Liberal Democrats claim to be UK’s ‘party of business’

Ed Davey pledges to replace business rates and £100bn to tackle climate change

The Liberal Democrats claimed to be the UK’s “party of business” and “fiscal responsibility” on Friday, in a broadside lambasting the election spending plans set out by its two main political rivals.

Ed Davey, the Lib Dem Treasury spokesman, pledged to replace the UK’s £30bn business rates system with a land value tax as well as spend £100bn tackling the effects of climate change.

“So far, the economy debate in this election has been a debate between fantasies. Fantasies born of nostalgia for a British imperial past, competing with fantasies from a failed 1970s ideology”, he said in a speech in Leeds. “Both the old parties are now fiscally incontinent.”

Labour has pledged to more than double the amount it would borrow for capital spending, setting it up for a battle with the Conservatives, who have outlined new fiscal rules to allow a wave of infrastructure investment. 

Sir Ed said the Lib Dems supported proposals set out by the Resolution Foundation, a think-tank, for governments to target a structural surplus in current spending equal to 1 per cent of national income over the length of a five-year parliament.

“Liberal Democrats accept that rule — and our spending plans meet it, with current account surpluses in every year of our five-year costings. In other words, fiscal responsibility. Unlike the others, with their fiscal incontinence,” Mr Davey said.

“The Conservatives are targeting only to balance the current account — and then in three years. Plus, their target has no flexibility at all. Given Brexit will blow this new Tory fiscal rule away in months, that’s even more reckless. If Boris Johnson so much as promises a tax cut, treat it with the contempt it deserves.

“And Labour? Well, they are promising to get to current account balance in five years’ time. Or, in plain language, Labour’s on the never-never.”

Recommended Brexit Briefing The challenge for Jo Swinson The Lib Dem manifesto will also include proposals for a new “commercial landowner levy” that would remove buildings and utilities from calculations, and only tax the land value of a commercial site. 

The current business rates system is based on “ratable values”, which are calculated every five years according to shop rental values, and a multiplier that rises annually with consumer price index inflation. The levy is paid by tenants, rather than landlords. 

“Our country is blessed by tens of thousands of brilliant businesses. And my message to British business today is: Liberal Democrats are now the party of business,” Sir Ed said.

“And in our economic plan, we want to back you, with tax reform, with digital networks [and] with strong competition policy. “So we will replace the analogue tax of business rates that is hitting our high streets, with a commercial landowner’s levy that will revitalise communities and spur on development.”

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