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Danny Alexander speech to Liberal Democrat Autumn Conference

September 25, 2012 12:34 PM
Originally published by UK Liberal Democrats

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I'd like to talk to you about our conference slogan: "Fairer taxes in tough times."

Thanks to the Liberal Democrats, taxes are getting fairer. Our tough budget negotiations mean that next year 24 million people will benefit from the largest ever increase in the tax free amount.

From April, working people will have seen their income tax bill fall by £550 and 2 million of the lowest earners will have ceased to pay any income tax. This is happening thanks to the Liberal Democrats in the Coalition Government.

It would not be happening without you.

Not everything about the Budget this year was perfect. But the Income Tax cut was by far the most important measure in the Budget - and the working people of this country will have over £3 billion more of their own money to spend next year as a result.

A cleaner working full time on the minimum wage will see their tax bill halved, thanks to Liberal Democrats. Very soon no one will pay Income Tax until they are earning more than £10,000, thanks to the Liberal Democrats.

We promised it in our manifesto, we campaigned for it, and we had the courage to go into coalition to deliver it. At the next election, we will promise to raise that figure yet further, to £12,500. So that you don't pay any Income Tax until you are earning more than a full-time salary on the minimum wage.

And in 2015 people will know that promise is credible, because we have delivered in Government. Thanks to the Liberal Democrats, truly a record of action - a promise of more.

Fairer taxes matter, because times are tough. The spending power of most people's pay packets has fallen over the last 5 years.

For too many, the spectre of unemployment has become a painful reality. For the country as a whole, the adjustment to a level of government spending and taxation that we can afford is painful and difficult.

When we came into office, we knew things were bad. But the truth is, we didn't know how bad. The damage that the crisis has done to our economy is even deeper than we first thought. The headwinds from high inflation and the eurozone are stronger than anyone imagined. The mess Labour left, worse than they would ever admit - let alone apologise for.

Now, having heard all of that, you might think I am pessimistic. You couldn't be more wrong. We have a government determined to do the right thing for the long term. Over the last two years we have laid strong foundations for a stronger economy.

I am fundamentally optimistic for the future. Because there are brilliant businesses, talented and hard-working people in every corner of this country who make this one of the best places to do business in the world.

Like the members of the Bristol Junior Chamber of Commerce I met with our brilliant Mayoral candidate Jon Rogers on Thursday, enthusing about the opportunities for young people to start their own businesses.

Like the small manufacturing company I visited in Cardiff South with Bablin Molik, our inspiring by-election candidate. A business that that has grown and is providing much needed jobs in the local area.

Like the massive chemicals plant I visited in Redcar with Ian Swales, growing with the help of a regional growth fund grant. These people are the growth makers, the job creators - our job is to help them.

Last year I announced the creation of the Growing Places Fund. £730m to help local areas fund local infrastructure to unlock new jobs. I can tell you today that the fund that Andrew Stunell and I established has already helped fund around 170 projects, supporting an estimated 178,000 jobs.

Conference, the economy has rightly been the central focus of this party conference.

Yesterday, we had an excellent debate on some of the further measures we would like to see to support growth. And Vince Cable gave a brilliant speech, setting out the work his department is doing to help clear up the mess that Labour left.

I daresay the congratulatory text message from Ed Miliband has been unavoidably delayed. Mr Miliband has come out with a new economic theory this month: 'Predistribution'

Apparently it means spending money you don't have, without knowing where that money is going to come from in the future. Conference, it's not a big new idea.

It's a bad old one. Labour spent 13 years trying it - and let the British people down spectacularly.

Labour don't like us talking about their record in office. But the country can never be allowed to forget their disastrous mistakes in banking, in regulation, in the public finances - falsely promising the British people that they could end boom and bust.

So I make no apology for reminding people that when it comes to the economy, Ed Balls and Ed Miliband have about as much credibility as Andrew Mitchell's etiquette coach.

