Davey conference speech: Cut income tax to tackle the cost of living

EMBARGO: Immediate Release

• In his keynote address, Liberal Democrat Leader Ed Davey will announce a major income tax cut to save millions of people £680 a year.
• The Liberal Democrats will take 760,000 people out of the higher rate (40p) tax band by raising the threshold to £56,000.
• The party would raise the tax-free personal allowance from £12,570 to £15,000, taking 2.5 million of the lowest-paid workers out of income tax completely.
• Davey will argue that the best way to put power back into the hands of people is to put more money into their pockets, as he rallies activists to fight for the future of our country.

In his keynote speech to the Liberal Democrat Party Conference later today, Ed Davey will announce a massive tax cut, funded by growing the economy through membership of the EU single market and a customs union.

The Lib Dems will announce a plan to end the squeeze on middle-income earners, put hundreds of pounds back in the pocket of millions of people, and take ordinary workers out of paying the higher tax rate that was designed for stockbrokers.

Over the last thirty years, the number of people paying the 40p rate has ballooned from two million to nine million. Davey will argue that a higher rate originally "designed for stockbrokers is now holding back teachers and nurses", punishing hard work, squeezing family incomes, and stalling the UK's economic potential.

Davey will say he is fighting for a “liberal country. A caring country.” and that “this is the fight of our lives”. Taking aim at Reform UK’s plans on income tax, he will slam their approach to deliver tax cuts by cutting disability benefits by £22 billion. He will say, “Reform says you can have a tax cut, but only if they get to punish disabled people at the same time. We say no. We can cut taxes and support the most vulnerable people in our country.”

Ed Davey will argue that the best way to put power back into the hands of people is to put more money into their pockets and more growth into the economy - “a liberal vision where everyone feels the benefits.”

Ed will close his speech by saying: “This is a fight for the future of our country. A fight for liberty, equality and community. A fight for the values we hold dear. This is the fight for our lives, and we’re going to win it.” 

ENDS

Notes to Editors:

• The Liberal Democrat plan would cut taxes for most people and take 2.5 million people out of paying income tax altogether by raising the tax-free personal allowance and employee NICs threshold to £15,000 within five years – well above inflation.
• It would also raise the higher rate threshold from £50,270 to £56,000 – taking 760,000 people out of paying the 40p tax rate.
• The additional rate threshold is currently set at the point that the personal allowance is fully withdrawn (£125,140). We would keep that link, raising the additional rate threshold to £130,000.
• The House of Commons Library estimates that this plan would cost £17 billion in year five. 
• This would be paid for through the dividends of the party’s plan for a new Growth and Defence Partnership with Europe, which the party estimates will boost government tax revenue by £27 billion a year by the end of the next parliament.
• When in Government, the Liberal Democrats delivered an increase to the personal allowance from £6,475 to £10,600.

Full text:

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Good afternoon, Conference.

Something big and dangerous is happening in our country.

Hundreds of thugs, in black shirts and balaclavas, are marching on our streets.

First Dover. Then Portsmouth.

Their aim? To intimidate. To spread fear. To stoke racism.

They may call themselves patriots, but they would tear our country apart.

We must not let them.

Conference, we have seen this before.

Racism on Britain’s streets is sadly nothing new.

Even though the vast majority of our fellow citizens share our values of decency, tolerance and respect – the values that make our country great –

There has always been a small minority hellbent on destroying them.

Mosley’s fascists in the thirties. The National Front in the seventies. Nick Griffin and the BNP just two decades ago.

Each time, they tried to turn neighbour against neighbour, tried to pit community against community, tried to turn our streets into battlegrounds.

But we didn’t let them. The British people said no.

The East End stood firm on Cable Street. Lewisham and Wood Green turned them back. Voters shut the BNP out.

Every generation, we have these men, who pretend to be patriots. Who claim to speak for “real Britain”.

And every generation, the real Britain refuses to accept it.

But something feels different this time, doesn’t it Conference?

Because the blackshirts marching today aren’t doing it in isolation.

They are just the most visible part of a far-right threat that is extremely well-funded.

That extends well beyond the shores of our United Kingdom.

That is promoted by the world’s richest man – Elon Musk – with all the might of his social media platform.

And yes Conference, we have to say it.

This is a far-right movement that is given oxygen, and heat, and fuel by politicians and parties who claim to be serious contenders to lead our country.

Cynical politicians like Nigel Farage.

Not just willing, but eager to fan the flames of hatred and intolerance to make himself richer. To get himself into power.

Trying to create a nation of division and fear – because that’s what keeps him going.

