1. Responsible finances: balancing the budget in a fair way

Responsible finances underpin every good government. High debt and deficits are a risk to economic stability and it is simply not right to borrow too much money and expect our children to pay it back. Debt interest payments last year were £46 billion: more than we spent on schools.

A responsible approach to tackling the deficit and our country’s debts is essential because it underpins everything else we want to achieve. In the last five years, we have worked hard to bring balance back to Britain’s public finances. The deficit is now half what it was when we took office in 2010. Nevertheless, there is still work to be done. Only Liberal Democrats will complete the job on time in a way that is fair, enables sustainable growth and protects public services.

1.1 Balancing the budget

We will complete the job of balancing the budget – on time, in full, and fairly. The Liberal Democrat objective is to eradicate the structural current budget deficit by 2017/18 and have debt falling as a percentage of national income, so it is back to sustainable levels by the middle of the next decade.

In 2010, Liberal Democrats insisted the Coalition adopt a fairer approach to dealing with the deficit, using both spending cuts and tax rises, than the Conservatives had planned. This mixed approach was much more in line with proposals set out in the Liberal Democrat manifesto. The Conservatives now want to scrap this approach entirely and use only spending cuts to finish the job. We reject this proposal, which would do significant damage to Britain’s public services and require punitive cuts to benefits on which some of the most vulnerable people depend.

We are determined to stick with the approach we set out in 2010 – a fair way of restoring the nation’s finances. So as we finish the job of balancing the books, we will use taxes on the wealthiest, on banks and big business and on polluters, and we will bear down on tax avoidance and evasion, to limit the impact of deficit reduction on public services. We do not think low and middle income earners should bear the burden of tax rises: our plans do not require any increase in the headline rates of Income Tax, National Insurance, VAT or Corporation Tax. In fact, our plans enable us to continue to cut taxes for people on low and middle incomes by raising the tax-free Personal Allowance.

Having a balanced approach on tax and spending enables us to:

* Protect the least well off in society and users of public services from the impact of measures taken to tackle the deficit.
* Invest, over the Parliament, the money NHS chiefs say is essential to protect our health service.
* Extend the protection of schools’ budgets to include early years and 16–19 education.
* Limit reductions in departmental spending to less than half the rate agreed for 2015/16.
* Limit welfare reductions so we do not destroy the essential safety net that protects us all in times of crisis.
* Continue to spend 0.7% of Gross National Income on international development aid, helping the poorest in the world.

We will carry out a full Spending Review after the General Election. Building on the successes of this Parliament, we will focus on delivering efficiency, funding proven spend-to-save initiatives, pursuing local and community integration to drive efficiency, and investing in technology to get public services and frontline staff online. The aim of everything that government does will be to help people improve their quality of life and wellbeing, especially the most vulnerable and least well off.

1.2 Looking to the future

Once we have balanced the books, we will ensure that overall public spending grows again in line with the economy. This will ensure we can improve key public services and enable public sector workers to receive fair and affordable increases in their pay. We understand that public services depend upon high-quality and dedicated staff.

We will follow two new fiscal rules.

Our first fiscal rule is that, from 2017/18, debt must fall as a proportion of our national income every year – except during a recession – so it reaches sustainable levels around the middle of the next decade.

Our second fiscal rule is that over the economic cycle we will balance the overall budget, no longer borrowing to pay for everyday expenditure. We will make one significant exception to enable us to invest in the things that will help our economy grow. Provided the debt rule is met, the government will be able to borrow for capital spending that enhances economic growth or financial stability, enabling us to increase this productive investment.

In our Spending Review we will set out long-term plans for capital expenditure, and ensure that investment in infrastructure, including in housing and energy efficiency, continues to rise both in absolute terms and as a share of the economy.

Our plan to finish the job and balance the books

* Aim to balance the structural current budget by 2017/18.
* Set a course to reduce debt as a share of national income.
* Make deficit reduction fair by ensuring the richest pay their fair share and corporations cannot avoid their tax responsibilities.
* Set new fiscal rules to balance the budget while allowing borrowing for productive investment.
* Increase public spending again in line with the economy once the budget is balanced.

2. Prosperity for all: building a sustainable economy

Britain needs a strong economy not just to help fund public services but because growth and enterprise create jobs and opportunities for all. Liberal Democrats want an economy that is strong, green, open and fair. As Britain recovers, we must make sure we don’t return to growth based on personal debt and speculation, but build prosperity and wellbeing that last, for everyone.

We will grow a high-skill, low-carbon economy by supporting education, training, infrastructure, innovation and technology. With a stable, competitive business environment and investment in green industries and infrastructure, we will ensure growth is embedded in every part of the UK.

We have made a big start in government: reforming the banking system; creating the world’s first Green Investment Bank; enabling unprecedented investment in low-carbon energy; introducing a Regional Growth Fund and a bold new Industrial Strategy to support growth and high-skilled jobs; delivering more than two million new apprenticeships; ensuring transparency of company ownership and promoting more diversity in business leadership.

