The Liberal Democrats' plans contain a number of progressive priorities. But their tax plans are regressive and the funding is "highly speculative", say the IFS.
The Liberal Democrats have today released their manifesto, ‘Change that works for you’. As with the Labour and Conservative documents earlier this week, we assess their document against our readers’ favourite manifesto ideas and examine some of the other progressive areas.
Against our readers’ five manifesto priorities, the Liberal Democrats:
• Make only one mention of the living wage, in the context of a section on a ‘sustainable farming industry’.
• Like Labour and the Tories, do not make explicit reference to a ‘Green New Deal’ but their plan does include plans for a “green stimulus [that] will create 100,000 jobs” The proposals have been praised by Greenpeace Executive Director John Sauven who said:
“The Liberal Democrats have set out the most progressive environmental policies of all the major parties, and they now have a real chance to make them count. As part of a coalition government, this party could establish red lines on issues like Heathrow and coal power and focus instead on developing the clean technologies that will define the 21st century”
• Are committed to “Work with other countries to establish new sources of development financing, including bringing forward urgent proposals for a financial transaction tax and a cap-and-trade system for carbon emissions from aviation and shipping.” They will also “introduce a Banking Levy, so that banks pay for their tax-payer guarantee, until the break-up is complete.”
• Go further than Labour on tax avoidance (the Tories didn’t even mention it) by pledging to tackle “avoidance and evasion, with new powers for HM Revenue & Customs and a law to ensure properties can’t avoid stamp duty if they are put into an offshore trust.” They estimate they can bring in £4,625 in tax receipts. Nick Clegg’s rationale at the manifesto launch was that this was 10 per cent of total tax avoidance. But a report by Compass last year said, “Tax avoidance, both corporate and personal, is estimated to cost the UK at least £25 billion a year.” The IFS call the estimates “highly speculative” and Channel 4’s Gary Gibbon has asked “Does it all add up to honesty?”
• Make no reference to water or rail ownership but they do propose an “overhaul [of] Network Rail to put the interests of passengers first and bring it under the Freedom of Information Act to make it more open.”
As we said at the time “our list was never intended to be an exhaustive grouping of manifesto ideas” so it’s also important to look at some other areas. Regardless of whether their costings stack up, this blog has previously questioned whether the £17 billion intended for their flagship tax policy is the best use of the money since households in the second richest decile would gain on average four times the amount than those in the poorest decile. The FT’s Philip Stephens has written, “Raising tax thresholds helps those on low incomes not much at all … only about 6 or 7 per cent – a small fraction – of Mr Cable’s £16bn tax cut would end up in the hands of the lowest 10 per cent of earners.” Channel 4’s Gary Gibbon asks, “Do the poorest really get that much from the new £10,000 allowance when lower earners lose so much in benefits?”
But the Liberal Democrats have been the boldest party in pledging to “Rule out the like-for-like replacement of the Trident nuclear weapons system.” As Left Foot Forward outlined last week, Nick Clegg has suggested replacing Trident with Astute. We have previously examined their other key pledges.
UPDATE:
An earlier version of this story suggested that the Lib Dem’s had not mentioned a Robin Hood Tax. They hadn’t but had pledged to introduce a ‘Financial Transaction Tax’ which we had missed. Apologies for that.
20 Responses to “The Lib Dem manifesto: a progressive perspective”
Left Foot Forward
The Lib Dem manifesto: a progressive perspective http://bit.ly/bIxNc5
Bill Kristol-Balls
Channel 4’s Gary Gibbon asks, “Do the poorest really get that much from the new £10,000 allowance when lower earners lose so much in benefits?”
This is something that I’m curious about. Are benefits worked out on gross or net income because if it’s gross then the Lib Dems pledge to raise the threshold would make no difference.
Also you could be a bit fairer on the IFS’s take on the LD proposals. According to The Guardian they also say that –
the Lib Dems have underestimated the amount of money they could raise from their other tax measures.
Finally, when you talk about the second richest decile receiving more in terms of a benefit than the lowest, have you factored in what they would lose in terms of the reduction in higher rate tax relief as well as the rise in capital gains?
james Lloyd
Will I am a little confused by saying no mention of ‘Robin Hood tax’ on page 62 it very clearly talks about introducing a financial transaction tax – which by any other name is a Robin Hood Tax is it not?
also on page 42 in manage water for everyone may not bring water back into public ownership but will introduce smart meters for water and on top of the social tariff that Lib Dems got introduced into the recent floods and water bill (opposed by the tories) makes water pricing more equitable and fairer.
Don Quixote
I think it’s worth mentioning that the Liberal Democrats also pledged to reduce train fares and are the most committed to electoral reform of the three main parties.
I actually thought it was a pretty good manifesto, certainly more gutsy than the other two. Given that this technically isn’t a Labour blog (regardless of Will Straw’s personal affiliation) but one for progressives, it would have been nice to see some of the many good points discussed a bit further.
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