The Lib Dems are ready to take up the progressive mantle - and offer robust opposition to Labour | Max von Thun
With the Conservatives in self-destruct mode, Labour is expected to win a sweeping majority in the upcoming general election. Yet, despite the Tories’ implosion, Labour has insisted on sticking to an increasingly conservative economic script, notwithstanding the huge challenges facing the country – from rising inequality and crumbling public services to low investment and stagnating productivity. This raises the worrying prospect that, once in government, the party will fail to seize a rare opportunity to steer the UK’s economy towards a more prosperous and equitable future.
Robust opposition in parliament will be key to ensuring that Labour does not end up stuck in a bland centrism that is unable or unwilling to grapple with the root causes of the UK’s malaise. The Tories, consumed by infighting and the prospect of a takeover by the far right, will certainly not provide this. But the Liberal Democrats, who according to recent polls may win more than 60 seats, could.
The party’s manifesto, published earlier today, brings to the fore several areas where it is moving to seize the progressive mantle from Labour. Arguably the most important of these is taxation, where the Lib Dems are proposing a set of targeted tax increases on the wealthy and big business to fund the UK’s starved public services. These include taxing capital gains at rates much closer to those applied to income, increasing the existing levy paid by large banks, tripling the existing digital services tax on big tech firms, taxing unproductive share buybacks by publicly listed companies, and imposing a windfall tax on the super-profits made by oil and gas companies during a cost of living crisis.
According to the party’s own costings, these measures will raise £15bn annually by the end of the next parliament, out of a total of £27bn the Lib Dems expect their plans to raise. These fair and reasonable tax increases would be used to give a much needed funding boost to underfunded public services, especially the care system, schools and the NHS. But given the Lib Dems are unlikely to be in government, the real relevance of the plans is what they say about the party’s willingness – in contrast to Labour – to confront the concentrated wealth and corporate power that drain the UK’s potential.
Naturally, it’s easier to be bold when you aren’t on the verge of power – although it should be noted that the Lib Dems are largely contesting prosperous Conservative-held seats not known for their radical instincts. Nevertheless, the party’s manifesto draws attention to several areas where Labour is lacking in ambition, even in comparison with its own plans just a year or two ago.
Unlike the Lib Dems, Labour has insisted on tying its own hands when it comes to raising taxes. This applies not just to income tax, national insurance and VAT – which working people bear the brunt of – but also, inexplicably, to taxes paid by large corporations and the wealthy. Labour has also dropped its own plans to tax big tech after being courted aggressively by the tech giants. Even worse, the shadow chancellor, Rachel Reeves, recently argued that Labour sees no “route towards having more money for public services that is through taxing”, despite taxes being the main way such services are funded. Labour’s reluctance to adequately fund public services even extends to the most punitive aspects of the welfare system, such as the cruel two child benefits cap which Labour – unlike the Lib Dems – has said it will maintain.
The Lib Dems are taking bolder and more progressive positions than Labour on other critical issues too. Most importantly, that includes easing the single biggest strain on the UK economy – Brexit – by setting out a long-term path towards rejoining the EU’s single market, which a majority of the British population now supports. It also includes challenging the increasingly negative debate on immigration by promising to cancel the Rwanda scheme, expanding legal routes for refugees to come to the UK and clipping the wings of the notoriously draconian Home Office.
That isn’t to say the Lib Dems are right on everything. Like Labour, the party has locked itself into a straitjacket by committing to decreasing government debt by the end of the parliament, despite the repeated failures of such fiscal rules to achieve their objectives in the past, and the artificial constraints they impose on public spending. And, like Labour, the Lib Dems have promised to maintain the unfair and unsustainable pensions triple lock, despite the UK’s ageing population and extreme intergenerational inequality. One area where Labour is clearly ahead of the Lib Dems is in developing the comprehensive industrial strategy the UK needs to green its economy, spread economic opportunity across the country and bolster the country’s security in an increasingly unstable world.
Labour is likely to win the outright majority it needs to govern alone. But a sizeable and progressive Lib-Dem opposition will help prevent a future Labour government from drifting too far to the right, and – hopefully – push it to be a little bolder as well.
Max von Thun was a political adviser to the Liberal Democrats from 2017 to 2019. He is Europe director at the Open Markets Institute, an anti-monopoly thinktank