Economy and BuisinessBuilding Prosperity For Britain |
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All our policies are costed and affordableUnlike the other parties, we have consistently set out costings for our manifesto pledges, explaining how much money they will need and how they will all be paid for. So this manifesto includes a specific section outlining our main costings. Our package of tough choices on spending, and fairer taxes, means that most people will be better off. |
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| There is only one proposed net tax rise (to 50 per cent on the proportion of incomes over £100,000 a year, affecting just one per cent of taxpayers) which will pay for the abolition of student tuition fees, free personal care for the elderly, and lower local taxes. Most people’s tax will be cut by replacing Council Tax with a system based on ability to pay, saving the typical household around £450 per year. | |
Tough choices in public spendingLiberal Democrats have different spending priorities from Labour. We believe that in order to concentrate resources on currently under-funded areas such as pensions, policing and early years education, funding should be switched from lower priority areas. That means reducing unnecessary subsidies to industry, and cutting wasteful new initiatives like the ID card and the Child Trust Fund handouts for future 18 year-olds. This will allow us to spend more on the things that really matter, like better pensions, more police and smaller class sizes. |
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A stable, well-managed economyWe welcome the greater economic stability that has been established since interest rates were set independently by the Bank of England (which the Liberal Democrats were the first party to advocate). Now, there needs to be more independent scrutiny and discipline in fiscal policy. |
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| We will give the the power to scrutinise the budget figures, including public borrowing, so that no Chancellor can fiddle the figures. We will make sure that the Office for National Statistics is independent and accountable to parliament, not subservient to ministers. We will tackle irresponsible credit expansion in mortgages and personal loans by curbing misleading advertising and anti-competitive practices by promoters of insurance for mortgages and loans, and of credit cards. We oppose the increasing complexity of business taxes and we will consult with business on a simpler and fairer system, giving priority to helping small businesses. | |
Fairer taxesUnder Labour, ordinary hard-working families pay more as a share of their incomes in tax than the very rich. Under Labour, the elderly have to sell their homes to pay for their care, while rising Council Tax and university top-up fees are making the system even more unfair. Taking all taxes together, the poorest 20 per cent of the population pay 38 per cent of their income in tax, compared to just 35 per cent for the richest 20 per cent. That’s not what people expected from a Labour Government. |
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| Liberal Democrats will make the tax system fairer and simpler. As a first step towards reducing tax paid by low earners, we will axe the unfair Council Tax and replace it with a Local Income Tax based on people’s ability to pay. This will cut the typical household’s tax bill by over £450. To pay for our policies of abolishing student top-up and tuition fees, ending elderly and disabled people needing to pay for their care, and cutting Council Tax, the richest one per cent of the population will pay 50 per cent tax (up from 41 per cent) on that part of their income over £100,000 per year. | |
Cut stamp dutyPeople are increasingly struggling to afford their first home. We will raise the starting point for stamp duty from £120,000 to £150,000. This step will take 150,000 mainly first-time buyers out of paying stamp duty altogether, and cuts the cost of home ownership. |
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An outward-looking economyLiberal Democrats support a liberal economic approach to trade, investment and migration in the national interest. We want Britain to be at the centre of a liberalised, reformed European Union. Liberal Democrats believe that Britain should work to create the right economic conditions to join the euro (subject to a referendum) in order to safeguard investment in the UK and reduce the cost and risk of trade with the rest of Europe. We will work to break down the trade barriers that prevent the poorest countries in the world selling their goods to the richer countries on fair terms. |
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Economic migrationEconomic migrants have helped make Britain one of the richest countries in the world, both economically and culturally. There remains a positive economic benefit from managed immigration to fill the demand for skills and labour that are in short supply. We will consult with business and the public services to agree numbers of work permits for economic migration to make sure that Britain continues to prosper. |
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There is no job more important for any government than managing the economy well. |
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When Labour was first elected, they seemed to understand this. Liberal Democrats were the first to propose making the Bank of England independent, to stop politicians playing with interest rates to suit their own re-election rather than the economy. adopted this suggestion, even though there had been nothing in Labour’s manifesto about it. |
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Increasingly, Labour has started to make mistakes. Too many rules and tax complications, holding businesses back. Inadequate action to contain the explosion of personal debt. Economic forecasts making unrealistic assumptions about future growth. Failure to take the tough decisions to prioritise taxpayers’ money, to spend it where it matters most. Over-complicated tax credits and means-tested benefits. |
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As the former Chief Economist at Shell, I have wrestled with these problems all my life, including advising governments. I know these decisions are not easy – and can easily be thrown by world events. |
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| So I want to make clear my priorities for managing the economy: | |
First, and most important, I will ensure a stable and well-managed economy. I’ll stick to the Golden Rules – that government borrowing should only finance investment over the economic cycle, and that government debt should be no higher that 40 per cent of GDP. To make sure of that, I’ll give the National Audit Office the job of publicly checking the budget figures. |
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| Second, I will insist on tough choices on public spending, cutting out low priorities in order to spend more on what matters most. As a result, all our policies are costed and affordable. | |
Third, I will introduce fairer taxes. Our only net tax rise in this manifesto is on that slice of people’s earnings over £100,000 a year, in order to abolish student tuition fees and care charges on the elderly, and cut local taxes. But we will make taxes fairer – such as replacing the Council Tax with a system based on ability to pay. The typical household’s tax bill will be cut by around £450 each year as a result. |
