Liberal Democrat leader Sir Ed Davey has pledged tax cuts that the party plans to pay for with the economic growth they expect to see from rejoining the EU single market and customs union.
He said his party is in the “fight of our lives” amid the threat from Nigel Farage’s Reform UK as he delivered his leader’s speech to close the party’s annual conference in Brighton.
Sir Ed entered the stage to David Bowie’s 1974 song Rebel Rebel before he began speaking in front of the party’s 71 MPs and left to Golden by KPop Demon Hunters.
The Lib Dems would raise the raise the threshold for income tax at the higher rate of 40p to £56,000 and the tax-free personal income allowance to £15,000, he said.
The latter proposal is different from Reform UK’s plan to do the same thing, he said, as theirs would be paid for through “cruelty”.
The Lib Dem pledge, meanwhile, would be funded by “the dividends of growth” from a deal the party would seek to make if they were voted into power to join the EU’s single market and a customs union.
If they won a general election, the party would start by raising the tax-free allowance in line with inflation and plan to bring it up to £15,000 by year five – which if the next election is in 2029 as expected would not be until 2034.
The threshold has been set at £12,570 since 2021 and is due to remain there until 2031.
The moves would reduce the amount of tax paid by those who remain in lower bands due to the changes.
They would need to secure a deal with the EU first, which they have said they expect could be done within a year.
Sir Ed said: “I’m announcing our plan to raise the tax-free personal allowance to £15,000.
“Taking two million more people out of paying tax altogether and giving most taxpayers a £680 tax cut.”
He went on: “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.”
Sir Ed said the Lib Dems would pay for the tax cut “fairly and honestly”, and not with borrowing, hiking taxes or “fantasy spending cuts that never materialise”.
“We will pay for it from the dividends of growth. The growth that comes from our bold new partnership with Europe.”
Elsewhere in his speech, he took aim at Nigel Farage, who he said was giving oxygen to anti-migrant protesters in Portsmouth and Devon.
He said the Reform UK leader was “eager to fan the flames of hatred and intolerance to make himself richer. To get himself into power”.
He claimed millions of moderate Conservatives are “turning away” from the Tories under Kemi Badenoch’s leadership and “increasingly to us”.
In a call to widen the Lib Dem’s appeal, he said the party was in the “fight of our lives” and that they would not win by “retreating into our own bubble, talking only to people who already agree with us”.
It comes on the final day of a Lib Dem conference in which Sir Ed, who has led the party since 2020, has faced questions over its failure to cut through to the public amid a crowded field of parties.
Several polls have shown a significant chunk of the public are not seeing and hearing about the party, and are unclear about what they stand for.
Sir Ed has dismissed concerns from an MP and councillor that the party is struggling to stay relevant, putting it down to a side effect of the party’s growth after it won a record number of MPs in 2024.
The Conservatives accused them of being “Labour enablers”, saying the party has “no clear economic policy of their own”.
Reform UK’s economic spokesman Robert Jenrick said: “Sir Ed is welcome to steal our policies, but his plan to pay for it is almost as silly as his photo stunts. At this rate, the Lib Dems’ fantasy economics would make Liz Truss blush.”
