Liberal Democrats reject the Conservative Government’s damaging and irrational commitment to run budget surpluses on both capital and revenue, which imposes completely unnecessary deep cuts in spending and limits the scope for much-needed capital investment. But we have no intention of just throwing away our hard-fought efforts to control the deficit during the Coalition years. Liberal Democrats will therefore commit to eliminating the deficit in day-to-day spending by 2020. This means we will be able to keep debt as a share of national wealth falling through the Parliament, unless there is a recession. Once we have brought current expenditure into balance we will ensure that overall public spending grows roughly in line with the economy. This means that we can improve key public services and provide them with the investment they need.
A long-term stable economy requires more than just discipline over spending. It requires us to invest in people, innovation and infrastructure in order to give our economy the opportunity to remain competitive for the future. The Conservatives have failed to take advantage of historically low interest rates to borrow for the investment that would create jobs now and prepare us and our economy for the future.
Liberal Democrats will therefore commit to a responsible and realistic £100 billion package of additional infrastructure investment. This will prioritise:
- New direct spending on house-building to help build 300,000 homes a year by 2022.
- A programme of installing hyper-fast, fibre optic broadband across the UK.
- Capital investment in schools and hospitals to support capacity increases and modernisation.
- Significant investment in road and rail infrastructure, including a continued commitment to HS2, Crossrail 2 and rail electrification.
- Additional funding to bring more private investment into renewable energy.
- £5 billion of initial capital for a new British Housing and Infrastructure Development Bank, using public money to attract private investment for these priorities.
We will ensure that the National Infrastructure Commission takes fully into account the environmental implications of all national infrastructure decisions. We will also devolve significant infrastructure spending to local areas.
Our investment in new infrastructure is matched by our commitment to protecting vital public services, including the NHS and Education. We will make the difficult decisions needed to ensure our NHS is protected for the long term and that children are given the opportunities they need to succeed. We will therefore commit to:
- Increasing spending on the NHS and social care, using the proceeds of a 1p rise in Income Tax. This will be paid by taxpayers in England, Wales, and Northern Ireland, and the revenue will be ringfenced for spending on NHS and social care services in England, with the appropriate share also being transferred to Wales and Northern Ireland. This taxation will be neither levied nor spent in Scotland. There will be a commensurate 1p increase in dividend taxation which is a UK-wide tax. The receipts of this will be similarly earmarked, with Scotland also receiving its share.
- Protecting the education budget in real terms per pupil from early years to age 19.
- End the 1% cap on pay rises in the public sector, and uprating wages in line with inflation.
The Conservative pursuit of Hard Brexit will have serious impacts on the UK’s national finances – impacts which current government plans may not fully take into account. Liberal Democrats would choose to pursue a very different European policy, and therefore would expect a better financial situation.
We will initiate a Spending Review after the General Election focusing on delivering efficiency, funding proven spend-to-save initiatives, pursuing local and community integration to drive efficiency, and investing in technology to get public services and frontline staff online.
Traditional indicators of economic activity such as GDP are poor guides to genuine prosperity and wellbeing. We will therefore introduce a National Wellbeing Strategy covering all aspects of government policy, including health, housing and environment.