The country won't let them forget their role in the economic crisis but it is also true that growth is much slower than we want. It will take us longer to deal with the deficit than we expected.

Here's why. The eurozone crisis. Higher than expected inflation. The weight of our broken banking system suffocating businesses with growth potential. All of these things have been tougher for Britain than was forecast when we started down this road.

In the short term, we are borrowing more as taxes and benefits respond automatically to help stabilise the economy. Critics should welcome that, not criticise it, because it shows that our plan is able to adjust as new pressures emerge. We have always been clear that flexibility is built in to our plan.

But every time an alternative is put forward, I ask myself a simple question. Will it strengthen the foundations of the better future economy that we are building?

Despite all of the difficulties and the challenges that lie ahead, in the last two years we have re-secured for this country a very precious commodity: credibility.

No one now doubts that Britain is a nation that can pay its way. As a result, the people from whom we borrowed £125 billion last year (more than the entire cost of the NHS by the way) were willing to lend us their money at some of the lowest interest rates we have ever paid.

Those low interest rates help keep wasteful spending on debt interest down. We have spent two years earning the confidence that secures those low rates. And we will not sacrifice it now.

Especially as we are able to use that credibility to create jobs, to help build homes, to get more money to business. Guaranteeing mortgages for first time buyers. Funding for lending to get more money to small firms. Guaranteeing funding to bring forward the major infrastructure projects our country needs and for housing associations to build more affordable homes.

Let me give you an example. One major project we are funding is London's Crossrail.

It is the biggest infrastructure project in Europe right now. But we need to ensure the rolling stock is delivered on time.

Right now, difficulties raising the necessary private funding in the market could delay their delivery. So I can announce to you today that the train contract for Crossrail will be the first project to qualify for a new government guarantee.

And it will be the first of many across Britain, I am sure. We have rebuilt the confidence in this nation's ability to pay its way in the world, we can now put that credibility to work for the British people.

There could not be a worse time to argue that we should abandon our plan. As we overwhelmingly agreed in our debate yesterday - we won't do it. It is the foundation for everything else. It is the foundation for jobs and prosperity in the future.

Last autumn, we were faced with a worsening forecast from the independent Office of Budget Responsibility. Rather than add more cuts now, we decided to take another two years to do the job.

That was the right, pragmatic response to things getting worse. Fellow Liberal Democrats, that decision has consequences too. It means we are now committed to further deficit reduction into the next Parliament.

Let me be absolutely clear: I will not sacrifice this party's independence by binding us to detailed spending plans deep into the next Parliament.

But there is one thing we must do. We have to set a detailed budget for government for the year 2015-16 because we will be in government for the first 5 weeks of it, at least.

That means setting out specific plans for the £16 billion of savings that are needed in that year. And it means setting out how we, as Liberal Democrats, would make the further tough choices needed beyond that.

Nick and I will negotiate hard to get this right, to make choices that are shaped by our Liberal values and driven by our Liberal Democrat priorities. We simply will not allow the books to be balanced in a way that hits the poorest hardest. At £220bn, welfare is one third of all public spending - and despite our painful reforms it is still rising.

We will have to look at it. But that cannot, must not, and will not be the only place we look. We insist that the difficult choices must be fairly shared: that those who can afford more must contribute more.

Which brings me back to where I started: fairer taxes, in tough times. We have done a great job cutting income taxes for working people. We have helped millions of people by stopping Labour's fuel duty increases. Helping struggling families and businesses deal with the burden of very high fuel costs.

And we have made a good start in raising taxes on the wealthiest. High earners get less tax relief on their pension contributions. You can't dodge stamp duty by putting your home in an offshore company.

Banks pay a special new tax - paying £10 billion over this Parliament. Capital Gains Tax is up - ending the scandal that a hedge fund manager could pay less tax than their cleaner.

At our conference 2 years ago, I announced an extra £900m to get tough on tax dodgers and told you that by the end of the Parliament it would deliver an additional £7bn a year in revenue.

