Liberal Democrat Leaders Say Fair Taxation Is Key To Cutting Deficit

Danny Alexander outlines plans to kickstart economy by ensuring money hoarded by Labour is spent on infrastructure.












Liberal Democrats should fight the next election by aspiring to lift those earning less than £12,500 out of paying income tax, says Danny Alexander.

The Liberal Democrats should fight the next general election by aspiring to lift anyone earning less than £12,500 out of paying income tax, Danny Alexander said.

The chief secretary to the Treasury, a close ally of Nick Clegg, also set out the "next steps in our plan for growth", including a pot of £500m drawn from "unallocated funds" across Whitehall. Later, in an interview with the BBC's Andrew Neil, Alexander said these funds had been taken from savings found across government and did not amount to a stimulus.

Although this money comes from within the "spending plans", he said, the cash will now be disbursed with more urgency to kickstart infrastructure projects currently struggling for credit, with the hope of galvanising private spending.

It is the third indication from the Lib Dems in the past week that they intend to concentrate efforts on accelerating capital projects, which marks a subtle shift in emphasis towards greater public spending, without busting the headline deficit reduction plan.

Clegg made a speech on the subject last week, announcing that Alexander was now in charge of 40 projects across Whitehall, ensuring they are implemented rather than delayed.

They are pressing because they believe that if government funds already allocated can be spent rather than hoarded – which they believe was the case under the last Labour government – modest upfront sums "gear" up to become substantial amounts of fresh capital.

The business secretary, Vince Cable, also evoked the policies of Franklin D Roosevelt in the 1930s when he called for a "New Deal-style stimulus" for capital investment in an interview on Saturday with the Guardian. In his Q&A with Neil on Sunday evening at the party conference, Alexander refused to back Cable's language, but said he preferred to express it as the government "straining every sinew" to get the economy growing more.

As well as further schemes to drive capital investment, and the aspiration of the party going further in its bid to take the low paid out of tax, Alexander also set out measures to increase tax revenues.

He repeated a pledge made in last year's conference speech that there would be a clampdown on tax evasion, with 2,250 HMRC staff working on evasion and avoidance. He said the government was already raising £2bn in this way this year, which he pledged would rise to £7bn annually by the end of the parliament.

In one month's time, an "affluent team" will begin looking at the 350,000 wealthiest taxpayers who each earn more than £2.5m a year, in addition to the 5,000 who are already monitored: "These are the people who pay or should pay the 50p rate of tax," he said in his speech on the first morning of conference.

"My message to the small minority who don't pay what they owe is simple – I agree with the chancellor. We will find you and your money and you will pay your fair share," he said.

He was sanguine about the 50p rate of tax – which Tory colleagues expect will be dismantled if a review winding up in January shows it yields little revenue. Once Alexander had said he believed it was "cloud cuckoo land" the rate would be discarded despite Tory colleagues regarding him to agree he was not ideologically committed to it should it emerge to be unlucrative.

Tories say the debate behind the scenes is turning not on whether the 50p tax rate stays or goes but rather on what amount the replacement levy raises – the sum the previous Labour government intended it to raise when they introduced the tax; or the amount the 50p rate has actually brought in. The question then becomes what tax on the wealthy be brought in its stead.

Alexander said: "Fair taxation of the wealthiest is key to our deficit reduction plan. Of course, if a better way can be found to raise the money from this group, I will be willing to consider it."

Later in his interview with Neil, Alexander talked about ensuring the "tax burden" on the wealthy remained high.

Earlier in the day, Clegg also made it clear the party's negotiations on the 50p rate would not see them martial an ideological commitment to it, but rather they would accept its replacement by some other form of levy on the well-off.

He told the BBC's Andrew Marr programme: "It stays unless we can first make more progress on lowering the tax burden on people on low and middle incomes, and secondly making sure as the chancellor himself has said we can find other ways the wealthiest can pay their fair share."

In Birmingham, Alexander's speech was remarkable for placing an emphasis on how to push ahead with another aspect of the Lib Dem income tax policy, at the other end of the scale.

He told the conference hall: "In the next parliament, I want us to go further; our aspiration should be that someone working full time on the minimum wage should pay no income tax at all. An income tax threshold of £12,500 – think what that would do to work incentives, think what it would mean for basic fairness. Let's put that on the front page of our next manifesto."

