(Bloomberg) -- Weeks after restoring the Liberal Democrats to their traditional third-place in UK politics, the question facing jubilant leader Ed Davey was what his centrist party tries next. In his speech to its annual conference in Brighton on Tuesday, the message was clear: If it’s not broken, don’t fix it.
Over about 45 minutes, Davey urged the new Labour government to end the “pessimism and defeatism” he said has marked the beginning of Keir Starmer’s premiership, and to boost spending on the ailing National Health Service by raising tax on banks and investment. Britain’s struggles can only be solved by “rising to our challenges with guts, determination, and hope,” he said.
Set against Starmer’s warnings about the state of the UK — his Chancellor of the Exchequer Rachel Reeves has used the time since the July 4 election to make the case for a tough budget to fix a £22 billion fiscal black hole — Davey’s urgings are unlikely to fall on sympathetic ears in 10 Downing Street. Yet the Liberal Democrat leader’s tone appeared carefully calibrated, to try to nudge the premier toward choices any Labour leader typically wants to make.
Party officials call it “constructive” opposition, allowing the Liberal Democrats to push their interests while maintaining pursuit of the ousted Conservatives. Davey’s party won 72 seats in the election, quadrupling its Members of Parliament - in large part due by winning over centrist voters alienated by a Tory party led by Rishi Sunak that was veering to the right.
Strategists are now focused on 20 Conservative seats where the Liberal Democrats came second, which would put them in touching distance of usurping the Tories as the UK’s official opposition. On Tuesday, Davey vowed to “finish the job” of winning the so-called blue wall — traditional Tory areas in southern England where the Liberal Democrats made gains in July. Even Sunak’s seat in Yorkshire could be up for grabs, strategists think, if he steps down as an MP.
“Our job is to consign the Conservative Party to the history books,” Davey said.
While party officials insist their strategy follows logic rather than preference and that the Liberal Democrats will continue to fight Labour at local level in cities like Liverpool and Sheffield, the reality is Davey’s party sees itself far closer to Labour than the Conservatives. Brexit and the Tory-led campaign to take the UK out of the European Union is a major part of that.
The two leaders, though, also have much in common politically. Davey spent much of the election campaign focused on fixing the NHS and the UK’s crisis in social care, and some of his most powerful interventions were personal videos about caring for his disabled son. Starmer, meanwhile, often referenced his sister working in the care sector, and has said whether the government can fix the NHS — a task he said will take a decade — would define his premiership.
“I urge Labour: do not make the same mistakes the Conservative Party did,” Davey said in his speech. “Be more positive. Act now. Show the ambition and urgency this moment demands – and save our NHS for good.” He also addressed Starmer directly on fixing social care: “Prime Minister: if you are willing to find a solution, I am ready and willing to work with you and get it done. For carers.”
Even with Starmer’s working majority of 167 seats in the House of Commons, Davey’s approach has potential implications for the government. Social care, in particular, is considered something of a third rail in British politics, given the cost and political compromises needed to engage on it.
The bigger question, though, lies in Starmer’s intentions for government. The prime minister has faced fierce criticism already from some in his party who have accused him of scaling down ambitions and focusing too much on the UK’s public finances. Starmer has countered that nothing is possible until the economy and government spending is on a sounder footing.
Davey’s ideas are politically sensitive for Labour. The Liberal Democrats want Reeves to increase the surcharge on bank profits, capital gains tax, introduce a 4% share buyback tax on FTSE100 companies, and reform inheritance tax to help fund a £9.8 billion package it says is needed for health and social care. Banks would face a £4.25 billion increase in levies under Davey’s plans.
He also wants the government to set up a ‘winter-proof NHS task force’ with an allocated £1.5 billion fund over four years to build resilience in hospitals and ambulance services, as well as more funding to increase the number of doctors and dentist appointments.
For now, at least, that’s far from the government’s messaging. Starmer warned last week that more money will not fix the NHS without fundamental reforms, while the Liberal Democrats also strongly opposed Reeves’s decision to cut winter energy assistance for millions of pensioners ahead of her Oct. 30 budget.
Still, Davey used his speech to promise Labour his party won’t antagonize for the sake of it. “We will scrutinize their plans carefully, and strive to improve them, and we will oppose them if we think they’ve got it wrong,” he said. “But where ministers act in the national interest – to solve such problems and improve people’s lives – we will support them.”
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