“Liberal Democrats in the Coalition Government are committed to delivering a tax system which is fair and progressive for everyone, why should working people who are not married pay more tax?

“Our commitment to increasing the income tax threshold to £10,000 has already resulted in an extra £200 in take home pay for millions of workers last year, with an additional £130 coming this April.

“Tax breaks for married couples would only help 4 million couples to the tune of around £150 year.

“This year, thanks to the Liberal Democrats, over 1 million people will have been lifted out of paying any income tax, rising to 4 million by 2015.

“Giving low earners a tax cut is exactly the kind of policy the Coalition Government should and is prioritising at a time when money is tight and people are feeling the pinch.”

Nick Clegg champions Youth Contract

Thousands of companies received a letter this week from the Deputy Prime Minister Nick Clegg calling on them to play their part in getting young people earning or learning.

Nick is urging businesses to sign up to the government’s flagship £1bn Youth Contract so that they are ready to offer the jobs to young people in April. He announced details of how employers can access cash to help cover the cost of taking on fresh talent through a ‘wage subsidy’. The subsidy will be paid to companies for taking on young unemployed people and is designed to cover costs like National Insurance contributions.

The wage subsidy will pay £2,275 to employers for every 18 – 24 year old unemployed person they employ from the Work Programme and is open to all businesses, voluntary organisations and charities.

Payments for the majority of business will be made after the young person has been employed for 26 weeks. For smaller enterprises these payments will be staggered, with the first payment after eight weeks and the rest after 26. This recognises that smaller businesses need a boost to their cashflow to make the jobs viable.

The wage incentive will also be available for part time positions, with a rate of £1,137.50 if someone is employed between 16 and 29 hours.

“Getting young people earning or learning is my top priority, and that’s what the Youth Contract is going to do,” said Nick. “This is a long-term boost to help businesses get young people into jobs before long-term damage is done. Employers have a huge part to play in this and the subsidy we’re announcing benefits business and young people.

“I have written to thousands of employers of all sizes – from global corporations to small local firms – calling on them to look at what we’re offering through the Youth Contract and sign up to offer jobs from April. This is a significant moment and a call to arms for businesses to offer long-term opportunities to young people who are out of work.”

Senior Liberal Democrat MEP and Vice President of the Parliament’s Budget Committee, George Lyon, who is pushing for the EU budget to be radically restructured and independently evaluated to find further savings, commented after the vote:

“At a time when people across the country struggle to make ends meet, it is important that MEPs show some leadership in keeping the Parliament’s costs under control.

“Freezing allowances and travel expenses is a good start. But I believe that we can make many more savings. In order to ensure that taxpayers are getting maximum value for their money, we need to have an independent evaluation of the EU budget to get rid of any inefficiencies and waste.

“I am very pleased that once again MEPs have also voted to push for a single seat of the European Parliament. It is an outrage that Member States still insist that the House travels between Brussels and Strasbourg each month. MEPs are quite right in calling for an urgent evaluation of this situation.”

Liberal Democrat MEPs have been on the forefront of the Single Seat Campaign which calls for the European Parliament to be permanently set up in Brussels. Liberal Democrat MEP and Vice President of the Parliament, Edward McMillan-Scott, who co-chairs the Single Seat Campaign and is launching an EU-wide public petition against its controversial ‘travelling circus’ added:

“The pollution, cost, inefficiency and remoteness of this travelling circus are indefensible. The 1.27 million people who signed up to the OneSeat petition in 2007, calling for the EP to be located only in Brussels, have been ignored by the EU. But Europe’s public today cannot be ignored against a backdrop of economic crisis and pressing environmental concerns.”

Commenting ahead of a vote on the 2013 EU budget guidelines in the European Parliament in Strasbourg tomorrow, Mr Lyon said:

“At this time of national austerity and budget consolidation, the EU budget needs to be shaken up and restructured to get rid of inefficiencies and waste.

“MEPs need to lead the way in identifying and making important savings. All MEP allowances should be frozen until 2014 and we must cap the travel budget at its present level. We must make our money travel further!

“It is also time we had an independent and thorough evaluation of the European Parliament’s budget to make sure that it delivers value for money. For the time being, I want to see a freeze in administrative spending of all EU institutions.”

The Lib Dem MEP went on to argue that a major saving within the European Parliament’s budget would be the adoption of a single seat for the House in Brussels. He added:

“I urge all MEPs to vote for a cross-party amendment for a single seat of the European Parliament. We need to send a strong signal to Member States that it is time to end the travelling circus between Brussels and Strasbourg. It is down to national capitals that we are still spending around £180m a year on pointless trips between those two cities. This wasteful practice must end now.”