The coalition agreement pledges that both parties in government will raise the income tax threshold to £10,000 by the end of the parliament and it is one of the policies the party is proudest of.

The policy has received support on the centre-right of the political spectrum with Tories sympathetic to its aims of cutting tax for the less well paid, but it has been criticised for being poorly targeted; in its original form this was a tax cut enjoyed by all, regardless of income.

The policy also has its Tory critics within the cabinet who fear a policy that removes people from paying tax would sever the relationship between government and the people.

Now the Lib Dems have committed themselves to raising the tax threshold still further, putting on the record an early indication of how they might seek to differentiate themselves from the Conservatives towards the end of the parliament.

Alexander's speech was occasionally heckled by one audience member with a shout of "rubbish" when Alexander criticised the Labour policies of Gordon Brown – a reminder that some delegates in the hall do not agree with the party leadership's decision to back plans to eliminate the structural deficit by the end of the parliament.

The coalition is currently trying hard to devise policies that will stimulate the British economy without busting either of the two targets they hope to hit at the end of the parliament – eliminating the structural deficit by 2014-2015 and bringing down the debt-to-GDP ratio.

While insistent they will not resile from the so-called "plan A" both on and off the record, the new imperative is to find ways of using existing capital spending commitment to encourage the private sector to part with their capital and increase the amount of capital in the economy.

On Friday, the business secretary Vince Cable, published a pamphlet for the CentreForum thinktank in which he suggested that alongside a new round of quantitative easing, he also believed new infrastructure projects were necessary including new roads built as toll roads.

This would have the advantage of encouraging the private sector to embark on a capital investment with a certain revenue stream not coming from the public purse.

Insisting his proposals amounted to a radical Keynesian package – using language and ideology not associated with the Conservative chancellor, George Osborne – Cable said that in the face of a stagnating economy ministers had to "pull all the levers available to government. We are not powerless."

Cable said: "It was four years after the Great Crash that Roosevelt came in and several years before they could do anything. Dams started being built 10 years after the Great Crash. What I have set out is a Keynesian approach to a demand crisis, but operating in a new world in which governments are highly constrained by these very febrile international financial markets. We constantly have to pay attention to them."

Now Alexander will disburse a "Growing Places fund", which he hopes enable the creation of local infrastructure across England.

"£500m to deliver key infrastructure and unlock development and create jobs. Providing a one-off upfront capital investment to kickstart developments that are stalled due to cash flow problems or lack of confidence.

"Putting local areas in the driving seat, enabling local government to invest in the key strategic infrastructure projects that they have identified as priorities and getting people into work."

Alexander said: "As Liberal Democrats, our judgments about what needs to be done should be driven by the liberal economy we want to build – sustainable, balanced, competitive, fair. To get there we must break down the vested interests – the enemies of growth that stand in the way of future prosperity."

"Too many businesses are being held back by congested roads, slow railways, inadequate broadband. Now more than ever, we need to get on with this work."

Hugh Grant: style watch

OK, so Italian politics has its problems, but at least they know how to dress. Hugh Grant, on the other hand, here lends weight to the old style adage that British men can't do casual.

When it comes to rocking a three-piece suit with a pocket square, the Savile Row gent still leads the world, but a certain type of British man still flounders as soon as let off the strictest dress code leash.

The trouble with this outfit is that the messages are mixed: was he trying to look smart but didn't have time to pull himself together and tuck his shirt in, or was he aiming for casual and put a suit jacket on as an afterthought? I suspect he was aiming for the kind of rakish dishevelment that Bill Nighy has made his own. But to pull that off takes effort.

Only the most perfectly fitted jacket looks good rumpled. Lucky for Hugh he's only addressing the Lib Dem conference. He'd never make it at London fashion week.

Top 50 Most Influential Liberal Democrats 2011: The Rise Of The Left

The battle to succeed Clegg and left-wing dissent over the party's role in the Coalition is reflected in this year's list of most influencial Liberal Democrats.












Establishment rebel: Lib Dem president comes in at number three.












Rebellion in the air: for how long will Nick Clegg remain Britain's most powerful Liberal Democrat?












Sticking power: Chris Huhne has been dogged be accusations over his driving - but keeps his top five slot.

If the opinion polls prove accurate - the last three showed the Liberal Democrats on 10% - this might be the last time we can find enough elected Liberal Democrats to form a viable top 50. The stark reality they face, and the internal debate that is now raging, is reflected in the top ten.

