Budget days are usually all about the Chancellor’s red box and the Treasury’s red book, but last week’s Budget was more defined by Labour’s red lines and the Brexit red tape.
Because at the root of so much of what’s gone wrong in our country – the cost-of-living crisis, broken public services, higher taxes, empty high streets, the lack of jobs and opportunity for young people – is the lack of economic growth.
Until a government has the courage to properly repair our broken relationship with Europe, it will not deliver the growth our country so desperately needs. And until then, any Budget will only amount to tinkering around the edges.
The UK economy is being held back by the terrible damage of the Conservatives’ Brexit deal – cheered on by Nigel Farage and voted for by Labour. Something we should never let any of them forget.
Only our party has consistently stood against it. Because that botched Brexit deal put up pointless new barriers to trade. It tied up British businesses in extra costs and red tape, and pushed up prices on our supermarket shelves.
That’s why we are leading the fight to fix Britain’s trading relationship with Europe – by taking us back into the single market, and a customs union too. It’s the biggest single thing the government could do to fix our economy.
And it’s the biggest single thing to tackle the cost-of-living crisis too, because the growth from trade with Europe will generate the revenue we need to give people a tax cut. Raising the income tax thresholds that have been frozen since 2021.
That stealth tax – started by Rishi Sunak, continued by Jeremy Hunt, Rachel Reeves and now John Healey – has dragged millions of the lowest-paid into paying income tax, and millions of ordinary people – nurses, teachers, police officers – into the higher 40p tax band.
Our economic plan would begin to reverse that, putting hundreds of pounds a year back in people’s pockets – like we did when we were last in government.
It would let people keep more of what they earn, reward hard work, and give individuals more power in our economy. It is a profoundly liberal thing to do. And if we grow the economy by trading more with Europe, we can afford to do it.
That’s what a real plan would look like – to turn the economy around and cut taxes fairly. But, despite Andy Burnham’s warm words on Europe, he is still refusing to ditch Keir Starmer’s old red lines that rule out membership of the single market or a customs union. And we are already seeing the Brexiteer forces in the Conservative Party, Reform and – yes – some in Labour doing everything they can to block any progress with Europe.
So it’s up to us – the most pro-growth, pro-business and pro-European party in British politics – to make the case for a real growth plan with Europe at its heart.
Getting devolution right
One area the Chancellor is looking to for growth is fiscal devolution. Taking money and power out of a few hands in Whitehall and giving it to communities to make their own decisions is something we as Liberals have always championed.
But there is a right way to do devolution, and a wrong way.
So in responding to the Budget, I set out our three key tests for the government’s plans. First, does it give councils enough money to actually fulfil the responsibilities they are being given? Second, does it reach beyond mayors to councils and communities everywhere? And third, is it fair – so that those areas that are already struggling don’t find themselves with even less?
Done properly, real fiscal devolution could be the start of something big. Done badly, it is simply passing the buck. We will hold the government’s feet to the fire to make sure they do it right.