Now is the time to push forward and reject any temptation to go back to the old economy. Whether it’s fighting for proper investment in renewable energy, or working to build a high-skill, flexible labour market: Liberal Democrats will ensure Britain doesn’t return to the mistakes of the past.

A Record of Delivery

Billions invested in growing modern British businesses with our Industrial Strategy, Business Bank and Regional Growth Fund
A Promise of More

Double innovation spend in our economy, making the UK a world leader in advanced manufacturing, clean technology and digital industries
Reformed the banking system to separate retail and investment banking and help rebuild our economy
Grow a competitive banking sector, support alternative finance providers and improve access to finance for business and consumers
The world’s first Green Investment Bank and low-carbon energy market, helping almost treble renewable electricity generation
Expand the Green Investment Bank and set a legally binding decarbonisation target to green our electricity
Biggest rail investment since Victorian times, driving record numbers of train journeys
Enable more people to travel with rail upgrades across the country and HS2

2.1 Economic and industrial growth

To deliver a balanced economy with strengths in every part of the UK, Britain needs a highly skilled workforce and flexible business support and finance. We must continue to invest to grow sectors like advanced manufacturing that can provide high-skilled, sustainable jobs, open up the supply chain to more small and medium-sized businesses and support firms bringing activity back to Britain.

We will:

* Continue to develop our Industrial Strategy, working with sectors which are critical to Britain’s ability to trade internationally – motor vehicles, aerospace, low-carbon energy, chemicals, creative industries, offshore and subsea technology and more.
* Develop the skilled workforce needed to support this growth with a major expansion of high-quality and advanced apprenticeships, offering vocational education on a par with academic qualifications, backed up with new sector-led National Colleges. We will develop a national skills strategy for key sectors, including low-carbon technologies, to help match skills and people.
* Aim to double innovation and research spending across the economy, supported by greater public funding on a longer timescale, more ‘Catapult’ innovation and technology centres and support for green innovation from the Green Investment Bank. We will continue to ringfence the science budget and ensure that, by 2020, both capital and revenue spending have increased at least in line with inflation.
* Build on the success of the Regional Growth Fund, which has already created more than 100,000 jobs and secured £1.8 billion of private investment. We will continue the Fund throughout the next Parliament.
* Devolve more economic decision-making to local areas, building on the success of City Deals and Growth Deals, prioritising the transfer of transport, housing and infrastructure funding, skills training and back-to-work support.
* Provide further support to medium-sized businesses through a one-stop-shop for accessing government support, a dedicated unit in HMRC and the development of management skills.
* Aim to stimulate local economies, working with Local Enterprise Partnerships to improve their effectiveness and coordination. We will:
* Use central government public procurement policy as a tool of local growth and community development, for example by purchasing from diverse sources and using local labour, goods and services, and encourage local government to do the same.
* Continue our work to open up public procurement to small and medium sized companies and to the voluntary sector.
* Develop platforms on which government can provide feedback on its suppliers to help quality providers to grow.

2.2 Banking and financial reform

The financial crisis of 2008 caused real damage to our economy including one of the largest budget deficits in the world and banks unable to support the real economy. Liberal Democrats have ensured radical reform of the banking industry to make banks safe and no longer requiring a taxpayer safety net.

Building on this progress, we will:

* Complete implementation of the new rules to separate retail banking from investment banking, working with the financial services industry to promote integrity, accountability and value across the sector.
* Expand the British Business Bank to perform a more central role in the economy, tackling the shortage of equity capital for growing firms and providing long-term capital for medium-sized businesses.
* Develop the UK banking sector to promote competition and innovation by:
o Facilitating new entrants, including through public procurement policy.
o Encouraging the growth of crowdfunding and alternative finance models, encouraging Local Authorities to use these platforms to improve credit access in their areas.
o Promoting a new community banking sector to support small and medium-sized Enterprises and social enterprises.
o Taking forward the recently commissioned study by the British Business Bank into the sustainability of Community Development Finance Institutions.
* Ensure access to finance for all, tackling discrimination in the provision of financial services and supporting products that increase financial inclusion.
* Continue the Banking Levy and introduce a time-limited supplementary Corporation Tax charge on the banking sector to ensure it continues to make a fair contribution to fiscal consolidation.

2.3 Creating a stable and competitive environment for growth

Britain needs a stable and competitive environment for growth; this is essential to attract and sustain new businesses and new jobs. Britain is not just a part of the European economy – we have to compete with the developing economies of Asia and Latin America, which are increasingly powering ahead.

We need to lock in macroeconomic stability, including low inflation, and reduce the risks of a return to the economics of boom and bust. And we need a tax system that is simple, fair and competitive – which attracts and retains jobs in our country, while ensuring business makes a fair contribution.

