The Liberal Democrats have announced plans for free school meals for all primary school children funded by a new share buyback tax.

In a policy announcement that could put pressure on Labour, the Lib Dems said the plan would begin with an immediate extension of free school meals to all 900,000 children living in poverty who currently miss out.

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The second phase would see all primary school children receiving free school meals as the public finances stabilise.

The pledge, to be included in the Lib Dem’s manifesto, would be funded by a 4% levy on the share buybacks of FTSE 100 listed corporations.

This is similar to the excise tax on buybacks implemented by President Biden in the US and could raise around £1.4bn a year, the party said.

A share buyback is when companies buy back their own shares from the market to increase their price – essentially so they can return excess cash to their shareholders

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Critics have warned this can come at the expense of productive investment in the economy.

The Lib Dems said the practice has allowed the profits of oil and gas giants, banks and large corporations to soar during a cost of living crisis.

Liberal Democrat Leader Ed Davey said: “Across the country, I hear heartbreaking stories of children going to school with empty packed lunch boxes as parents struggle to cover even the basic costs.

“Conservative MPs should hang their heads in shame at a legacy of children going hungry in the worst cost of living crisis in a generation.”

He added: “I am proud the Liberal Democrats have the most ambitious plan for free school meals of any party, which would save parents money and transform the future for millions of children.”

The announcement could put pressure on Sir Keir Starmer to make a similar offering – given this is something many of his MPs want to see.

Free school meals are already rolled out in London and a promise to extend the scheme was at the centre of Sadiq Khan’s successful bid for a historic third term as the city’s Labour mayor.

Labour’s policy nationally is to ensure every primary school child in England has access to fully funded breakfast clubs, but not lunches.

However, a series of Labour MPs have called for the national rollout of free meals, something which was in the party’s manifesto in 2019.

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Under current rules, pupils in England get free school meals up to the end of Year 2 and then only if their families receive certain benefits. There have long been warnings from poverty campaigners that thousands of children in need are missing out.

In 2022, research by PWC found that every £1 spent on free school meals for the poorest children generates £1.38 in health and earnings benefits, including improvements to children’s health, education and future working life opportunities.

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The analysis found that a free school meals scheme could inject up to £41.3bn into the economy over 20 years.

The Tories’ position is that free school meals should be targeted, going to those who most need it.

The government say that over a third of pupils in England now receive free school meals in education settings, compared with one in six in 2010.

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