The Staffordshire farmer and economic policy expert takes over from Liz Lynne who stood down from Parliament earlier in February after more than 12 years due to the extensive travelling required in the job. Phillip Bennion was elected to second place on the Lib Dem list of candidates at the last European elections in 2009.

Commenting on his new role, Phillip Bennion said:

“I am determined to fight for the vital interests of the whole of the West Midlands region in the European Union and for a more prosperous and democratic Europe. From the shire counties to the manufacturing heart of the nation in Birmingham, this region's economic and environmental future will be shaped by our relationship with the EU.

“Literally hundreds of thousands of local jobs depend on it, so I will do my best to make sure we punch our weight in the corridors of power, whether in Brussels or London.

“I have always been pro-European. I am a strong supporter of a more liberal and democratic EU that concentrates on what it should be doing as simply and efficiently as possible. We are stronger together and would be much poorer apart.

“In our inter-connected world, the financial crisis in all western nations shows that we cannot bury our heads in the sand. If we listen to the siren sceptic voices we will be sleepwalking to disaster.

“Every European country is vulnerable to economic and environmental challenges which individual governments cannot control. Britain cannot tackle these challenges alone but must forge strong alliances with our neighbours. We have to be a strong voice for reform with a seat at the top table.

“I will use my experience as a farmer and independent businessman to work for EU rules that enable European businesses to take on the competition from Brazil, Russia, India and China (the BRICS) and other developing nations. Pointless red tape has to go and pro-active action taken to stimulate investment, trade and new jobs.

“I am committed to doing all that I can to further food, energy and material security in the long term in a way that conserves biodiversity and addresses climate change.

“Liz Lynne did a tremendous job as our MEP. Following her is a huge challenge but I am looking forward to getting to work.”

The leader of the Liberal Democrat delegation in the European Parliament, Fiona Hall MEP said:

“Phillip Bennion has been a very active Lib Dem member and campaigner in the West Midlands over many years. He not only knows the region very well, but also has first hand experience of working at a European level through his involvement with the European Liberal Democrat Party (ELDR) and as chair of the Liberal Democrat European Group (LDEG).

“With his background as a councillor, farmer and businessman, I am sure that he will be a valuable addition to the Liberal Democrat team in the European Parliament and we are looking forward to working with him.”

In tough times, the Liberal Democrats believe you should keep more of the money that you earn. That’s why the Liberal Democrats have long called for the tax-free threshold raised to £10,000 – giving you a tax cut when you need it most.
Liberal Democrat plans would save working people £700 a year –that’s an extra £60 in your wages every month. And more than 3.5million older and low-paid people will be freed from paying any income tax altogether.  This is a plan we put on the front page of our General Election manifesto and it went into the Coalition Agreement.
We have already started putting this in to practice.
In April last year, millions of ordinary working people were given a £200 annual tax cut and since last April 800,000 low paid people no longer pay any income tax at all.  But we believe our tax cuts need to happen faster and go further.  And we want your help in making it happen.
Ahead of the Budget next month, Nick Clegg and Liberal Democrats in the government will be pushing to speed up our tax plans.  Please join this campaign and sign the petition which is on the Number 10 website here.
Liberal Democrats want tax cuts for working people, not the rich.  Please help us to make that happen.

Confident Ed stands firm

Strongly backed by Nick Clegg, newly appointed Secretary of State for Energy and Climate Change, Ed Davey was quick to make his mark in his new role when he confirmed his personal commitment to green growth, green jobs and the wider use of wind power technology. “I think that onshore and offshore wind power has a real place in a balanced mix of energy generation so I’m a huge supporter of renewables” he said.

100 Tory back-benchers have tabled a motion calling for a dramatic cut in subsidies for onshore wind farms but Ed is very clear where he stands. “Already we’ve seen through the subsidies that this government has invested in onshore wind that the price has come down to make onshore more competitive, so we’ve got money in all sorts of renewables because of the success of these investments.

“There may have been a change at the helm, but there’ll be no change in direction or ambition. My priorities are very simple: green jobs, green growth and getting the best deal for energy bill payers.”Ed and Nick Clegg were visiting the Building Research Establishment’s Innovation Park near Watford, a testing site for green homes, where they met graduates considering moving into green construction jobs. Nick Clegg told them “The race is on to lead the world in clean, green energy. The savviest states understand that going for growth means going green. Low-carbon markets are the next frontier in the battle for global pre-eminence.