Well Conference, that is not our country. That is not who we are.

It is the worst of Trump’s America.

We must not let it become Farage’s Britain.

And that rhetoric – it goes beyond words. It has real consequences, on our streets and in our communities.

From the shameful attacks on volunteers of the Royal National Lifeboat Institution –

To the friend of mine – a young British woman of Indian descent –

Who was told by Reform activists that, if they got into power, she and her family would have their passports taken away.

And now, those same activists are backed by £72 million from two crypto billionaires.

Conference, if there was any doubt before, there can’t be now.

We are in the fight of our lives. And it is a fight we must win.

No pressure, friends!

But the good news is this: we’re already winning.

I look around this hall and I see so many councillors, so many council leaders, so many Members of Parliament – in Westminster, Holyrood and Cardiff Bay.

And all of you who’ve helped get them elected.

We’re even winning in Devon – whatever you might have heard!

More and more of you every year.

All of us, dedicated to building a United Kingdom of fairness, decency, and community.

We are utterly united in condemning racism in all its forms.

But condemnation alone is not enough. We have to understand why it's happening – so we can defeat it.

People are fed up.

They see a politics that promises change and fails to deliver.

Their bills keep rising. Their kids still can’t afford a home of their own. Their loved ones still wait too long for a GP appointment.

When people stop believing politics can change their lives, they get cynical. Angry. And they're not wrong.

When our young people can’t see a future for themselves in our communities, they stop looking. And they turn to their screens instead.

Screens that offer the illusion of excitement. The illusion of connection. The illusion of belonging.

But screens that only deepen the sense of emptiness and loneliness that no amount of scrolling can ever fill.

Is it any wonder the populists have found something to exploit?

Their whole agenda is to tear everything down. And when people are desperate for change, “tear it all down” starts to sound like the only honest thing left.

People feel powerless, and they're looking for anyone who seems willing to tell the truth about how broken things feel.

We have to understand that, Conference.

Because the fight against those forces really is the fight of our lives.

It will take more than a manifesto. It will take a movement, rooted in decency, fairness and community. British values. Liberal values.

And that movement can't just talk to itself.

We won't win the fight of our lives by retreating into our own bubble, talking only to people who already agree with us.

Just look at today's Conservative Party.

Kemi Badenoch is now blocking anyone from standing for the Conservatives who cares about human rights or climate action.

Millions of decent, moderate Conservative voters are getting her message, and they're turning away – increasingly, to us.

That’s what happens when you talk only to yourselves. You don’t just keep people out. You drive your own people away.

Real Liberalism is rooted in seeing the value of every human being – not just the ones who share our appearance or our beliefs.

A free society is messy. It’s full of disagreement.

And as Liberals, we don't erase our differences. We confront them.

The way people across our country overcome their differences every day.

Not by shouting past each other, but by building real human connections.

Person to person. Neighbour to neighbour. Street by street.

Because when that person you disagree with stops being just another little box on your social media feed, and becomes a human being with a face, a home and a life –

That's when we make progress.

And Conference, if this all sounds eerily familiar – it should!

Because this is exactly what our party has always been about.

The community politics we practise day-in, day-out. Real community politics. That’s the answer.

Because community politics is not some cunning tactic to win a few more votes at election time.

It’s a year-round commitment to form those human connections. To be truly a part of the communities we serve.

Going from doorstep to doorstep. High street to village hall. Train station to school gate.

Showing people that democracy can actually work for them. That it can change their lives and their communities for the better.

Not doing things to people. Not even doing things for people.

But doing things with them. And giving them the power to do more for themselves.

Friends, I’ve seen the life-changing power of community politics very close to home.

We have a lot of brilliant Liberal Democrat councillors in Kingston.

But there’s one who I think is especially brilliant. Some of you might know her…

My wonderful wife Emily.

Emily is leading Kingston’s biggest council house building programme in half a century.

But what makes her a brilliant Liberal isn’t just the number of homes she’s building. It’s how she’s doing it.

When Emily took over, there was already a plan to regenerate the borough’s biggest council estate.

But it was a plan drawn up by the old Conservative council – who’d given no say at all to the people who actually live there.

It was something being done to them, not with them.

So Emily said no. It’s their home. They should have a say.

And she insisted on an estate-wide ballot.

That decision was transformative.

It forced council officers and the developer to visit the estate. It forced them to actually talk to the tenants – and listen to them.

And guess what? It resulted in better homes, better designed.

And the residents voted for them in big numbers. But just as important – they felt good about it.

They could hardly believe someone had asked their opinion. Gave them a say. Took power and put it in their hands.

