Tories have lost the plot with unfair taxes, Lib Dem leader claims

Sir Ed Davey has accused Boris Johnson’s Conservatives of having “lost the plot on tax” as he vowed the Liberal Democrats will fight for a fairer deal at the local elections.

The Lib Dem leader kicked off his party’s campaigning for the May polls in south-west London on Wednesday, and used his speech to claim the Tory Government “either doesn’t care or doesn’t get it” when it comes to the cost-of-living crisis.

After his speech in Wimbledon, he told the PA news agency that the triple whammy of increased national insurance contributions (NICs), rising VAT bills and the decision to freeze income tax thresholds demonstrates that ministers have a “tin ear” to the plight of struggling families.

Wednesday saw the rise in national insurance come into force, with millions of workers and employers hit with a 1.25 percentage point increase.

The manifesto-busting move by the Government is designed to fund clearing the NHS backlog caused by the coronavirus pandemic and reforming adult social care in the long term.

Sir Ed, however, said the move is unfair and being implemented at the wrong time.

He also said freezing income tax thresholds, a move announced last year, will “clobber” the lowest paid by effectively reducing how much they can earn tax-free over the next four years.

The former cabinet minister argued that cutting waste in the health sector – with billions spent during the pandemic on personal protective equipment that was not suitable for use in the NHS – and implementing a fairer tax system could have protected households from higher bills.

“What I would particularly say about the NICs tax rise is that, not only is it unfair because it doesn’t tax landlords, it doesn’t tax wealthy people – some of whom get their money from investment income – it only taxes working people, which is clearly the wrong way and unfair way of doing it,” he told PA.

“But to raise it now shows a tin ear and like they are taking people for granted.

“It was planned before the cost-of-living crisis became so severe and, like some other people cross-party, the Liberal Democrats are saying now is absolutely the wrong time.”

The Lib Dems are arguing for VAT to be cut from 20% to 17.5% for one year to help save families money, a move they predict could claw back an average of £600 for typical households.

Sir Ed said his party also supports a windfall tax on the “super-profits” of oil and gas companies, stating that a “relatively modest windfall tax could bring in £10 billion or more” given the spiralling of energy prices.

The former energy secretary said: “There is money there if you have a fairer tax system.

“It is just wrong, when people are really struggling, to pile on these unfair taxes, which, let’s be clear, are hitting the lowest paid.

“They are clobbering the lower paid with that freeze in tax allowance – that keeps getting missed out in all that discussion. It shouldn’t be.

“I think the Conservatives have lost the plot on tax.”

The Kingston and Surbiton MP said the local elections could be “tough” for his party following victories four years ago at council level.

He told reporters the Lib Dems are “fighting from a high base” but that there is a chance to take Hull City Council off Labour and progress could be made in Harrogate.

The party said some target authorities in so-called “blue wall” Tory-held areas are not holding elections this year, making the national picture more “tricky”.