Liberal Democrats conference news September 16 21 LibDems take a green turn on tax policie

21 Sep 06
The Liberal Democrats successfully shrugged off their image as a high tax-and-spend party after members endorsed radical proposals that shift the focus of taxation from income to wealth and pollution.

22 September 2006

The Liberal Democrats successfully shrugged off their image as a high tax-and-spend party after members endorsed radical proposals that shift the focus of taxation from income to wealth and pollution.

Despite mutterings of rebellion, the Fairer, simpler, greener tax reform paper sailed through the conference, with even critics praising the broad thrust of the policy.

Efforts to preserve the 'totemic' promise to introduce a 50p tax rate on incomes over £100,000 failed when delegates backed the unamended proposals as official party policy.

Following the two-hour debate on September 19, LibDem leader Sir Menzies Campbell said: 'We are going into the next election with bold and credible tax policies. They demonstrate our commitment to tackling inequality and environmental damage while maintaining financial discipline.'

Under the revenue-neutral reforms, the 10p starting rate of tax would be abolished, the basic rate of income tax reduced by 2p and the threshold for the 40% higher tax rate raised to £50,000.

These changes would be funded by reforming capital gains tax, in particular removing taper relief, introducing an aircraft tax based on emissions and sharp hikes in excise duty for new vehicles.

The debate centred on whether to incorporate the 50p tax rate for high incomes or abandon it.

Treasury spokesman Vince Cable told the conference: 'Our new proposals are balanced: balanced as between income and wealth; balanced as between redistribution and ensuring there are incentives to entrepreneurs to stay in Britain. Simply tacking the 50p rate on to our current package, as some are suggesting, would elevate symbols and spin above substance.'

As well as modernisers like Cable, Left-leaning LibDems such as health spokesman Steve Webb and party chair Paul Holmes took to the stage to urge delegates to support the proposals.

Humorously describing himself as a 'soggy, socialist dinosaur', Holmes said: 'We should not be locked into hollow symbolism based on last year's manifesto… This package is more progressive and more distributive than the 50p rate.'

But others, led by the party's science spokesman Evan Harris, pointed to the popularity and simplicity of the higher tax rate. Harris told the conference that discarding the 50p rate was merely symbolic. The higher rate of tax was not an electoral liability, he said. 'The policy is clearly distinctive and we need distinctive policies.'

The rebels were disappointed but sanguine in defeat. Gareth Epps, a member of the commission that came up with the paper, told Public Finance: 'We're concentrating on presenting ourselves to the public. The beauty of the 50p top rate was its simplicity. Conference felt confident our new proposals were simple enough.'

l The LibDems' effort to develop a credible alternative economic policy continued on September 20 when Cable announced he would be identifying public spending areas that should be cut to fund the party's priorities.

'In an age when all politicians are regarded with some cynicism, no one is any longer impressed with uncosted and unfunded spending promises,' Cable said.

Local government proposals provoke delegates' wrath

The Liberal Democrat frontbench suffered a humiliation over local government when members threw out policy proposals as lacking substance.

In an excoriating speech to the conference on September 19, Richard Kemp, leader of the LibDem group at the Local Government Association, tore into the document, Your community, your choice.

He said that it contained nothing new and ignored the fact that the party represented some of the most deprived wards in the country.

'Nothing in here will be of use when [LibDem local government spokesman Andrew Stunell] faces Ruth Kelly on the white paper. There's nothing I can use when I negotiate on behalf of councillors,' he said. 'I call on you to abstain and let this resolution go into the cat litter of history.'

The paper puts forward a vision of power devolved from Whitehall to the lowest practical level and community decision-making, accountable to residents rather than ministers. Local committees would take on responsibility for libraries, parks, sports facilities and other service buildings. It also envisages more co-operation between councils.

Julian Cummins, a delegate from Leeds, said: 'Who would have thought that the Liberal Democrats would have supported the creation of unelected and unaccountable user groups. The loudest voices will get what they want.'

Cambridgeshire councillor Julian Huppert succeeded in getting the paper referred back to the policy working group. 'There's nothing much wrong with this paper because there's nothing much in it,' he said.

But Stunell said: 'What is wrong if you've got a good policy, in keeping it? If I'm going to face Ruth Kelly, I'd be better off with this paper than without it.'


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