Lib Dem conference: Clegg warning over axing 50p tax

Lib Dem leader Nick Clegg at the 2010 autumn conference Nick Clegg told The Independent a tax cut for the "very, very rich" would destroy public confidence

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Nick Clegg has said axing the 50p top income tax rate too early could "destroy" public support, as the Lib Dems gather for their conference.

The deputy PM said no decision would be taken without "consensus" between the coalition parties on the issue.

The 50p rate on earnings over £150,000 was introduced as a temporary measure under the previous Labour government.

Chancellor George Osborne says it is temporary and has asked HM Revenue and Customs to see how much it is raising.

The five-day conference is being held in Birmingham, with leader Nick Clegg expected to highlight the party's achievements in government.

Delegates are expected to vote on 15 policy motions on issues including welfare reform, adult social care, phone hacking and Lords reform.

'Very dangerous'

There have been calls in recent weeks for the government to axe the 50p rate - 20 economists signed a letter to the Financial Times suggesting it was harming the UK economy and should be dropped "at the earliest opportunity".

The former Conservative chancellor Lord Lawson has also added his voice to those calling for it to be dropped, telling the BBC it was "very dangerous" to the UK's economic competitiveness.

Start Quote

You cannot decide these things without both coalition parties agreeing, without consensus”

End Quote Nick Clegg Lib Dem leader

But Mr Clegg restated his opposition to axing the top rate, without any tax cuts for people further down the income scale.

He told the newspaper: "There is no way that the 50p [rate] is unilaterally going to be dropped in the absence of progress on lowering tax on people on low and middle incomes and looking at ways the wealthiest pay their fair share."

The tax system had to be competitive, but also had to have public support, and if millions of people felt "passed over" as preference was given to the better off "you destroy the very fabric of consensus without which a sensible tax system cannot survive."

Asked if he would walk out of the coalition over the issue, he said it would not come to that: "You cannot decide these things without both coalition parties agreeing, without consensus."

'Completely agree'

The coalition agreement drawn up between the Conservatives and Mr Clegg's party says the government will work towards increasing the tax-free personal allowance to £10,000 - a Lib Dem policy - and that would be prioritised "over other tax cuts".

The chancellor told the BBC he had always said the 50p rate was temporary and it was right to assess how much it was raising.

George Osborne has defended the government's review of the 50p tax

He added: "I completely agree with people who make the point that we've also got to be helping people on lower and middle incomes. And one of the things I've been able to do in the last couple of budgets is lift over a million low-income people out of income tax and I would hope it future budgets to continue to do exactly that kind of thing."

Since their last autumn conference, the Lib Dems have suffered their worst English local elections for 30 years, losing nine councils and 747 councillors.

Mr Clegg told the BBC it had been "a really tough year" but his party would get "stronger in the future".

He said the achievements he would be highlighting included raising the income tax threshold, reforming the state pension and creating more apprenticeships.

But he admitted: "Some people who used to support us don't now."

He added: "It's been a really tough year. We came into government in what were obviously controversial circumstances because we are governing with our sworn enemies the Conservative Party, and, even more controversially, we're having to make very, very difficult and in some cases downright unpopular decisions."

The party will also be considering controversial NHS plans at the conference and members will be trying to pressurise the Conservatives to lock out private sector from health care proposals. A conference committee will consider a request to hold an emergency debate.

About 8,000 delegates are expected to attend the conference at Birmingham's International Convention Centre, where security will be much tighter than in previous years.

Some party members are so concerned at the stringent identity checks that a motion has been put forward for debate on the subject.

The conference will end with a keynote speech by Mr Clegg on Wednesday.


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  • rate this

    Comment number 177.

    The fiscal reason for 50p maybe up in the air at the moment but the moral issue it seems to me is firmly planted.People who earn such sums have a moral obligation to the society that allowed them to earn such amounts to pay more in tax.If it wasn't for the rest of us you wouldn't be earning it so stop whining your hardly broke.

  • rate this

    Comment number 176.

    Osborne's comments are stomach churning. He says that he has lifted a (nominal) million people out of income tax and "hopes" to do the same for others in future budgets for others. However he is DETERMINED to reduce income tax for people who have more money than they or their familes could ever need.At the same Clegg does NOT intend to walk away from the coalition government. Complete charade.

  • rate this

    Comment number 175.

    I look forward to the day I pay 50% tax. I would pay it with a big grin on my face. I doubt it will ever happen.

  • rate this

    Comment number 174.

    The 50p rate should be scrapped. It makes very little for the economy and is sending large corporations abroad that we need here to boost the economy and get the UK back on its feet.

