion that freedom to do and say what one wants is what liberalism is all about.
(*) subject to the harm principle
(+) This includes the freedom to create wealth and keep a decent amount of it. Ultimately it is wealth that sets people free by enabling them to be free of enslavement by poverty, ignorance or conformity.
Both Ed & Daisy look to be from the Trussite school of economics. Let’s have tax cuts, spend more on public services & infrastructure… and a pony.
How will you pay for that? A sceptic asks.
The growth fairy will provide.
Raising the income tax personal allowance and the threshold for paying the higher rate – good; joining the single market and customs union – good. Alleging that the latter will immediately bring in enough additional tax to pay for the former – pure economic illiteracy. Now if Ed had said something sensible like: we will equalise the taxation of earned and unearned income; we will tax capital gains at the same rates as earned income; we will ensure that trusts pay their fair share of taxes, and then pointed to an IFS report that showed that these reforms would bring in sufficient additional tax, that would have been a responsible approach. Instead Lib Dem MPs will be forced to defend this policy against hostile questioning in the media. To use a cricketing metaphor: “It is rather like sending your opening batsmen to the crease only for them to find, the moment the first balls are bowled, that their bats have been broken before the game by the team captain” (Geoffrey Howe 1990). Like Thatcher then, it is time now for Davey to go.
Graham Evans: How do you think we can make the transition to power without going into coalition first? Do tell. In 2010, we could not have refused the chance to be in government as that would have vindicated all those who said we were never a serious party of power. We certainly could have handled it better as we definitely were unprepared for it and, sadly, had a leader who was unbelievably naive and wouldn’t take any advice. I have argued for some time that we need to prepare for the possibility of coalition by preparing in advance a number of bills – including one for STV – and making it abundantly clear in advance that our willingness to enter a coalition will be dependent on our partners accepting certain proposals on electoral reform, on decentralisation , on Europe for example.
Jenny Barnes: Ed did suggest where the money would come from, from the growth that would flow from rejoining the single market and customs union. I would have preferred some alternative tax proposals, but I think that our Europe plans, if implemented, would create substantial additional tax revenue, because it is already known that Brexit is costing us around £90 billion pa in lost tax revenue. The growth fairy has always provided extra revenue for governments, though if it sufficient by itself in this instance may be debatable.
It’s a huge shift back from the centre-left (e.g. Kennedy, Ashdown, Farron) to the Right (Clegg and the Coalition).
It explains why Davey has been so bereft of radical thinking – e.g. on Gaza, on rescuing the NHS and public services, on electoral reform. Davey does not want radical ideas, which could frighten off the pink Tory voters he is targeting. He just wants a tax giveaway.
Forget about the pretence that lifting the lower threshold might be marginally redistributive toward the poorest. There will also be a lifting of the 40% threshold. This is a party for the comfortably off who demand to be more comfortably off.
How about changing the leader? Well, to be worthwhile, that would mean a challenger bold enough to jump to their feet, this week, and declare opposition to Daveyism. I’m not seeing that happen. I’m just seeing loud applause for Davey from Cooper et al. No point in a change that means no change.
So, no centre-left Lib Dem should stay in Davey’s party. Neither Burnham nor Polanski are perfect, but, they are trying. Davey is not.
TBH this feels to me – and I’m a clear admirer of Davey – like tactical politics.
So I do not give it much weight, and in the party tactical politics are very much part of the strategy.
I’d make a similar point about the noisy efforts to frame the issues around Smart Glasses as being primarily about voyeurism,
@ Laurence Cox and Jenny Barnes
“Alleging that the latter will immediately bring in enough additional tax to pay for the former – pure economic illiteracy. ”
I don’t think anyone is suggesting this is immediate.
“The growth fairy will provide.”
We have spent most of the last 15 years arguing that not being in the single market and customs union damages growth/wealth creation. What has changed other than an extension of existing party policy (*) ?
(*) Our last general election manifesto included a commitment to increase the threshold at which income tax should be paid as funds allow and that we should fix the broken trading relationship with Europe.
I believe three years was mentioned and that’s optimistic but not ridiculous. The problem is that without that growth our public services will collapse within a similar time frame. The money will not just be there to give away.
