Lib Dem conference: Minister signals tax crackdown

By Gavin Stamp
Political reporter, BBC News, in Birmingham

Media caption,
Danny Alexander: "We need to make sure that tax owed, is tax paid"

More than 2,000 tax inspectors will be recruited to crack down on tax evasion among the wealthiest people in the UK, a Liberal Democrat minister has said.

Danny Alexander, Chief Secretary to the Treasury, told the Lib Dem conference that this would ensure 350,000 top earners paid their "fair share" of tax.

Efforts to raise an extra £7bn by 2015 from evaders were "on track", he said.

The party should be "proud" of its economic record since taking power, he added, and would "stick to its guns".

The renewed drive against tax evasion is designed to prevent the richest people in Britain from hiding the true extent of their liabilities and ensure they contribute to efforts to reduce the UK's huge deficit.

'Fair share'

Mr Alexander told the conference in Birmingham that "we need to make sure tax owed is tax paid".

He said a crackdown on tax evasion and avoidance announced a year ago was "bearing fruit", with £2bn set to be raised this year towards a target of £7bn by 2015.

There already is a special unit within HM Revenue & Customs - set up by Labour - to focus on the tax arrangements of the wealthiest 5,000 people in the UK.

But the new staff will be employed to scrutinise the accounts of an additional 350,000 people who each have a total wealth of more than £2.5m.

"It took 12 years for the previous government to take action against the wealthiest 5,000 people, some of who weren't paying their fair share of tax," he said.

"We can do better than that.

"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."

The move comes amid a wider debate over taxation on the wealthiest in society and the future of the 50p top rate on earnings over £150,000.

Chancellor George Osborne says the rate - introduced by Labour in 2010 - is temporary and has asked HM Revenue and Customs to see how much it is raising.

There have been calls in recent weeks for the government to axe the 50p rate, with leading economists suggesting it is harming the UK economy and should be dropped "at the earliest opportunity".

'Morally right'

Lib Dem leader Nick Clegg has said it is right to have a review of its effectiveness.

But he insisted that if the 50p rate were scrapped, it would have to be replaced by "other ways" of ensuring the richest "pay their fair share".

"I don't think it is morally or even economically right to unilaterally lower the tax burden on the very, very wealthiest when we have not made as much progress as we wanted to on lowering tax on millions of people on ordinary incomes," he told BBC One's Andrew Marr Show.

The 50p rate "stays unless we can make much more progress" on the wider lowering of tax, he added.

The Lib Dems have previously floated the idea of a so-called "mansion tax" on property or land assets over a certain value.

The BBC News Channel's chief political correspondent Norman Smith said the coalition might be able to "bridge any divide" over 50p since the Conservatives were committed to further raising the level at which people start paying income tax - set to go up to £10,000.

'Enemies of growth'

In his speech, Mr Alexander defended the government's plan to reduce the deficit, saying the Lib Dems should be "proud" that it had taken decisive action and guaranteed "financial credibility".

"Labour say our motivation is dogmatic. They're wrong. It's practical.

"Financial discipline is necessary for effective government. It would be completely wrong to leave the bills for past mistakes to be paid for by our children. The economic case is indisputable

"We must stick to our plans and we will."

But acknowledging that a economic "storm was raging" in Europe, he sought to counter claims from Labour that the government has no growth strategy amid other signs of further economic deterioration.

"To get there we must break down the vested interests - the enemies of growth that stand in the way of future prosperity."

He announced the creation of a £500m "Growing Places" fund to support infrastructure projects which have got into financial difficulty.

Promising to "unlock development and create jobs", Mr Alexander said the scheme will enable local government to invest in priority projects and "get people into work".

A plan announced last week to single out projects of strategic national importance - such as Crossrail and broadband rollout - to ensure they move ahead quickly was criticised for being too modest.

'Realism needed'

He also pledged to free up £100m in extra revenue for local councils to spend on housing.

Labour say more substantial action is required to tackle youth and female unemployment, including a VAT cut and a rise in the bank levy to pay for new homes.

And business groups have urged ministers to be more ambitious in their approach.

"After more than a year in government, business people tell me they want to see realism, pragmatism and growth on the Lib Dems' agenda," said John Longworth, from the British Chambers of Commerce.

On the first full day of the conference, delegates in Birmingham will also debate tuition fees, drugs policy and schools funding on Sunday while party president Tim Farron and schools minister Sarah Teather will make keynote speeches.