UK Politics

Lib Dem conference: Clegg warning over axing 50p tax

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

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.

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.

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Media captionGeorge 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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