We will:

* Continue to support an independent Bank of England, with a mandate to keep inflation low and stable to support sustainable growth. We will protect the new regulatory framework, which ensures the Bank of England has the necessary tools to help avoid a return to boom and bust.
* Continue to reform business tax to ensure it stays competitive, making small and medium-sized enterprises the priority for any business tax cuts. We will work to adjust the tax system away from subsidy of high leverage debt and tackle the bias against equity investment.
* Reform and improve the Regulatory Policy Committee to reduce regulatory uncertainty and remove unnecessary business regulation. We understand that well-designed regulation, focused on outcomes rather than processes, has a vital role in creating markets and driving investment and will use it, in particular, to promote low-carbon and resource-efficient innovation.

In England we will complete the ongoing review of Business Rates, prioritising reforms that lessen the burden on smaller businesses, ensure high streets remain competitive and promote more efficient use of land. Liberal Democrats remain committed to introducing Land Value Tax (LVT), which would replace Business Rates in the longer term and could enable the reduction or abolition of other taxes. We will extend the Business Rates review to ensure it considers the implementation of LVT, as well as interim reforms like Site Value Rating that could be completed within five years. We will charge the Land Registry with completing registration of all substantial land and property holdings in England and Wales by 2020.

2.4 Green jobs and industry

New world markets are developing in low-carbon and resource-efficient technologies. Britain’s real strengths in sectors like offshore wind power and low-carbon vehicles, and in green finance, make us well placed to compete.

We must make sure green industries can reach their full potential and build on successes in increasing recycling to shift towards a so-called ‘circular economy’ in which we use natural resources efficiently and minimise waste. (See also Section 6.2)

We will:

* Pass a Zero Carbon Britain Act to set a new legally binding target to bring net greenhouse gas emissions to zero by 2050.
* Realise the full potential of the Green Investment Bank by increasing its capitalisation, expanding its remit, allowing it to raise funds independently and enabling it to issue green bonds.
* Place the Natural Capital Committee (NCC) on the same statutory footing as the Committee on Climate Change through our Nature Act. We will task the NCC with identifying the key natural resources being used unsustainably and recommending legally binding targets for reducing their net consumption; and introduce incentives for businesses to improve resource efficiency.
* Help incentivise sustainable behaviour by increasing the proportion of tax revenue accounted for by green taxes.
* Grow the market for green products and services with steadily higher green criteria in public procurement policy, extending procurement requirements more widely through the public sector including to the NHS and Academy schools. In particular we will deliver ambitious reductions in energy use.
* Increase research and development and commercialisation support in four key low-carbon technologies where Britain could lead the world: tidal power, carbon capture and storage, energy storage and ultra-low emission vehicles.
* Ensure UK Trade and Investment and UK Export Finance can prioritise support for key sectors identified in our Industrial Strategy, including exports of green products and technologies, and press for higher environmental standards for export credit agencies throughout the OECD.
* Encourage the creation of green financial products to bring consumer capital into green industries.

We will improve the way government handles the cross-cutting challenges of delivering green growth and fighting climate change, establishing a senior Cabinet Committee to coordinate action and bringing together officials in inter-departmental units on issues like air quality and resource management. We will replicate the success of the Office for Budget Responsibility with an Office for Environmental Responsibility scrutinising the government’s efforts to meets its environmental targets.

2.5 Making the connection: transport infrastructure

Liberal Democrats are leading the renewal of Britain's ageing infrastructure but we still have decades of under-investment to catch up on. We need better transport infrastructure, a modern railway system, and less congestion on our roads.

We have established our second fiscal rule precisely so we can invest in productive infrastructure to help the economy grow.

We will:

* Set out 10-year rolling capital investment plans.
* Develop a comprehensive plan to electrify the overwhelming majority of the UK rail network, reopen smaller stations, restore twin-track lines to major routes and proceed with HS2, as the first stage of a high-speed rail network to Scotland.
* Invest in major transport improvements and infrastructure. We will:
o Deliver the Transport for the North strategy to promote growth, innovation and prosperity across northern England.
o Develop more modern, resilient links to and within the South West peninsula to help develop and diversify the regional economy
o Complete East-West rail, connecting up Oxford and Cambridge and catalysing major new housing development.
o Ensure London’s transport infrastructure is improved to withstand the pressure of population and economic growth.
* Work to encourage further private sector investment in rail freight terminals and rail-connected distribution parks. We will set a clear objective to shift more freight from road to rail and change planning law to ensure new developments provide good freight access to retail, manufacturing and warehouse facilities.
* Ensure our airport infrastructure meets the needs of a modern and open economy, without allowing emissions from aviation to undermine our goal of a zero-carbon Britain by 2050. We will carefully consider the conclusions of the Davies Review into runway capacity and develop a strategic airports policy for the whole of the UK in the light of those recommendations and advice from the Committee on Climate Change. We remain opposed to any expansion of Heathrow, Stansted or Gatwick and any new airport in the Thames Estuary, because of local issues of air and noise pollution. We will ensure no net increase in runways across the UK.
* Ensure new rail franchises include a stronger focus on customers, including requirements to integrate more effectively with other modes of transport and a programme of investment in new stations, lines and station facilities. We will continue the Access for All programme, improving disabled access to public transport.