There is the whiff of succession planning in the air. The resilience of Chris Huhne is also hanging around – down just one place despite a difficult year in his personal life. Those in, or close, to the Clegg Operation (as Liberal Democrats a little self-consciously call it) remain powerful - his Chief of Staff stays at five. There have been recent changes reflected here, but the conflict between the government and the internal opposition has become much more of an equal one over the year.

As one MP put it, the year has been “about the rise of the left”. Confidence in the party outside Westminster has grown even as polling numbers remained minimal. Liberal Democrats seem to have discovered that even in government the world does not end if you disagree. And this has given rise to a new breed of rebel, personified in Tim Fallon, Lib Dem President and the leading establishment rebel (up 31 places to number three).

The Liberal Democrats have learnt a great deal about coalition politics this year. It is unclear sometimes which are the sanctioned and which the unsanctioned rebellions. If Nick Clegg is eyeing an eventual move to Brussels - to replace Baroness Ashton - then this is informing the positioning that is taking place now.

The experience of government has also lead to a rather different set of discussions this year. There was much more talk about the hidden wiring of the political game. Names like Ben Williams, a fixer from the Whips Office were discussed - and while he did not make the cut, James Gurling, who is modernising the party’s electoral machine, comes in at 46. Also in at 35 comes James McGrory, the leader’s favourite spin doctor. Described by some as a cockney thug he is not your typical Liberal Democrat, but he has also been described as the best press officer in the business. The highest new entry at 26 is also from the inside of the machine: Julian Astle comes in to the Clegg machine and into the heart of government as the newly minted Deputy Head of Number 10 Policy Unit.

The Liberal Democrats who hold Cabinet positions and can therefore, in theory, shape policy have had a mixed record this year. The sharpest debate surrounds Danny Alexander. He survives at number two because of his status as part of the mixed doubles Quad – Cameron and Clegg, Osborne and Alexander. But he has also been described as being dead in the party. Vince Cable, still hugely popular in the party, also slips down a little (three places to seven) and opinion is sharply divided on the extent to which he is a busted flush. Further down the food chain, junior ministers have struggled to make a mark and some have slipped back – for example Michael Moore but others have done obviously better, like Steve Webb, up two as Minister of State for Pensions. It depends on the extent to which they have delivered what is grandly referred as the Liberal Democratic Agenda in Government.

The discussion on Ministers vs the Party is reflected over and over again in this list. Does the party hate Danny Alexander because he is competent? Would they love him if he held the same post – they love to have Cabinet Ministers after all - but was utterly incompetent and ineffective in fulfilling his brief? One gets the impression that many of them would feel better, a little more like themselves, in these circumstances.

In the past when Liberals have formed coalition governments with the Conservatives, the ministers have tended to go native and be absorbed into the Conservative Party. Alexander matters while he holds office. The impression is that when the government ends so does his career in the Liberal Democrats. Any safe Tory seats going?

The big gainers, overall, have been from the left and it is here that the succession planning is really going on. Simon Hughes stays securely at sixth and Evan Harris is up 14 places to ten. Shirley Williams has campaigned across the board but especially on the NHS and is up 13 places to twelve. Brian Paddick pops in on the strength of the nomination to contest for Mayor of London and Caroline Pidgeon, Leader of the Greater London Assembly Liberals, squeaks in at 49 - one of a very few local government people to make it in on to the list. The party in the country, where it has clung on to power at local level, has had a quiet year.

Even though the left has made noise, the Liberal Democrats remain too fond of being in power to walk away from Clegg’s great gamble just yet. But the sound that we can hear this year from Liberal Democratic left, even up to the President of the Party, on the back benches and in the council groups that survive, is the sound of burying weapons for the battle of succession to come. The trouble is at 10% there might not be much left for Tim Fallon or A. N. Other, to inherit from the Cleggster.

Danny Alexander Backs Case For Strong UK Union

Treasury Secretary Danny Alexander has stepped up the case for Scotland remaining in the United Kingdom.









The SNP wants to hold a referendum towards the end of the five-year parliamentary term.

In a speech to CBI Scotland members he said the current constitutional uncertainty was in danger of distracting from the economic recovery.

He told the Glasgow gathering: "We are stronger together."

The SNP government has pledged to hold an independence referendum in the second half of the current parliamentary term.