Families have started moving into the first new homes, and Emily’s been to see some of them.

One told her something that still chokes both of us up.

They said about their new flat, “We don’t deserve this.”

“We don’t deserve this.”

That’s how hopeless the old system had made them feel.

But now they’re hopeful again.

That, my friends, is real community politics. Real Liberalism.

And I am so proud to be married to someone who puts Liberalism into practice – for some of the most vulnerable and deprived people in my constituency.

Emily, I’m so proud of you.

I think about this every time I hear people say that politics can’t change anything.

It can. It does.

Every single day, in council chambers and surgeries and parliaments up and down this country, Liberal Democrats are proving that votes can make a difference.

That your voice can change things.

That with liberal community politics, we can answer people’s hopelessness and powerlessness.

Not with a slogan, not with a scapegoat, but with hard work.

With the fight of our lives.

As I’ve said to you Conference before, if you want one sentence that sums up what Liberalism means to me, it’s this:

Being a Liberal is about empowering the powerless, and holding the already powerful to account.

And it’s not just councils or developers we need to hold to account, is it Conference?

It’s the water companies – polluting our rivers while paying vast sums in dividends and bonuses.

The social media barons – poisoning the minds of our children while stirring up division and hatred.

The corrupt politicians – enriching themselves while taking everyone else for granted.

And there’s a new power we can’t afford to ignore. That needs to be held to account now. Urgently.

Artificial intelligence is already changing our lives – in ways we notice, and ways we don’t.

Handled well, it could cure diseases, make work easier, unlock discoveries we can barely imagine.

But handled badly, it concentrates more power in fewer hands than at any point in human history.

And that is a threat not only to our country and our communities, but to the future of our whole species.

Some of the very scientists and engineers building this technology are warning that super-intelligent AI could – and this is a direct quote – “kill us all”.

That is not science fiction. That is a live warning, from the people who know.

Not just the fight of our lives. The fight for life itself.

And yet right now, the future of this technology is being decided by a tiny number of the richest and most powerful men in California and in Beijing.

Racing each other with no guard rails and no one to slow them down.

Conference, we would never accept that with any other existential threat. And we must not accept it when it comes to AI.

Take nuclear weapons.

We didn’t leave the atom bomb to a few billionaires to police themselves.

We built the International Atomic Energy Agency. Nations working together to control a technology that could destroy us all.

And on climate change, our party has always been at the forefront of pushing for international action. Global action.

We led the work in Europe, forging a historic deal that laid the ground for the Paris Agreement.

We did those things because – as Liberals – we know that something as existential as nuclear weapons or climate change cannot be left in the hands of a powerful few.

And so it must be with AI.

Now, I’m not the only person to compare AI to climate change. Donald Trump has done it too. He says they’re both “hoaxes”.

But Trump also says the only thing we need to protect us against AI is a “smart President”.

I don’t know about you Conference, but I feel safer already!

Can we leave it to Trump to save us all? No!

Can we leave it to Mark Zuckerberg? To Sam Altman? To Elon Musk? No!

But I’m afraid the plan Andy Burnham has set out – a partnership with Trump’s Department of War – doesn’t come close to meeting the scale of this threat.

It only risks making us more dependent on a Trump administration in the pocket of the tech bros.

So it’s up to us to rise to this challenge, friends.

We need a global treaty to press pause on super-intelligent AI now, before it’s too late.

We need a new International AI Safety Agency – like we have for nuclear – to stop anyone from developing this technology recklessly.

A liberal solution – because the problem is fundamentally one about power. It’s too concentrated, and we must break it up.

But we must also pay attention to the other half of our liberal equation.

Giving people more power.

Not just doing things for them, because “the state knows best”, as I fear Andy Burnham may be inclined to do.

Or leaving them to sink or swim – as Kemi Badenoch and Nigel Farage are already promising to do.

But empowering people by helping everyone to be the best they can be – for themselves.

That is the liberal mission.

Again, it doesn’t start with policies. It starts with a mindset.

And I think about it most when I think about our son, John.

Emily and I were told, when John was small, that he would spend his life in a wheelchair, permanently.

We were told we needed to accept it. But we didn’t.

We sought out therapy that helps his muscles. We learnt exercises to help him control his own body.

Emily spent two years painstakingly teaching him to crawl.

I’ve just talked about the lengths Emily goes to for her housing tenants, so you can imagine the lengths she’ll go to for our son.

Slowly but surely – and with a lot of help – we’ve empowered John to hold his own weight, and to walk if aided.