Modern light rail systems, like Croydon Tramlink and Manchester Metrolink, have brought significant benefits to passengers. We will encourage Local Authorities to consider trams alongside other options, and support a new generation of light rail and ultra-light rail schemes in towns and cities where local people want them.

2.6 Low-carbon energy

Our reforms of the electricity market have already created the world’s first low-carbon electricity market and will stimulate up to 250,000 green jobs across the UK by 2020. Since 2010, energy demand has fallen by 2.5% a year and renewable electricity generation has almost trebled.

But we need to go further and faster to meet our goal of reducing energy demand by 50% by 2030. If we do not speed up energy efficiency investment, our buildings will continue to leak energy and waste money and our businesses will fail to compete internationally. We will ensure we create a low-carbon economy at the lowest cost for consumers.

We will:

* Make saving energy a top infrastructure priority, stimulating private sector demand with our new Electricity Demand Reduction market, new market-shaping energy efficiency standards, support for industry, particularly SMEs, and a programme of tax incentives and public investment. Our plans for insulating homes are set out in more detail in Section 7.5, below.
* Stimulate a minimum of £100 billion more private investment in low-carbon energy infrastructure by 2020.
* Set a legally binding decarbonisation target range for 2030 for the power sector of 50– 100g of CO2 per kWh, which can largely be achieved by expansion of renewables, with an indicative target of 60% of electricity from renewable sources by 2030. We will support investment in energy storage and smart grid technology to enable this higher reliance on renewables.
* Work with the independent regulator Ofgem to ensure the costs of electricity distribution and transmission infrastructure are allocated efficiently and fairly between consumers and generators across the country, and develop more European electricity interconnection capacity.
* Regulate to end the use of unabated coal in electricity generation by 2025 because of its high carbon emissions and impact on local air quality, and require any new gas stations built after 2030 to be fitted with Carbon Capture and Storage (CCS) technology. We will implement a second phase of CCS projects by 2020.
* Expand community energy, building on Britain’s first ever community energy strategy with additional financial and regulatory support. We will encourage Councils to be proactive in delivering energy saving and electricity generation.
* Encourage onshore wind in appropriate locations, helping meet our climate targets at least cost. We will end ideologically motivated interference in local planning decisions for wind farms by Government Ministers.
* Accept that new nuclear power stations can play a role in low-carbon electricity supply provided concerns about safety, disposal of waste and cost are adequately addressed and without public subsidy for new build.
* Use biomass primarily for heating and small-scale power generation, act to encourage the wider use of biogas and argue for the reform of EU policies on biofuels and biomass which help drive deforestation, including ending all support for food-crop-based biofuels after 2020.
* Continue to back new entrants to the energy market, smart meters and faster switching to promote proper competition, aiming for at least 30% of the household market to be supplied by competitors to the ‘Big 6’ by 2020.

The UK has significant stores of unconventional gas, which could be accessed through the process known as fracking. It is vital that efforts to access this gas be properly regulated to protect our natural environment. Liberal Democrats in government have introduced the world’s most robust regulatory regime for unconventional gas, including banning drilling in National Parks, and will take two further steps to ensure any shale gas contributes to a faster transition to a low-carbon economy.

We will:

* Establish a Low-carbon Transition Fund using 50% of any tax revenues from shale gas to fund energy efficiency, community energy, low-carbon innovation and renewable heat.
* Require that once a shale gas well is finished, it must be offered at no cost to geothermal heat developers, to enable faster expansion of this renewable technology.

2.7 An open, trading nation

As a major global economy, we must promote open markets and free trade, both within the European Union and beyond. Only as a full member of a reformed European Union can we be certain Britain’s businesses will have access to markets in Europe and beyond.

Liberal Democrats believe we should welcome talented people from abroad, encourage visitors and tourists who contribute enormously to our economic growth, and give sanctuary to refugees fleeing persecution. Immigration procedures must be robust and fair, and the UK must remain open to visitors who boost our economy, and migrant workers who play a vital role in business and public services.

We will:

* Remain a committed member of the EU so we can complete the Single Market in areas including online industries, the energy market and services, and help negotiate EU international trade agreements, opening opportunities for British businesses.
* Support Single Market disciplines in relation to competition and state aid rules while creating a stronger public interest test for takeovers in research-intensive activities.
* Continue to allow high-skill immigration to support key sectors of the economy, and ensure work, tourist and family visit visas are processed quickly and efficiently.
* Ensure the UK is an attractive destination for overseas students, not least those who wish to study STEM subjects (Science, Technology, Engineering and Maths). We will reinstate post-study work visas for STEM graduates who can find graduate-level employment within six months of completing their degree.