Its reasonable to make some attempt to predict likely futures.
Reform continue their slow but steady decline, by 2029 they are likely to be back in the Others category alongside Restore & Your Party, most of their Votes will go to The Conservatives, cutting the Labour-Conservative gap to single figures.
That means Coalition, Fair Votes for 2034 & probably the end of The LibDems.
Economics aside, Peter Taylor’s thoughts about contributing to party funds are understandable.
Had the central organisation shown any interest in fighting Holborn and St Pancras properly, I would have contributed to any directly associated fighting fund.
Although, due to an oversight, I appear not to have millions of pounds at my disposal, I am certainly inclined to contribute to specific constituencies – but there is no way I would any longer contribute to central funds, given the lack of strategic ability that is on show (?) almost every day.
I find myself disagreeing with most of Ed’s ad-hoc policy announcements (including nukes, defence bonds, fuel tax cuts) which rarely stand up to scrutiny because they haven’t been stress-tested.
I agree in principle with raising tax thresholds to some extent, as we face the ridiculous situation of large numbers of pensioners becoming liable for tiny amounts of income tax.
But the most obvious flaw is that it will take years to negotiate Single Market/Customs Union membership, and after that it will take even longer for the economic benefit to feed through as increased revenue that will pay for raising thresholds. The idea that we can promise tax cuts in the next manifesto and deliver them in the next Parliament paid for by getting closer to Europe is nonsense (even if we agree with the direction of travel).
What happened to ‘evidence based policy making’?
@ David Allen
“This is a party for the comfortably off who demand to be more comfortably off.”
No it isn’t. We are a party that wants to deliver freedom from enslavement by poverty, conformity and ignorance so that people are free to do and say what they like, and which understands that wealth creation is essential in achieving that.
It will take the Telegraph 5 minutes to claim that we are advocating closer EU alignment in order to help the already comfortable. Doesn’t matter that it’s not true. If this was tactics, it was bad tactics. If it was genuine, it’s washed out Toryism pushed undemocratically on what was once a democratic party. Shame on you Ed.
Did Ed have conference approval for his ‘announcement’ about supporting the opening of the ‘Jackdaw’ gas field and for an immediate ’10p-a-litre cut to fuel duty’?
Or was this yet another off-the-cuff’ example of a ‘one man show’?
@Expats. No he didn’t have conference approval for that either.
It’s a poor policy on a number of fronts
1) The costing side is at best a little vague (IFS say this will be a lot more than £17bn and Reform cost it as higher though their proposal may differ)
2) Where the money comes from isn’t clear. The party article talks (with no source) of £27bn. There was a policy paper by some think tank which I can’t make complete sense of but can’t see a figure of either £17 or £27bn from this sort of thing
3) It doesn’t help the lowest paid all that much. If you earn £12,000 you are no better off, if you earn £70,000 you’ll be quite a bit better off. So it is marked different from the 2010 proposal
4) The tax cut will not kick in until the final year of a putative future Parliament. So that could be 8 years off and if a week is a long time in politics. So again *very* different from the 2010 offer.
It’s a gimmick rather than a serious policy. I’d say it probably means I wouldn’t vote Lib Dem at the next GE but then unless I move house I’m probably not going to anyway!
@Jack
“It will take the Telegraph 5 minutes to claim that we are advocating closer EU alignment in order to help the already comfortable”
Great. Telegraph readers draw the conclusion that closer EU alignment is a good thing and might even vote Lib Dem in order to achieve it. We get to achieve our political goals of closer EU alignment and getting Lib Dem MP’s bums on seat in Westminster; and the Telegraph pays for the advertising.
What’s not to like?
This seems to be (according to BBC news) the source document. Though in that case why it isn’t linked in the party website article I’m not sure
https://bestforbritain.org/wp-content/uploads/2026/06/Modelling_EU_UK_Intergration_Scenarios_and_the_Effects_of_Protectionism.pdf
I’m not the strongest on economic calculations so may have some of this wrong. But the top end figure I can see is as a benefit is a $16.6bn uplift to GDP (NB – dollars not pounds)
The article from the think tank talks of a “£39-£54 billion uplift to the UK economy”. It’s a heck of a reach to make that to the talked of £27bn growth dividend to fund tax and spending (a minimum of 50% tax take)
Also whatever you think of this proposal, for the Lib Dems to set policy positions based on not getting attacked by the Telegraph for wanting closer integration with Europe seems to ignore that they have been doing that for….. Well they’ve been doing that forever!
