Lib-Con: The policies

Find out what’s in store for the UK with the most important parts of the deal finalised between the Conservatives and the Liberal Democrats. What was dropped, what was kept, and where did they agree to disagree?

The economy:

The Lib Dems have agreed to cuts of £6 billion to non-frontline services in 2010/11.

Planned rise in national insurance to be scrapped.

Tax credits for high earners the child trust funds will face reductions.

The Tories have dropped their plans to double the inheritance tax threshold.

The Lib Dems have agreed to drop their policy to apply mansions tax to homes worth over £2 million.

A full spending review will be held, reporting this Autumn.

The personal allowance for income tax will be increased. This will take precedence over all other tax policies.

This will go ahead if still possible after the reform to personal tax allowance but the Lib Dems will allowed to abstain on the vote without threatening the coalition.

Detailed development of Lib Dem policy on tax avoidance will take place.

Banking levy will be introduced.

There will be robust action against excessive bonuses.

Proposals forthcoming on increasing flow of credit to small and medium-sized businesses. Independent commission will investigate how to separate retail from investment functions of banks.

Bank of England to be given control of macro-prudential regulation and oversight of micro-prudential regulation.

Welfare and public services

NHS funding will increase in real terms in each year of the parliament.

A pupil premium will be established for disadvantaged youngsters by taking money from other budgets.

Free school plans to be implemented, and schools to have more freedom over national curriculum.

All welfare-to-work schemes scrapped in favour of a new single system. Contracts with welfare-to-work providers will reflect their success rate. Default retirement age to be phased out and date set for rise in state pension age to 66.

The Lib Dems have signed up to Tory plan for a cap on immigration.

Both parties agreed to end the detention of children.

Defence and foreign affairs:

The Lib Dems have agreed to disagree on the renewal of Trident, but the replacement process will continue, with the caveat that value for money will be heavily scrutinised.

A full strategic security and defence review will take place alongside the spending review.

A commission to consider the ‘West Lothian question’.

Britain will never have the euro for the duration of the coalition.

No further transfer of powers over the course of the next parliament.

European Communities Act 1972 to be reformed so all later transfers of power trigger a referendum.

United Kingdom sovereignty bill to ensure parliament remains ultimate authority.

Civil liberties:

ID cards scrapped.

‘Great repeal bill’ to tear up authoritarian legislation.

Freedom of Information Act expanded.

DNA retention to follow Scottish model.

Review of libel laws.

New protections for peaceful protest.

Safeguards against misuse of terror legislation.

Controls on retention of internet activity and emails.

A new mechanism to prevent the proliferation of unnecessary new criminal offences.

New controls on the proliferation of CCTV.

Parliamentary reform:

Fixed term parliaments to be introduced, with caveat that there will be a dissolution if 55% of MPs support a vote of no-confidence in the government.

Power of recall for corrupt MPs.

A committee will look into ways of creating a wholly or mainly elected upper chamber on the basis of proportional representation.

In the interim, Lords appointments will be made on the basis of current representation in the Commons.

Wright Committee recommendations to be implemented in full.

Statutory register of lobbyists to be introduced.

Referendum bill on electoral reform will allow for a referendum on the alternative vote system.

MPs will be whipped but this will not affect the position each party takes to the referendum itself.


Green investment bank to be established.

Smart grid and meters to be rolled out.

Hips scrapped, but energy performance certificates retained.

Lib Dems permitted to retain objections to nuclear power while allowing national planning statement which authorises the building of more power stations.

Third runway at Heathrow axed.

Passenger duty will now be collected per-plane.