Tourism and heritage collectively make up as much as 9% of our economy, and yet these industries do not have the status they deserve in government or in wider society. We will work to make sure the British tourism industry is able to compete with other major world destinations and be a key generator of growth in the UK economy.

We will:

* Strengthen the Hospitality and Tourism Council, with the Business and Culture Secretaries as co-chairs.
* Give higher status to tourism within the Department for Culture, Media and Sport.
* Build on our successful Tourism North and Tourism South West initiatives to devolve more power, resources and decision-making to local areas to promote their unique tourism propositions in the UK and globally.

2.8 Securing global leadership in technology

The UK has a competitive advantage in key sectors of the modern economy that have the capacity to transform our lives. The UK’s digital sector is growing at a rate of over 10% a year, employing nearly 1.5m people. 15% of all new companies last year were digital companies. We need to support this important sector of our economy. We will:

* Complete the rollout of high-speed broadband, to reach almost every household (99.9%) in the UK as well as small businesses in both rural and urban areas.
* Build on the success of Tech City, Tech North and the Cambridge tech cluster with a network across the UK acting as incubators for technology companies.
* Support fast-growing businesses that could create a million jobs over 20 years, following the Sherry Coutu report into these ‘Scale-Ups’.
* Promote the take-up of STEM subjects in schools, retain coding on the National Curriculum and encourage entrepreneurship at all levels.
* Maintain and develop the award-winning Government Digital Service, and the principle of Digital by Default in public services, pressing ahead with plans to extend this to local government.
* Continue to release government data sets that can facilitate economic growth in an open and accessible format, including on standards in public services.
* Ensure the technology implications of government activity are properly considered by introducing Technology Impact Assessments into the policy design process.
* Develop cutting edge digital skills courses for young people and the unemployed working with private sector employers and education and training providers.

2.9 Pride in creativity

Liberal Democrats understand that arts, creative industries and culture are crucial to Britain’s success and essential for personal fulfilment and quality of life. The UK’s creative sector has been one of the great success stories of the past five years, and a critical driver of our recovery. We are proud of the arts in Britain and will support them properly, working to deliver access for all, regardless of income, ethnicity, gender, age, belief, sexuality or disability. We believe the arts have an essential role in our education system and will work to encourage creativity in our schools and universities.

We will:

* Maintain free access to national museums and galleries, while giving these institutions greater autonomy.
* Protect the independence of the BBC while ensuring the Licence Fee does not rise faster than inflation, maintain Channel 4 in public ownership and protect the funding and editorial independence of Welsh language broadcasters.
* Support growth in the creative industries, including video gaming, by continuing to support the Creative Industries Council, promoting creative skills, supporting modern and flexible patent, copyright and licensing rules, and addressing the barriers to finance faced by small creative businesses.

3. Real help for family finances: tax, welfare, pensions and consumer rights

A fair society is one in which everyone has the means to get by and the chance to get on. Liberal Democrats believe Britain should be more equal, and have worked in government to cut taxes for people on low and middle incomes, putting money back in the pockets of millions of people. We have improved childcare support, reformed benefits to make sure work pays and improved back-to-work support. And we have freed up pension savings to give older people more choice about how to manage their money in retirement.

We will continue to rebalance the tax system away from hard work and towards unearned wealth, while stamping out abusive tax avoidance. We will increase availability of childcare to help parents who want to work. We will continue to reform welfare and get people the right support in Jobcentres. We will build on our world-leading reforms to the pensions system. And we will fight tirelessly for a better deal for consumers, in the private and public sectors.

Record of Delivery

An £800 tax cut for low and middle income earners, delivered by letting you earn £10,600 tax free
Promise of More

Raise the Personal Allowance to at least £12,500, cutting your taxes by around £400 more
Secured the biggest ever cash rise in the state pension with our ‘triple lock’ policy on uprating
Legislate to make the ‘triple lock’ permanent, guaranteeing decent pensions rises each year
Cut the cost of childcare with more free hours for 3 and 4 year olds, and help for disadvantaged 2 year olds too.
Extend free childcare to all two year olds, and to the children of working families from the end of paid parental leave
Helped people balance work and family life with Shared Parental Leave and the Right to Request flexible working for all
Expand Shared Parental Leave with a ‘use it or lose it’ month for fathers, and introduce a right to paid leave for carers
Kept welfare spending under control, while blocking plans to cut off young people’s benefits
Make sure it pays to work by rolling out Universal Credit, and invest in back-to-work and healthcare support for those who need it

3.1 Fair taxes

During this Parliament we have gone even further than our manifesto pledge to raise the personal Income Tax threshold to £10,000 a year. This April’s increase to £10,600 has lifted more than three million people out of Income Tax altogether and delivered a tax cut of more than £800 for millions of low and middle-income taxpayers.