It has seemed clear to me for some time that we need a change of Leader.
Well done to Ed to have taken us this far but wise is the Leader who knows when it is time to step down. The Opinion Polls are telling us that loud and clear.
A better argument for raising the thresholds is that a reduction in taxation will stimulate the economy and increase taxation revenue. Keynesian Economics 101 basically.
Keynes own counter-argument was that this could apply equally to most other taxes and more public spending too; but there is a limit to a reflationary policy. It’s not a lack of potential revenue but it is a lack of potential resources which could lead to increased inflation.
@Tristan Ward 23rd Sep ’26 – 7:36pm..
The idea that Daily Telegraph readers are a viable source of future LD votes made me choke on my coffee..
I was a bit shocked to hear this. It struck me as a very poor idea. I understand it to be, actually, regressive in nature, nowhere near as progressive as it sounds. Bad policy.
The comments here are just the kind of discussion that should have taken place before considering any such announcement. When we debated FPC’s planned program last year, some said we should have included tax issues in that program and I called for School Curriculum and qualifications system also. Neither are happening.
We need a better thought out big policy on government income and expenditure and how it will affect individuals (now and in future) and how it affects public services. Will the divided views on this announcement spark such a policy development within the party? Or are we too set in our ways to change strategy and do it? Unfortunately there’s no positive sign yet.
What I want to know is when we will introduce 10% and 30% bands so tax is much more progressive , even 5% increments or 1% as the Swiss do it, the 20-40% cliff face is in my view a real barrier to people seeking better paid jobs/demanding salary increases, so many people are determined at whatever cost to themselves to staying within the 20% band.
The other issue with our messaging is this …’lifting xxx out of tax’, we should not be saying this, paying tax is part of being a grown-up citizen living in a civilised society with benefits that are paid for out of the public purse.
Why do we keep parroting what the other parties are saying, we need differentiation.
“ It’s not a lack of potential revenue but it is a lack of potential resources which could lead to increased inflation.”
PM is on the money.
We are in a world where resources: oil, gas, lithium and other rare earths used in modern electric motors/generators, will increasingly be in short supply and thus subject to elevated pricing. Traditional economic growth will only add to the demand for these resources and thus increase inflation.
Additionally, many of the attributes of the new more sustainable society are about reducing the “froth” of unnecessary “economic activity” (eg. Why travel to an office just to do something that can be done at home, install solar panels on your own roof rather than pay someone else via layers of middlemen for the electricity from their panels.) Which in turn will reduce taxable transactions and thus the size of the economy. So I would be very wary of assuming future tax revenues will be able to pay for today’s tax giveaways…
100% awful.
Both the policy of giving a £1600 tax cut to top earners and the complete lack of democratic process that led to it.
Given everything the party has been saying about the NHS, carers, SEND and infrastructure, how can a massive tax handout to those in the top 20% of incomes be a bigger priority than investing in those?
I was already unhappy about the fuel duty and Jackdaw announcements, but this one took the biscuit.
Over my 25ish years in the party I was always of the view that Neil was the most sensible person I ever knew and the party would be much better off just doing what he thought pretty much all the time!
Roland 24th Sep ’26 – 3:11pm:
We are in a world where resources: oil, gas, lithium and other rare earths used in modern electric motors/generators, will increasingly be in short supply….
Not anytime soon. Gas, for example, is abundant worldwide with many new fields and suppliers expected to come onstream over the next decade and beyond. UK Onshore Oil and Gas (UKOOG) estimates potential reserves of 1,329 trillion cubic feet of shale gas under central England alone — enough to supply the UK’s current consumption for over four centuries.
‘Miliband civil servants predict years of plunging gas prices’ [February 2026]:
https://archive.is/nO99e
Rare earth elements are also abundant. The term ‘rare’ refers to their sparse distribution in deposits, not to their prevalence.