    Its about time this government started doing what it promised in the firs place and getting those claiming social security back to work.

  • rate this

    Comment number 173.

    While Nick bangs the drum at his conference on the 50% tax rate , I hope he will bang it equally as loud in Cabinet when Osbourne tries removing it, it requires actions Mr Clegg not just party crowd pleasing mood music!.

  • rate this

    Comment number 172.

    @144.arroyovaquero: Hard working and honest like, for example, Fred the Shred?

    Bank balance is no indication of moral fibre.

  • rate this

    Comment number 171.

    2 Hours ago

    Yeah, and pigs might fly! Spineless renegade.
    Indeed,but unfortunately no longer spinless,as proven by grandma Cable last week,when he made absolutely no mention whatsoever of any delay in reining in the bankers,when first interviewed,as the government spin on the subject was announced.

    8 or 9 years delay last week,it'll probably be 12 years by october.

  • rate this

    Comment number 170.

    £150,000 a year would not but you a decent flat in London. Hard work in the UK on the PAYE system just doesn't pay. The other way is of course the government takes everything then pays everyone benefits... al la soviet union.... I feel another brain drain coming on.

  • rate this

    Comment number 169. forgot to put the royals and the lords in there.

  • rate this

    Comment number 168.

    Punitive rates of tax for hard-working (and law-abiding) members of society is hardly 'fair'.

    How do you know they're all hard working & law abiding

    They might be be making their money by conning old ladies into buying dodgy goods at seriously overinflated prices or bankers specialising in short selling

    earning loads of money doesn't mean they're good - or bad,

  • rate this

    Comment number 167.

    148 Rotherham lad

    How do you quantify that? What numbers do you have?

    I'm looking to leave the country, that means a loss of around £750 for every £1000 my company earns, think that's a good idea?

  • rate this

    Comment number 166.

    If the 50p higher tax does not bring in a lot of money - then the rate should be increased to say 70% so that it does.

    The 50p higher tax rate is a pwoerful symbol of fairness - politicains need to take on board the importnance of the symbols of fairness.

    Why all this bleating from the city of London when many of the spivs are non doms & tax dodgers anyway?

    Symbols matter

  • rate this

    Comment number 165.

    bet they will use this as a leverage to get the gay marraige bill through

  • rate this

    Comment number 164.

    116.Luke Jordan
    you really need to wake up and face the truth.
    scraping the 50% tax rate would not bring in more executives who would all pay lots more tax any that did would do what tories already do become non-doms and avoid almost all tax's
    Besides where are all these jobs you think they are going to fill.
    Perhaps you missed out on the fact unemployment is rising thanks to hack and slash

  • rate this

    Comment number 163.

    The 50p tax rate is not the highest tax band. From the 2010-11 tax year the Personal Allowance reduces where the income is above £100, 000 - by £1 for every £2 of income above the £100,000 limit. Individuals who earn between £100,000 and £112, 950 are subject therefore to an effective tax rate of 60p in the pound for that fraction of their income.

  • rate this

    Comment number 162.

    What is extraordinary here is that this discussion has been going on for some time and they still have not got the analysis on what the 50p rate is contributing. Surely all the parties should have that information first before having this debate.

    As there are some smart people in politics the interested parties must have this information and are waiting for the right time to use it

  • rate this

    Comment number 161.

    139.Tio Terry
    Greetings Tio. Long time no see.
    I'm a retired person paying tax at 40% and still think that people who complain about having to pay high taxes haven't got much to complain about that a bit of expense cutting won't put right.
    I'm surprised to find you of all people had it in you to compare the United Kingdom unfavourably with anything done by La REPUBLIQUE Francaise :-)

  • rate this

    Comment number 160.

    Just call me Dave
    7 Minutes ago


    I agree, it's just to show what they would pay, I also have a post referring to expenses where one gets £150k salary then huge sums in expenses. I know very well self employed benefits, I was one for 12 years - 90% net. Expense cost though was a third of my money, I now have a local full time position and about the same disposable income.

  • rate this

    Comment number 159.

    "150 Tio Terry"
    The point is free enterprise can thrive because of the free economy and state investment. People do not make money solely by their own efforts. They need people called "customers" who need disposable income to buy their products and services; they need workers who are educated and healthy and who can afford to buy stuff. No one is independent of the rest of society and the economy.

  • rate this

    Comment number 158.

    The 50p tax rate is a waste of time anyone who earns enough to pay it has a good accountant to make sure they don't pay it.


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