We will continue to make taxes fairer and simpler, help those on low and middle incomes, and ensure those on the highest incomes make a fair contribution.

We will:

* Raise the tax-free Personal Allowance to at least £12,500 by the end of the next Parliament, putting around £400 back in the pockets of millions of working people and pensioners. We will bring forward the planned increase to an £11,000 allowance to April 2016.
* Consider, as a next step, and once the Personal Allowance rise is delivered, raising the employee National Insurance threshold to the Income Tax threshold, as resources allow, while protecting low earners’ ability to accrue pension and benefit entitlements.
* Ensure those with the highest incomes and wealth are making a fair contribution. We have identified a series of distortions, loopholes and excess reliefs that should be removed, raising money to contribute to deficit reduction. These include reforms to Capital Gains Tax and Dividend Tax relief, refocusing Entrepreneurs’ Relief and a supplementary Corporation Tax for the banking sector. In addition, we will introduce a UK-wide High Value Property Levy on residential properties worth over £2 million. It will have a banded structure, like Council Tax.
* Take tough action against corporate tax evasion and avoidance, including by:
* Setting a target for HM Revenue and Customs to reduce the tax gap and continuing to invest in staff to enable them to meet it.
* Introducing a general anti-avoidance rule which would outlaw contrived structures designed purely or largely to avoid tax.
* Implementing the planned new offence of corporate failure to prevent economic crime, including tax evasion, with penalties for directors up to and including custodial sentences.
* Levying penalties on firms proven to facilitate tax evasion, equivalent to the amount of tax evaded by their clients.
* Asking the Bank of England’s Financial Policy Committee to consider the approach to paying tax taken by banks for themselves, their employees and for their customers, as part of their assessment of the risks posed by the sector, supported by an annual report by HMRC.
* Restrict access to non-domiciled status, increasing the charges paid to adopt this status and ending the ability to inherit it.

3.2 Help with childcare costs

Many parents want to take significant time out from work to care for young children but in many families both parents want or have to work, and the costs of childcare are prohibitive.

We have made dramatic improvements over the current Parliament – with Tax-Free Childcare, increases in childcare support through the benefit system and more free childcare hours for two, three and four year olds. But we need to do more so that all who want to work can do so.

We will:

* Commit to an ambitious goal of 20 hours’ free childcare a week for all parents with children aged from two to four years, and all working parents from the end of paid parental leave (nine months) to two years. This will not only help parents afford to work, it will help all children start school confident, happy and ready to learn.
* Start by providing 15 hours a week of free childcare to the parents of all two year olds. We will then prioritise 15 hours free childcare for all working parents with children aged between nine months and two years.
* Complete the introduction of Tax-Free Childcare, which will provide up to £2,000 of childcare support for each child and include childcare support in Universal Credit, refunding 85% of childcare costs so work pays for low earners.

3.3 Creating jobs and helping people find work

More people are working in the UK today than ever before. Our economic plans have created more jobs than anyone forecast. But that does not make it easy for everyone to find work. Liberal Democrats inherited a benefit system that trapped millions on out-of-work benefits, because it simply did not pay to be in work. Our reforms are starting to change that but we need to go further.

We will:

* Complete the introduction of Universal Credit (UC), so people are always better off in work. We will review UC to address any issues regarding ‘cliff edges’, and ensure increased working hours are properly incentivised for all claimants. We will retain the overall cap on a household’s benefits and believe this should continue to be set at around the average family income.
* Deliver a reformed and improved Work Programme in partnership with English local government, and the national governments of Wales, Scotland and Northern Ireland. By devolving this support we can ensure help and training are more tailored to local employment markets and better integrated with other services. We will improve incentives for Jobcentre staff and Work Programme providers to ensure there is real help for those furthest from the labour market.
* Establish a review of effective ways to promote ‘rainy day’ saving to improve people’s financial resilience, and reform hardship payments, making it easier for people to bring forward part of their benefit payments to deal with emergencies.
* Develop a package of specialist support for carers seeking part-time work or a return to full-time employment.
* Review sanctions procedures in Jobcentres. While sanctions can be a necessary last resort to ensure jobseekers are looking for work, they should not be used to cut benefit expenditure deliberately. Reductions in benefits may not always be the best way to improve claimants’ compliance: those with chaotic lives might be more successful in finding a job if they were directed to targeted support with their problems. We will ensure there are no league tables or targets for sanctions issued by Jobcentres and introduce a ‘yellow card’ warning so people are only sanctioned if they deliberately and repeatedly break the rules.