When we go on family walks, he rides a tricycle – and he loves it.

Let me tell you this, Conference. Too many of our social service systems don’t empower people like John. They don’t have that culture.

They think care is something you do to people.

But Emily and I have been incredibly fortunate.

We were lucky to find therapists for John who did believe in empowering him.

I’m an MP. Emily is a councillor and a lawyer. We’ve had a lot of support from family and friends.

But even so, we have had to fight for John, every step of the way.

And I know that, for most people who aren’t so lucky, the fight is much harder.

I see them every week in my constituency surgery. Like the parents fighting for their kids with special educational needs.

Battling a system that’s supposed to be there for them and their child. But instead it beats them down and makes them feel hopeless. Trapped. Powerless.

Ask any parent in that position – and I know there are lots of you here in this hall – and they’ll tell you.

We don’t want charity. We don’t want a system that does everything for us.

We know our children best, and we love them like no one else can ever love them.

What we want is a system that empowers us and our children, so we can help them thrive.

That’s what real care is all about. It doesn’t just manage people – it unlocks their potential.

That’s what I’m fighting for. A liberal country. A caring country.

That is the fight of our lives.

And it all starts right at the very beginning.

At birth.

That precious, miraculous moment when everything changes.

It should be a time of unblemished joy.

But right now, here in one of the richest countries on Earth, giving birth is not always safe.

Inquiry after inquiry has found the same horrifying pattern.

Mothers and babies left with life-changing injuries – or worse – because of a maternity system stretched far beyond its limits.

Midwives doing their best, but exhausted, and in buildings that aren’t fit for purpose.

That shames our country. And we won’t accept it.

We will give mothers the one-to-one care they need, make every maternity unit safe, and end this scandal once and for all.

Conference, I believe Britain should be the safest place in the world to give birth.

And it should be the best country in the world to raise a family too.

But that promise cannot be realised while families are being crushed by rising bills and an economy that feels rigged against them.

They cannot be powerful or free while a cost-of-living crisis grinds them down every day.

The young couple who did everything they were told to do – worked hard, saved what they could – and still can’t get near a mortgage.

Still renting a flat that eats up their income. Watching the dream of owning a home drift further out of reach.

The pensioner who was scared to turn on a fan this summer, now scared to turn on the heating this winter.

The people who say “I’m working harder than ever. I managed to get a promotion and a pay rise. But somehow I’m struggling more than I was before.”

And we know what has brought us to this point, don’t we Conference?

The terrible economic damage of the Conservatives’ Brexit deal – backed, let’s never forget, by Nigel Farage.

A deal that put up barriers to trade, that tied up British businesses in costs and red tape, that pushed up prices on our supermarket shelves.

A deal that took opportunities away from our young people.

The botched Brexit deal. All the Conservative chaos that followed.

And then Labour – instead of fixing it – have only added to the pain with damaging tax hikes and their own chaos and their own infighting.

And even now, Andy Burnham refuses to open the door to the European single market.

We are the only ones with the courage to say it, aren’t we Conference?

Fixing our relationship with Europe is the only way to get our economy back on track.

And we are fighting to do just that.

To put Britain back where it belongs. Back at the heart of Europe.

This, too, is the fight of our lives.

Last year, I set out our plan for a new customs union, to slash the Brexit red tape.

Now I’m going further, because this moment demands it.

Not just a customs union, but joining the single market too.

Bringing down those barriers to trade. Breathing new life into our economy. And bolstering our collective security too.

Not just a growth plan. A defence plan.

To defeat Putin. To protect our continent and our country.

Truly the fight of our lives.

And growing our economy like this will mean we can tackle the cost of living too.

That starts with income tax.

Look what’s happened over the last few years – because of the lack of growth.

Desperate for another source of money, governments – both Conservative and Labour – have taken it out of people’s pockets.

How? By freezing the tax-free personal allowance.

Raising income tax by stealth.

Taking hundreds of pounds more out of the payslips of ordinary people, every year.

A stealth tax to pay the cost of the economic vandalism of Johnson and Farage.

When we were in government, our party did the opposite.

We raised the personal allowance by £4,000.

Taking more than 3 million people out of paying income tax altogether.

It was a profoundly liberal thing to do.

Rewarding hard work and aspiration. Helping the lowest paid the most.

Trusting people to spend their own money, not telling them the state knows best.

And our liberal approach is what is needed again today.

So I’m announcing our plan to raise the tax-free personal allowance to £15,000.

Taking 2 million more people out of paying tax altogether, and giving most taxpayers a £680 tax cut.

Real money, back in people’s pockets.