How abundant are rare earths?:
https://gemini.google.com
@ Jeff,
I was meaning resources to be everything that is available to be bought in the economy. If govt adopts a fiscally reflationary policy it is possible to increase the size of the economy but if they overdo it they will create too much inflation.
Far too late for me to comment, but just skimmed through the replies and I agree with most.
Most important is that as Caron says, it was announced where hundreds of Lib Dems, at considerable cost in terms of time, energy and money, were doing the democratic thing of debating policy. As people were leaving too.
I walked out of his speech in tears in March at the announcement of the new nuke policy (as Caron said, thankfully disappeared it seems) and resigned from the Lib Dems.
I have rejoined in solidarity with true lib dems, standing as best I can with them, but I was watching from home and just did not put myself through the back of cigarette box policy being announced.
I’ve heard that MPs (most of anyway) and Fed Policy Committee not consulted either.
Time to resign gracefully on a high of work done so far and commit time and energy to developing all party social care strategy, I say this as someone who campaigned for Ed in the last leadership election.
Nigel Jones,
“When we debated FPC’s planned program last year, some said we should have included tax issues in that program”
Indeed. I didn’t submit such an amendment, but did submit such a motion for this conference just gone, but it wasn’t accepted. FCC also thought it should have been done last year.
I have been saying for years that Ed Davey and our spokespeople shouldn’t make policy. Ed said during the hustings (I think in 2019) that he knew that the leader does not make policy for our party.
Increasing the personal allowance is a good policy. Increasing the 40% rate to 56,000 is a bad policy. A case could be made to increase it by the same amount as the personal allowance is being increased by – £2430 to £53,000. As others have said funding it from rejoining the single market and custom union is a bad policy because of the time it takes for the benefits to arrive.
@Jeff – I didn’t say resources were scarce, just that they are in short supply. So whilst there might be decades of fossil fuels in the ground, you may have noticed oil and gas are currently in short supply due to the rather minor matter of the US war in the Middle East and growing demand from other countries such as China and India…
With Lithium for example, we have a problem that whilst it is abundant, the places where it can (using current technologies) be economically extracted are limited. Plus as noted by people who’s job it is to do the maths, our envisaged consumption rate (just for EVs) outstrips the rate we are and would want to extract and process the mineral and thus we can expect supply shortages. Remember behind Trump’s claims for “ownership” over Greenland, Canada, Central and South America is the desire to control the mineral resources and only trade with those who agree to his whims…
“the policy of giving a £1600 tax cut to top earners” While the policy is awful, it’s not quite that awful. The personal allowance is tapered for those with incomes over £100 000 and there was no commitment to index the 45% rate. The biggest winners in absolute terms would be on £100 000 while those with the highest percentage gain will be on £15 000.
@ Expats
“The idea that Daily Telegraph readers are a viable source of future LD votes made me choke on my coffee.”
I give you my in-laws who:
1 read the Telegraph (always have)
2 are what Theresa May would have called the “just about managing” on a reasonable but ever more squeezed company pension plus state pension.
3 live in an east midlands constituency
3 They despise/fear Reform, MAGA and the rest
4 and think Brexit was a rubbish idea
5 will never vote Labour because they fear higher taxes their high taxes
6 mostly vote Tory but have voted Lib Dem in the past
They might well vote Lib Dem again, and I suspect there are quite a few similar people out there across the country.
Tristan Ward 25th Sep ’26 – 11:49am..
I don’t doubt that we can all name someone who reads the DE and is not it’s typical ‘reader’..
For instance, I know a Green voter who gets it for the Crossword and has done long before it became less into straight fact-based reporting and moved toward a more pronounced right-wing opinionated and populist outlet.
However, I did write ‘viable source’..
To expand a comment I made in another thread, the policy would make sense if we also rolled back Rishi Sunak’s election giveaway (a four pence cut in NI). Ideally it would go on income tax rather than NI. This would make it roughly revenue neutral and different income groups would be affected as follows:
15,000: +680.40
50,271: -730.36
56,000: -157.46
125,140: -157.46
130,000: -837.86
It’s not too late for FPC to set up a working group on tax policy, so that we can have democratic decision-offering on a vital issue. Michael GB is right to want at least a motion, which now could come to Spring Conference. And what about much-needed Council tax reform being soon debated?