Liberal Democrats will protect young people’s entitlements to the welfare safety net, while getting them the help they need to get their first job. That means doubling the number of businesses that hire apprentices. It also means providing support that has been proven to work, like work experience placements that help them get a first foot on the career ladder. These placements should be tailored for those with disabilities or mental health problems and those with parental responsibilities and we will work to expand the availability of placements into new sectors including manufacturing, science and technology.

3.4 Making welfare work

Working-age benefits make up a significant proportion of public spending, and have long been in need of reform, which we have started in this Parliament. Through tough choices, we have found savings in the welfare budget and we must continue to do so as we balance the books. However, we do not support proposals for a lengthy freeze to working-age benefits, and we will not protect benefits for the wealthiest pensioners at the expense of people working on low wages.

Our priority is to tackle the causes of rising benefit bills – high rents, low pay, sickness and unemployment.

We will:

* Introduce a 1% cap on the uprating of working-age benefits until the budget is balanced in 2017/18, after which they will rise with inflation once again. Disability and parental leave benefits will be exempt from this temporary cap.
* Encourage landlords to lower their rent by paying them Housing Benefit directly, with tenants’ consent, in return for a fixed reduction. Our plans for a major expansion of house building and new ‘family friendly’ tenancies, which limit annual rent increases, will also help reduce upward pressure on rents. We will review the way the Shared Accommodation Rate in Local Housing Allowance is set, and review the Broad Rental Market Areas to ensure they fit with realistic travel patterns.
* Improve links between Jobcentres and Work Programme providers and the local NHS to ensure all those in receipt of health-related benefits are getting the care and support to which they are entitled. In particular, as we expand access to talking therapies we expect many more people to recover and be able to seek work again.
* Work with Local Authorities to tackle fraud and error in a more coordinated way, in particular on Housing Benefit.
* Help everyone in work on a low wage step up the career ladder and increase their hours, reducing their need for benefits, with tailored in-work careers and job search advice.
* Withdraw eligibility for the Winter Fuel Payment and free TV Licence from pensioners who pay tax at the higher rate (40%). We will retain the free bus pass for all pensioners.

3.5 Flexibility at work and fair pay

Britain’s employment laws are among the best in the world, balancing the needs of business for flexibility with the rights of staff to fair treatment. Nonetheless there are still too many examples of low pay, exploitation, and bad practice, which contribute to unacceptable levels of inequality in our society. This has to change: the more people earn a decent wage, the fewer will be dependent on benefits or stuck in poverty.

We will:

* Encourage employers to provide more flexible working, expanding Shared Parental Leave with an additional ‘use it or lose it’ month to encourage fathers to take time off with young children. While changes to parental leave should be introduced slowly to give business time to adjust, our ambition is to see Paternity and Shared Parental Leave become a ‘day one’ right.
* Ensure swift implementation of the new rules requiring companies with more than 250 employees to publish details of the different pay levels of men and women in their organisation. We will build on this platform and, by 2020, extend transparency requirements to include publishing the number of people paid less than the Living Wage and the ratio between top and median pay. We will also consult on requirements for companies to conduct and publish a full equality pay review, and to consult staff on executive pay.
* Ask the Low Pay Commission to look at ways of raising the National Minimum Wage, without damaging employment opportunities. We will improve enforcement action and clamp down on abuses by employers seeking to avoid paying the minimum wage by reviewing practices such as unpaid internships.
* Establish an independent review to consult on how to set a fair Living Wage across all sectors. We will pay this Living Wage in all central government departments and their agencies from April 2016, and encourage other public sector employers to do likewise.
* Improve the enforcement of employment rights, reviewing Employment Tribunal fees to ensure they are not a barrier. We will ensure employers cannot avoid giving their staff rights or paying the minimum wage by wrongly classifying them as workers or self-employed.

Liberal Democrats understand that flexible employment contracts – including Zero Hours contracts – can work well for employees and businesses. But that is not always the case and we will continue to stamp out abuse. We will create a formal right to request a fixed contract and consult on introducing a right to make regular patterns of work contractual after a period of time.

3.6 Improving support for the hardest to help

For too long, sickness benefits were used as a way of parking people away from the unemployment statistics. Our aim is to get everyone the support and help they need, both financially and in terms of advice and support. That does require a formal assessment: but these tests have to be fair and should not be an extra burden for vulnerable people. That is why we have made many improvements to the assessments introduced by the last government.

We want to aim even higher, ensuring assessments are truly fair, with quick access to financial help for those who cannot work, and support for those who can.