Last year, I reported back that we were on track for an additional £2bn. And this year, I can announce we are on track to raise an additional £4bn. Fairer taxes in tough times, means everyone playing by the same rule book, and everyone paying their fair share.

To their credit, even most Conservatives now agree with that too. Last year we set up a new affluent unit within HMRC. I can report that it is already a success: it has raised £44m in less than a year.

And so I can announce that we will build on that success and expand its remit to the wealthiest 500,000 people in the country, those with net wealth over a million pounds.

The vast majority of taxpayers in this wealth bracket pay their fair share. We have this message to the small minority of wealthy people who don't play by the rules: we are coming to get you and you will pay your fair share.

But conference, tax dodging is not limited to our own shores.

So when I say we are coming to get you and you will pay your fair share, I mean those hiding their assets offshore too. Back in 2009, Labour made an agreement with Liechtenstein that set a time limited window that closes in 2016 for people to bring their UK tax affairs up to date.

They thought it would raise a billion pounds. Under this Government many more people are fessing up. So, we are doubling the size of the team focussed on Liechtenstein. With that extra effort we can recover much more from those who thought they could hide their money offshore. Up to three times more - £3bn.

That is good progress. We should all be proud of it. Getting tough on those who don't play by the rules. And as times get tougher, as belts get tighter, as austerity goes on for longer, it is morally necessary to do more.

In the summer, I shut down the scandalous situation where thousands of public sector workers were being paid in a way that potentially allowed them to pay too little tax.

Rules are now in place to stop that happening - based on the simple principle that if you're being paid public money, you should pay your taxes. But it cannot be right that similar rules don't apply to companies doing business with the government too.

There are thousands of large firms that receive taxpayers' money to deliver a service - they do a good job helping to deliver public services. But I have discovered that there is nothing that prevents the very small minority of firms that don't play by the rules from winning government contracts.

That is not right. That is not fair. And I am determined that it comes to an end.

If you want to work for us, you should play by our rules. Taxpayers' money should not be funding tax dodgers. So I have tasked HMRC and the Cabinet Office to come up with a workable solution to this problem and we will set out more details later this year.

And we need to get wealthy individuals to pay a fairer share too. In this country, we tax work, effort and income too highly, and unearned wealth far too little. Now you can move your money off shore but you can't move your mansion. That's why we want a Mansion Tax. It's simple, it's fair, it's unavoidable.

An extra levy on high value property would get more money from those who can afford it. It would ensure that the burden of the next round of deficit reduction is shared more fairly. We will continue to argue for it within government.

Now, some experiences in government have been quite strange. Nick may have hit the heady heights of 143 in the official charts. But strangest of all, some people seem to think it is impossible to be Chief Secretary to the Treasury and a Liberal Democrat at the same time.

Yes, I do have to work closely with George Osborne and Oliver Letwin. I do my best to make the Coalition work. And, actually, they do too. It is not impossible to be a Liberal Democrat in the Treasury. It is essential.

My liberal values are not left at the door on Whitehall. They are strengthened by being applied in practice, toughened by the experience of government.

And through my department we are delivering Liberal Democrat ideas:

  • More investment in transport than ever before
  • £2.5bn set aside for the pupil premium
  • £1.3bn to invest in Post Offices
  • A crackdown on tax avoidance and evasion
  • Big tax cuts for ordinary working families

All of that in the toughest economic circumstances any modern government has faced. Do you really think Conservatives governing on their own would have done those things? That's the difference Liberal Democrats make in the Treasury.

We inherited an economy as damaged as any in modern peacetime history. We have taken the tough decisions that lay the foundations for a modern, strong, balanced economy with strong businesses and more jobs. Reforming welfare, taxing the wealthy, practical help for working families.

Thanks to you, we are on the road to recovery. Thanks to you, we are doing the job we set out to do. It is not easy, but we are doing the right thing and we are making a difference. That is worth the effort.