Chair of CBI Scotland, Linda Urquhart, also addressed the annual dinner, saying that members were concerned about the commitment to a referendum and its timing.

She also called for the legality of any such vote to be "put beyond doubt".

But SNP Treasury spokesman Stewart Hosie accused CBI Scotland of "blundering into the constitutional debate".

The constitution is a reserved matter for Westminster, but the UK government has indicated it would not stand in the way of a vote in Scotland.

It is not clear yet what question or options might be included in any ballot.
'Stronger together'

Ms Urquhart said anything that added uncertainty was unwelcome at a time when economic pressure on business continued "to be relentless".

Lib Dem minister Mr Alexander said: "Scotland's road to recovery is intimately tied to recovery of the rest of the UK, and we must work together - politicians and businesses - to capitalise on every opportunity to support recovery.

"We are stronger together - and we are stronger when Scotland's two governments work together, pulling in the same direction for the people of this country."

He added: "We cannot allow the current constitutional uncertainty to distract or undermine this economic goal - Scotland is too important to the UK and the UK too important to Scotland for that.

"I hope that your voices - the voices of Scotland's economic future - will be heard as that debate develops."

Ms Urquhart said the SNP government's commitment to holding a referendum was "a matter for them", but added there was concern among CBI Scotland members "about the possible damage that could be done to Scotland by the uncertainties arising from this commitment and its timing".

She continued: "This is not helpful - but with that timescale committed to, I believe that business will consider it all the more important for any referendum to deliver a clear result: independence - yes or no - and no second questions which might produce an inconclusive result.

"The legality of any referendum must also be put beyond doubt - the constitution is a reserved matter - so the Scottish and UK governments must work together to ensure legal certainty and a decisive result."

SNP treasury spokesman Stewart Hosie questioned whether Ms Urquhart's remarks were representative of the business community in Scotland.
'Right to vote'

Mr Hosie, who is MP for Dundee East, said the CBI's credibility had previously been "undermined by blunders into the constitutional debate", claiming it had misrepresented members on issues related to powers for the Scottish Parliament.

He continued: "This is not the first time CBI Scotland has blundered into the constitutional debate and this latest intervention will fuel concerns that the CBI's leadership has a political rather than a business agenda.

"Given the overwhelming mandate the SNP secured at the recent elections, with broad support from businesses big and small, there must be a question over whether CBI is even speaking for its membership, let alone the wider business community."

Mr Hosie added: "We believe that the people of Scotland should have the right to vote in a single referendum agreed by the Scottish Parliament, on a published proposal, which is then implemented - exactly as was done for the two-question devolution referendum in 1997."

Call for 'Clarity' On Independence

A senior Liberal Democrat has accused First Minister Alex Salmond of backing away from the key SNP policy for full independence.











Lord Wallace of Tankerness, the Advocate General and former deputy first minister, said Mr Salmond will stop short of the aim and settle instead for maximum powers within the UK.

In an interview with The Times newspaper, Lord Wallace said: "The First Minister is a very forceful character and someone who in spite of all the rhetoric about independence actually knows on which side the bread is buttered and therefore will push for maximum powers but stop short.

"I wouldn't say he was a feartie but he's got his head screwed on the right way."

He called for "clarity" on what independence means and an early referendum, and compared Mr Salmond with Jordi Pujol, a Catalonian politician who settled for devolved powers within the Spanish state.

Lord Wallace's provocative claim follows interventions from other senior Lib Dem MPs in recent days. Scottish Secretary Michael Moore said the SNP has questions to answer on areas such as currency, bank regulation, EU membership and defence after independence.

Chief Treasury Secretary Danny Alexander, another Scottish Lib Dem MP, said the country's deficit would have been the largest in Europe, according to the gap between taxes raised and what was spent in 2009-10.

A spokesman for Mr Salmond said: "The First Minister is totally committed to independence, as are growing numbers of people in Scotland, and we will give people that chance to choose independence in the referendum we have promised.

"Jim Wallace's problem is that he didn't even manage to be Scotland's Jordi Pujol when he had the chance. With every week that passes his party seem to be retreating further and further from their supposed policy of more powers for Scotland's national Parliament - and instead are acting as a front for a Tory Government Scotland didn't vote for.

"The Lib Dems now sound like the Scottish Tories did in the 1990s, and it is having exactly the same result on their level of support."