Scrap tax increases to tackle cost of living crisis, urge Lib Dems

Proposing the motion the party’s Treasury spokesperson Christine Jardine MP said the cost of living crisis was putting households all over the country under pressure. It would affect everyone but there are households who will face particular challenges making ends meet, she said.

The motion passed by the conference accuses the Conservative Government of worsening the cost-of-living crisis by raising national insurance, suspending the pensions triple lock, freezing the income tax personal allowance from April 2022 until April 2026, and cutting Universal Credit by £1,000 a year (partially offset by the reduction of the taper rate to 55%).

The motion accuses the Government of raising taxes on working families and cutting benefits, while ‘lowering the global minimum corporation tax rate from 21% under Joe Biden’s plans to 15%’ and cutting the corporation tax surcharge on big banks from 8% to 3%.

The motion calls on the Government to:

• Scrap the national insurance hike
• End the freeze of the income tax personal allowance
• Uprate pensions in line with the Bank of England’s inflation forecast of 6%
• Reinstate the £1,000 boost to Universal Credit
• Introduce a year-long windfall tax on the record profits of gas producers and traders, to help fund the doubling of the Warm Home Discount and Winter Fuel Allowance, an increase to the Cold Weather Payment, an emergency home insulation programme, and to support small businesses in energy-intensive industries
• Support low-income households on Universal Credit with rising mortgage costs by returning the Support for Mortgage Interest scheme to its pre-2018 format
• Reverse the cut of the corporation tax bank surcharge

It also reaffirms existing Liberal Democrat policies, including:

• Putting 1p on the basic, higher and additional rates of Income Tax, with the proceeds ring-fenced for the NHS and social care.
• Taxing income from capital more fairly compared to income from work by abolishing the separate Capital Gains Tax-free allowance and instead taxing capital gains and salaries through a single allowance.
• Backing a global minimum rate of corporation tax at 21%, and seeking to persuade other countries to do the same.
• Exploring the benefits of a Windfall Tax on the super-profits of large corporations that profited from public health restrictions during the pandemic.

Three amendments were proposed to the motion. Two were uncontroversial, adding in references to rising transport costs and incoming payments for lateral flow tests. The third, seeking to remove opposition to the income tax allowance freeze from the motion, was controversial. Its proponents argued that increasing the personal allowance should not be a priority, as it was a tax break that mostly helps the better off and would cost £10 billion by 2026. But Christine Jardine said freezing the allowance is a stealth tax that penalises people who won’t see a real increase in their earnings. It would force 1.5 million low earners to pay income tax, at the worst possible time for them, she argued. The amendment fell. 

In her keynote speech to the conference the previous day Jardine had set out a lot of the same messages, attacking what she said was the Conservative Party’s failure to tackle the cost-of-living crisis. She accused the Government of “writing off billions that have been fraudulently taken from the taxpayer, while hitting those same taxpayers with a hike in national insurance and stealth taxes.”

Supporting hospitality, retail and leisure

Another motion passed by the conference focused on help for the hospitality, retail and leisure sectors in the face of the new Omicron variant of covid-19.

Among other measures, the motion calls on the Government to:

• Reinstate the emergency 5% rate of VAT for hospitality, accommodation and attractions, at least through June 2022
• Reintroduce 100% business rates relief for the retail, hospitality and leisure sectors, at least through June 2022
• Urgently dispatch the £1.5bn Business Rates Relief fund for firms that don’t qualify for full business rates relief – to support those in the hospitality and retail supply chains that will be indirectly impacted by Omicron
• Raise Statutory Sick Pay and expand it to the two million workers earning less than £120 a week
• Maintain the Statutory Sick Pay Rebate Scheme at least until the end of 2022
• Take serious action to crack down on emergency loan fraud and furlough fraud, and invest in HMRC’s capacity, in order to recoup as much misallocated money as possible

Building a Fairer Society

Party members debated a ‘Fairer Society’ consultation paper, providing input to inform the work of a policy working group which is expected to lead to a policy paper at this year’s autumn conference. Those taking part were asked which of the five themes of the consultation they considered the most important. The two runaway leaders were proposals for a ‘universal basic income’ (43%) and ‘tackling poverty’ (38%) with ‘workplaces and working rights’, ‘jobs, skills and opportunities’ and ‘growing regional economies’ lagging behind.

On a universal basic income (UBI), the party’s position has been in favour since a vote at the autumn 2020 conference, but with work ongoing to decide what level it would be set at, how it would be funded and other important practicalities. A working group last year suggested a starting point of turning the income tax personal allowance and national insurance primary threshold into a UBI of £71 per week. The UBI would be paid to all working-age UK residents and delivered by HMRC, rather than the Department of Work and Pensions.

The Fairer Society working group will consider what a UBI in the form proposed by the previous working group would deliver in terms of economic fairness compared to or in conjunction with other potential policy interventions, and, in the light of this, what is the most appropriate approach to rolling it out. The consultation asks how quickly a UBI should be rolled out and whether a minimum income guarantee could be a staging post on the way to universality.

On tackling poverty the Lib Dems have existing commitments to reform Universal Credit by reducing waiting times, abolishing the two-child cap and benefits cap, abolishing the benefit sanctions system and reinstating the £20 uplift. The consultation asks whether this is sufficient, and which groups and areas should be most urgently prioritised for additional targeted support.

Rebuilding Trade and Cooperation with Europe

A policy motion passed on the Saturday morning of the conference sets out a range of proposals for strengthening cooperation with the EU. On trade these include:

• Making an explicit commitment to maintaining the level playing field and not to lower standards of labour, environmental and consumer protection in the UK
• Maintaining dynamic alignment with EU legislative and regulatory changes in order to avoid regulatory divergence between the two jurisdictions, and aiming to reach mutual recognition agreements to avoid doubletesting
• Exploring ways to simplify procedures for UK exporters, and the possibility of a specific UK-EU agreement on small businesses
• Seeking to ratify the memorandum of understanding with the EU on equivalence for financial services
• Initiate conversations to establish mutual recognition of professional qualifications

Conference news in brief

A successful motion and paper on democracy and public debate propose introducing a levy on large social media companies, to fund policies to combat societal harms stemming from the misuse of online platforms.

A motion on ending sewage discharges proposes the introduction of a ‘Sewage Tax’ on water company profits to fund the cleanup of waterways. The Lib Dems believes that, in 2020, water companies made £2 billion in profit - a Sewage Tax would have raised £340 million. The party say that water companies would be prevented from passing the cost of the Sewage Tax onto consumers by Ofwat.

Away from tax the biggest controversy of the conference was a proposal to significantly slim down the party’s Board (Executive). This passed despite concerns from some members that it represented a centralisation of power within the party.