ED DAVEY PROMISES £17BN INCOME TAX CUT IF LIB DEMS ELECTED

Ed Davey has set out a plan for a £17billion income tax cut, telling the Liberal Democrats' annual conference in Brighton that the party would raise the personal allowance to £15,000 and lift the threshold for the 40p higher rate by around £6,000. The plan also includes a smaller increase to the 45p additional rate, currently payable above £125,000. Davey said the cuts would be funded entirely through economic growth generated by rejoining the European Union's single market and customs union. He described the approach as "trusting people to spend their own money, not telling them the state knows best."

Because a deal with the EU would take time to negotiate, the actual tax cuts would not take effect until the final year of a parliament, potentially as late as 2034, at a cost of £17billion. In the years before that, thresholds would rise only in line with inflation, keeping levels broadly unchanged. Davey criticised what he called "post-Brexit stealth taxes" caused by frozen thresholds, saying the number of people paying the 40p rate had grown from 2 million three decades ago to 9 million now. "A tax band designed for stockbrokers is now holding back teachers and nurses," he said. "That's not fair. It's not right."

The proposal marks a shift in the Liberal Democrats' fiscal approach and is aimed partly at retaining support among former Conservative voters who backed the party in 2024, when it won more than 60 seats from the Tories. Some Liberal Democrat MPs have reportedly called privately for a more ambitious vision for the party, amid polling suggesting many voters remain unclear what it stands for. Party advisers reportedly argue that the cost of living remains the issue most affecting voters, making a future tax cut relevant now despite the distant timeframe.