Budget Resolutions

Joshua Reynolds Excerpts

Thursday 29th October 2026 Commons Chamber

[Mr Joshua Reynolds (Maidenhead) (LD)]

After years of government chaos and failure we can only end the brutal cost of living crisis and fix our broken public services if we get the economy growing. We need a real growth plan with Europe at its heart, so Labour must fix the Conservatives’ botched Brexit deal by joining the single market, negotiating a new customs union and using the billions of pounds that that raises to cut people’s taxes and bills.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

Will the hon. Gentleman give way?

[Mr Reynolds]

Already? Okay.

[Dr Evans]

We heard from the Conservative Front Bench that we do not meet the criteria to rejoin the EU. How do the Lib Dems suggest that we get around that problem?

[Mr Reynolds]

I thank the hon. Gentleman for his intervention. He should have listened to what I said in the previous 30 seconds. What I said was that we need to join the single market and negotiate a new customs union. I did not say that we need to rejoin the European Union.

First, Liberal Democrats would fix the biggest brake on our economy: the botched Brexit deal. It has put up barriers for every business that trades with our largest market. Small firms in Maidenhead tell me that they now spend more time filling in forms than filling in orders. Some have simply given up trading with Europe altogether. That is lost trade, lost jobs and lost revenue. We would rip up the Government’s red lines and build a new growth and defence partnership with Europe, including the single market and a new customs union.

We would grow our economy. According to independent research, those measures would bring in £27 billion a year in extra tax revenue by the end of the Parliament. We would give those proceeds back to the people who earned it by raising the tax-free personal allowance to £15,000 and raising the higher rate threshold to £56,000, taking 2.5 million of the lowest paid out of income tax altogether and putting £650 back in people’s pockets. It was the Liberal Democrats who raised the personal allowance before. We can do it again. That is how to cut taxes responsibly—we grow our way there.

[Anna Dixon (Shipley) (Lab)]

Would the hon. Gentleman wish to add his thanks to the Chancellor for the new low-income tax-free allowance for pensioners, which will ensure that they can keep their state pension and hard-earned pension?

--- Later in debate ---

[Mr Reynolds]

I think the hon. Lady will find that there is an anomaly within the Chancellor’s proposals: a 54% tax rate for certain pensioners on certain incomes. I do not necessarily believe that a 54% tax rate for pensioners is the right thing to be doing.

Secondly, Liberal Democrats would make fairer choices about who pays. This Budget goes back once again to savers. Tax on savings and property income go up by another two points. That is on top of the two points that were announced last year. The retired couple who have put money away all their lives and the family who are saving for their deposit will be taxed more. The Government are giving savers a little with one hand while taking with another.

There is a fairer option, though. Because of the high interest rates and the way that the Bank of England’s quantitative easing programme works, the Treasury is handing billions of pounds over to the big banks every year. That is a windfall that the banks did nothing to earn. It is a windfall that they keep, and businesses in our villages and towns are paying the price. Our plan to claw back some of that money would raise £5 billion a year on average. That has never been needed more. As UKHospitality confirms, the hospitality sector pays 82p in business taxes for every £1 it makes. That is the highest amount paid by a sector in our economy and double that of the banks.

In my constituency, we have felt that more than ever. Last month, the Crown at Burchetts Green, ranked among the 50 best gastropubs in the country, closed its doors, with its owner blaming staff costs, rent, business rates and VAT. They said enough was enough. If a pub like that cannot make the numbers add up, what hope is there for cafés, restaurants and pubs across the country? That is why we would use some of the bank windfall tax to cut VAT for the hospitality sector, where it needs it most. The third thing we would do is take our security seriously.

[Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)]

There is a slight irony in what the hon. Gentleman has just said. He wants to cut VAT on pubs, yet he wants to get closer to the European Union, which would not allow us to cut VAT in our own country. Is there not a slight contradiction there?

[Mr Reynolds]

Once again, the hon. Gentleman is confusing rejoining the single market and customs union with rejoining the European Union.

I am glad that the Defence Secretary is in his place, because just days ago, he said that we need to be ready for war by 2030, within 1,000 days. I take that warning seriously, and I hope that his colleagues do, too. Yesterday, the Chancellor set the target for spending 3% of GDP on defence by 2030, and the plan to pay for that will come in next year’s spending review. The money needed for the issues and compromises that the Defence Secretary describes will not come until next year. No Government can meet a 1,000-day deadline on a funding plan that does not exist. That is why we Liberal Democrats have proposed defence bonds. Our plan would raise £20 billion over two years, ringfenced to rebuild our armed forces. That would start now, inside the Defence Secretary’s 1,000 days, and not after them.

Meanwhile, the Government are funding their defence investment plan by cutting budgets across Whitehall. Earlier this year, Departments were told to cut 1% from their capital budgets to pay for the first £10.3 billion of the DIP. For the remaining £5 billion, they must now find another 1% on top of that. As has already been mentioned, we do not know where the cuts will come from. Families right across the country want to know which capital projects are to be cut. Will it be the rebuilding of our crumbling schools or our leaking hospitals? Where will that money come from? We are asked to choose between security and growth, but we need both. The Government urgently need to make the case for defence bonds, so that we have the money to rebuild our defences as soon as possible. If we built that capacity alongside our European partners, every pound would go further, and support skilled jobs and British businesses in the supply chain.

We have also set out how to keep that investment going for the long term: through the digital services tax. We would raise the tax from 2% to 10%, bringing in billions of pounds a year from the tech and social media giants by 2030. They are some of the most profitable companies in the world, and they should pay their fair share. Our plan shows how, and it is fully costed. Defence bonds will provide the money up front, and the higher digital services tax would sustain that amount year after year. Together, they would pay for us to expand British shipbuilding and build more frigates to protect our waters.

Our European neighbours are investing billions in their defence industries, and Britain must be at the heart of that, not watching from the sidelines. We need our new growth and defence partnership with Europe—buying together, building together and defending our continent together—to ensure that British shipyards, engineers and factories win jobs and investments from European contracts. If we are shut out, those jobs go elsewhere.

This Budget is a holding pattern Budget; it is not the growth Budget that we all needed. There is a better way: growth with Europe; fairer taxes that ask the big banks, rather than hard-pressed savers, to pay their share; lower bills for every household; and a serious plan for our security. That is what fiscal responsibility looks like. We need to grow our economy, cut people’s bills and cut people’s taxes.