Now – you might have heard Robert Jenrick say something similar at Reform’s conference. In between trying to defend Farage’s latest funding scandal.

But here’s the big difference.

Jenrick didn’t say this, but Reform’s figures show they’d pay for it by ripping £22 billion of crucial support away from disabled people.

Think about that. Reform say you can have a tax cut, but only if they get to punish disabled people at the same time.

We say no. We can cut taxes and support the most vulnerable people in our country.

Because we will pay for our tax cut fairly and honestly.

Not with more borrowing. Not with fantasy spending cuts that never materialise. Not by hiking your taxes by stealth elsewhere.

We will pay for it from the dividends of growth. The growth that comes from our bold new partnership with Europe.

Closer trade brings growth. Growth brings tax revenue.

And we will give that revenue back to the people who created it in the first place – the British people, through their work, every single day.

That is the difference between us and Reform.

Their tax cut is paid for through cruelty.

Ours is paid for by the growth of a stronger economy.

We did it before. We can do it again.

And we can go further, to tackle a second unfairness – one we didn’t deal with when we were in government.

Back then, we rightly focused on raising the personal allowance – but let more people fall into the 40p income tax band.

And the post-Brexit stealth taxes have pulled more and more people into paying that higher rate tax.

Thirty years ago, just 2 million people paid it. Now it’s 9 million.

A tax band designed for stockbrokers is now holding back teachers and nurses.

That’s not fair. It’s not right.

And tellingly, Reform have said they will do nothing about it.

But we will. Because our growth plan will mean we can raise the 40p threshold to £56,000.

Taking hundreds of thousands of ordinary people out of paying higher rate tax.

Growing our economy with Europe. Backing our great British businesses. Putting money back into people’s pockets.

That is our vision for a better economy. A liberal vision where everyone feels the benefits.

But Conference, there is a bigger, more fundamental change we need to talk about.

A change to the nature of politics itself.

Because the things that have gone wrong in our country, the crises we face – the maternity crisis, the housing shortage, the sewage scandal, the cost of living, the sense that nothing quite works the way it should –

These are not the failings of the British people. Not for one second.

These are the failings of governments. Labour governments. Conservative governments. SNP governments in Holyrood.

They are the failings of governments that don’t listen, that take people for granted, and let them down.

But here’s the good news. There is no failing of British governments that cannot be put right by the talents of the British people. Not one.

We have the engineers and entrepreneurs, the teachers and carers, the scientists, the small business owners who open up at six in the morning and lock up at ten at night.

It isn’t hard work our country’s short of. It isn’t talent we’re lacking.

What we are lacking is a system that empowers people to make the most of their talents.

Our United Kingdom is a great country. A truly great country.

But it’s a country being held back.

Held back by governments that failed it, and by a system that is broken.

And it is us who will give the British people the power and the freedom to take our country forward.

Not Reform with their politics of grievance and blame.

Not a tired Conservative Party that has learnt nothing from its failure.

Not a Labour Party that just doesn’t understand so many parts of the country.

But us. Liberals. That is our task.

To change our broken politics so we can fix our country.

To win the fight of our lives.

I won't pretend to you that it will be easy.

This is a fight against hopelessness and cynicism

Against populists who profit from division.

Against the forces that would tear our country apart.

And those forces have now got £72 million behind them.

They are going to throw everything they’ve got at us – and at the values that we hold dear.

But Conference, we will not back down.

We will stand and fight for the country we love.

Because this fight isn’t just about the next election.

It’s about the future of our country. What kind of Britain our children grow up in – and whether they can be proud of it.

It’s not just a choice between policy platforms. It’s a choice between tearing our great country down and looking for someone to blame, or lifting it up by trusting the British people.

Between a politics of grievance and a politics of empowerment.

That is the choice. And it is ours to win.

So when we leave this hall, let’s remember why.

For the family doing the sums at the kitchen table, who need it to be just a little bit easier.

For the mother holding her newborn baby, who should be able to look forward with hope.

For John, and everyone like him, who deserve care that empowers them to thrive.

For that young woman on her doorstep, whose Britishness should not be up for debate.

Let’s build a country that works for them.

Let’s put more money in people’s pockets and more power in people’s hands.

Let’s change our politics so we can build a country that is richer. Safer. More liberal in the truest sense of that word – not a label, but a promise:

That who you are, where you’re from, and what you look like will never determine whether you belong here or how far you can go.

Friends, this is a fight for the future of our country.

A fight for liberty, equality and community.

A fight for the values we hold dear.

This is the fight of our lives.

And we are going to win it.

Thank you.