We will:

* Conduct a review of the Work Capability Assessment and Personal Independence Payment assessments to ensure they are fair, accurate and timely and evaluate the merits of a public sector provider.
* Invest to clear any backlog in assessments for Disability Living Allowance and Personal Independence Payment.
* Simplify and streamline back-to-work support for people with disabilities, mental or physical health problems. We will aim for the goal of one assessment and one budget for disabled and sick people to give them more choice and control.
* Raise awareness of, and seek to expand, Access to Work, which supports people with disabilities in work.
* Reform the policy to remove the spare room subsidy. Existing social tenants will not be subject to any housing benefit reduction until they have been offered reasonable alternative accommodation. We will ensure tenants who need an extra bedroom for genuine medical reasons are entitled to one in any assessment of their Housing Benefit needs, and those whose homes are substantially adapted do not have their Housing Benefit reduced.

3.7 Help to save for and enjoy your retirement

Life expectancy is increasing. This is obviously good news, but it brings challenges; older people may need a pension income that will last for 20, 30 or even 40 years.

We want to build on the world-leading reforms Liberal Democrats in government have introduced since 2010. We have abolished the default retirement ages so older people cannot be forced out of work on grounds of age. We have reversed decades of decline in pensioner incomes by uprating the state pension in line with our ‘triple lock’ guarantee. We have introduced a new single tier pension to make saving simple. We have auto-enrolled 5 million people into a pension for the first time. And we have scrapped the rules that dictated how you receive your pension, so now you can spend your savings as you see fit.

We want Britain to be the best place in the world to save for, and enjoy, your retirement.

We will:

* Continue the introduction of our simpler single tier pension so people can plan ahead securely, and feel the benefit of every pound they save.
* Legislate for the Liberal Democrat ‘triple lock’ of increasing the State Pension each year by the highest of earnings growth, prices growth or 2.5%.
* Ensure pensioners are eligible to gain from the increased Personal Allowance of £12,500.
* Improve workplace pensions and continue to auto-enrol workers, completing the rollout of this scheme in full and on time. We will crack down on charges and encourage people to save more into their pension pot through this scheme.
* Press ahead with plans to allow people more freedom in the use of their pension pots and to allow existing pensioners to sell their annuity.
* Establish a review to consider the case for, and practical implications of, introducing a single rate of tax relief for pensions, which would be designed to be simpler and fairer and which would be set more generously than the current 20% basic rate relief.

3.8 Protecting consumers and keeping bills low

Confident consumers encourage innovation and competition, which strengthen our economy. We have radically overhauled consumer rights law, making it simpler and clearer and for the first time protecting consumers buying digital content. We have driven competition in the energy sector, speeded up switching, and simplified tariffs so customers can always get the best deal. We have ended the era of above-inflation rail fare increases. We have clamped down on unscrupulous payday lenders and strengthened protections for vulnerable consumers against rogue traders. In the next Parliament we want to go further.

We will:

* Force energy companies to allow customers to change to any cheaper supplier in just 24 hours, and extend the principle of ‘gainer led’ switching, where your new provider organises your switch for you, into new sectors, including telecoms.
* Give people easier to understand information about their own energy use, with appropriate privacy protections, with a national rollout of smart electricity and gas meters. We will guarantee that anyone on a prepayment meter can choose a smart meter instead by 2017.
* Help people form new energy cooperatives so they can benefit from group discounts and cut their bills.
* Protect high streets and consumers by granting new powers to Local Authorities to reduce the proliferation of betting shops and substantially reducing the maximum stakes for Fixed Odds Betting Terminals.
* Ensure rail fares rise no faster than inflation over the Parliament as a whole.
* Require the Sports Ground Safety Authority to prepare guidance under which domestic football clubs, working with their supporters, may introduce safe standing areas.
* Continue and expand the midata project into new sectors, giving consumers the right to access data businesses hold on them in an open and reusable format.

3.9 Driving up standards in public services

Citizens expect a good service from their public services, and rightly so. While many schools, hospitals, libraries and other public institutions offer world-class standards, we could do so much better: integrating services and making them more accessible, as well as improving the response when things go wrong.

Liberal Democrats value the important role the voluntary, independent and community sectors play in the life of our communities and in delivering public services. To ensure all providers of public services are accountable to their users and the public, a public authority (if possible a democratically accountable one) should always take the decision about whether a service should be provided or commissioned.

We will:

* Improve consumer protections in public services, with a review of complaints handling processes, exploring the options of mirroring the private sector ‘super-complaint’ system in the public sector and reforms to the current system of ombudsmen.
* Introduce a ‘community trigger’ mechanism to enable the public to require a review of the provision of a particular service being delivered consistently poorly.
* Extend Freedom of Information laws to cover private companies delivering public services.
* Work with Local Authorities to bring services together at a local level to provide a better service to citizens, and support users in pooling their personal budgets into mutual support arrangements.
* Continue and expand the What Works Network to promote evidence-based policy making, establish an incubator for social enterprises developing innovative solutions to policy problems and expand the use of public competitions to encourage innovation in public services.
* Require the highest standards of data protection by public service providers, including requiring that where data is used for research purposes it must be anonymised wherever possible, and impose a moratorium on the creation of new government databases without Parliamentary authority.

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