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Finally, simpler taxes. Gordon Brown has endlessly made the tax system more complex and unworkable. That, in the end, is self-defeating, simply adding to business costs, chaos at the Inland Revenue, and misery for confused taxpayers. |
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These simple rules are my basic principles – and foundation–stones for Britain’s future prosperity. |
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In Vince Cable, a former leading economist in industry, the Liberal Democrats have as Shadow Chancellor someone who can be relied on to make sure that every Liberal Democrat policy is affordable, and that economic policy delivers more stability and less red tape. This manifesto is realistic, costed, and deliverable – that’s why it wins my support. Susan Kramer - Former International Banker |
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Buissness |
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Cut the red tape that stops businesses from growingLiberal Democrats will slash the red tape, bureaucracy and over-regulation that are holding British businesses – especially small businesses – back. We will start with these three measures:
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Introduce small-business rate reliefMany small businesses pay a disproportionate amount in rates – as much as 35 per cent of their profits. We will help small businesses by reforming the business rates system to allow firms with a rateable value of less than £25,000 to claim a business rate allowance of up to £1,500. This would represent a saving of over £600 a year for the majority of small businesses. We will also reform the valuation system to base rates on site values, rather than rental value, which penalises businesses that invest in improving their premises. |
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Scrap the Department of Trade and IndustryThere is no need for a big department that interferes in the economy and subsidises failing companies at taxpayers’ expense. The DTI is irrelevant to most enterprises, so in abolishing it Liberal Democrats will cut away its bureaucratic and wasteful functions. We will transfer its useful roles to more appropriate departments, such as support for scientific research to our Department for Education, Skills and Science. |
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| The Chief Secretary to the Treasury will take on the role of advocate for business at the Cabinet table. Overall, this will save £8 billion of taxpayers’ money over the life of a parliament. We will invest this saving in our priorities, including improving education and training – which are of far more real benefit to business. | |
Protect consumers from rip-offsWe will introduce a new legal duty on businesses to trade fairly, while cutting back unnecessary red tape and bureaucracy. Enforced by the courts, this will require less form-filling than Labour’s complex rules, yet provide more effective protection for consumers, and promote free competition. |
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Boost tourismWe will promote domestic tourism opportunities, starting by creating an English Tourism Board to match those in Scotland, Wales and Northern Ireland, with increased resources for marketing England. These measures will help reduce the ‘tourism deficit’ – the difference between the amount spent by overseas visitors in the |
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Before entering parliament in 1983 I worked in business. The red tape, bureaucracy and wasteful rules were bad enough then. They are much worse today. |
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People running businesses up and down the country are the powerhouse of the economy. They need the freedom to generate economic growth – yet they are held back, struggling under a mountain of government rules, tax complications, bureaucracy and inspections. |
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So I have used my experience in business to make one thing sure above all else – that Liberal Democrat business policy is all about making things simpler, easier and fairer for businesses – particularly small businesses – to prosper and grow. |
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That means getting government off the back of business. For example, we will cut back the cost of business rates for small businesses. We will use ‘sunset clauses’ to prevent unnecessary regulations imposing a burden on business long after their usefulness has passed. And we will get rid of the top-heavy old-style DTI industrial subsidies, investing instead in high-quality training so that young people have the skills employers want. |
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It also means a fairer playing field between small and large businesses – for example, by tackling the abuse of monopoly power through creating a duty to trade fairly. And where there is a need for government intervention, for example in tackling pollution, our promise is to harness market forces with incentives for sustainable development, so that good businesses pay less tax. |
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The business people I meet don’t want subsidies, they just want government off their backs. They want government to deliver skills and infrastructure, not ever more red tape. They want the freedom to succeed. These are our ambitions too. Malcolm Bruce Liberal Democrat Trade and Industry Spokesperson |
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It comes down to this: government needs to concentrate on its own job – delivering a stable, sustainable economy, a skilled workforce, and a modern infrastructure. It should only intervene in the market where it can show that the benefits clearly outweigh the costs. Regulation is a last resort. Red tape must be cut. In my experience this combination is unique to the Liberal Democrats. Iain Vallance Former Chairman of BT and former President of the CBI |
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Green Action |
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Using economic instruments to benefit the environmentGreen tax reforms and traded permits should be used to encourage people to act in a more environmentally responsible way. We will change the Climate Change Levy into a Carbon Tax, making it more effective at discouraging the use of the polluting fuels and energy sources that harm the environment. We will also strengthen tax incentives to use smaller and less polluting vehicles and create more energy-efficient homes. We will launch a Treasury-led Environmental Incentive Programme, examining tax reforms that will reduce pollution and protect the environment, on the clear principle of taxing differently, not taxing more. |
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Promote clean energyLiberal Democrats will make sure that at least 20 per cent of the UK’s electricity comes from a full range of renewable sources by the year 2020, by increasing and reforming the obligation on energy suppliers to use renewable energy. |
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| Liberal Democrats will not replace existing nuclear power stations as they come to the end of their safe and economic operating lives – instead we will use renewables and conserve energy. We will encourage the use of alternatives, such as hydrogen fuels, as technology develops. |