“We have every reason to be confident. The combination of enviable wind, wave and tidal power, a world-beating research base and a proud history of engineering give the UK a clear competitive edge. So we’re already in pole position. But the reality is: we need to sharpen our elbows if we want to stay ahead.” Ed Davey also announced that 155 community energy projects across the country have won a share of £5.1 million of funding from the Local Energy Assessment Fund. The winning bids include projects to demonstrate wall insulation to the public, schemes to check the energy efficiency of homes and events to promote energy efficiency in local communities.

While Ed was getting to grips with his new job, Norfolk North’s Liberal Democrat MP Norman Lamb was taking up his new appointment as Minister for Employment Relations, Consumer and Postal Affairs in the Department of Business Innovation and Skills. Welcoming him Secretary of State Vince Cable said “Norman’s professional background as an employment lawyer and experience as the Liberal Democrat’s Trade and Industry Spokesman make him an ideal replacement. He pioneered our policy to privatise Royal Mail and establish employee share ownership in the business so it is fitting that he will be responsible for implementing that policy.”

Norman, who was previously chief political adviser to Nick Clegg, expressed himself particularly delighted to be implementing the Post Office reforms he had pioneered in opposition. These would give employees a stake in the company.

Two other new appointments were announced in the mini-reshuffle. Cardiff Central MP Jenny Willott becomes an Assistant Government Whip and Dunbartonshire East’s MP Jo Swinson becomes PPS to Nick Clegg.

Commenting on the ongoing crisis where Italy, Romania, Bulgaria, Greece, Turkey and Germany have experienced reductions of up to 30% in Russian gas supplies from Gazprom over the last few days, Sir Graham said:

“The freezing conditions across Europe highlight yet again the dangers of being so overly-reliant on Russia for a quarter of our gas. Gazprom has – understandably – diverted its supplies to keep Russian homes warm, leaving many European countries short and prices on the rise.”

“And we just don’t know what Gazprom will do next.”

“But the wind is blowing harder than ever in the Scottish Hebrides and it is 15 C and sunny in southern Spain and Greece. If, instead of building gas pipelines, we were building electricity transmission infrastructure and switching from fossil fuels to wind and solar power, this week’s energy outlook would be a different story. European renewables are the answer to our energy security.”

“Indeed, the sun is also shining bright as ever in the Sahara. Importing electricity from North Africa would in fact be more secure than Russian gas, due to the larger number of potential trading partners and the fact that electricity cannot be switched off like gas. Electricity is the ultimate ‘just in time’ product: that which is not transmitted today is lost forever.”

“The sheer hypocrisy of Labour to point the finger on bankers’ bonuses is staggering. Labour presided over the biggest boom in bonuses this country has seen, from £3.1bn in 2001 to £11.5 billion in 2007. At the same time, they sat back and knighted the financial speculators who led this country to the brink of economic collapse.

“The Coalition Government inherited this economic mess from Labour and has taken decisive action to put the country back on track. We’ve capped cash bonuses at state owned banks to £2,000 and overall, the bonus pool is smaller than last year and considerably less than under Labour.

“In Government, Liberal Democrats are doing the right thing – implementing the Vickers’ proposals to make banking safer in the future, continuing our fight to get the banks to lend more and introducing the banking levy which raises £2.5bn a year. All Labour can do is complain from the side lines.

“While Labour spent thirteen years being intensely relaxed about people getting filthy rich, Liberal Democrats have made clear that our priority is lifting the lowest paid people out of paying income tax all together.”

“Promoting cycling and green transport is the right thing to do and I am delighted Liberal Democrats in the Coalition Government are taking action.

“This comes at a crucial time. Just five days ago The Times launched a cycle campaign in response to the shocking increase in fatalities among cyclists on our roads.

“It is absolutely essential people should be able to walk to work or cycle to school in a safe environment. The extra £8m for Sustrans will go a long way to achieving this.

“And the £7m for improved rail-cycle links will ensure that we continue to build a transport network which puts passengers first.”

Clegg calls time on unfair tax system

At the Institute for Government last Friday, the Deputy Prime Minister gave a major speech on tax and supporting working families.

“The tax system,” said Nick Clegg, “should be designed to reward effort, enterprise and innovation… and bear down on those things which are bad for our society.
“Attitudes to tax are a good proxy for our deepest political instincts and the three major political traditions in the UK – conservatism, socialism and liberalism – have very distinct approaches.”

“The liberal approach, put most simply, is based on a profound commitment to the value of paid work. Citizens are empowered when they can keep the fruits of their own labour. And fiscal liberalism supports taxes on unearned wealth… precisely to lighten taxes on the incomes of hardworking people.

“So the Coalition is calling time on our unfair and out-of-whack tax system.
We’ve put up Capital Gains Tax; we’ve reduced tax breaks on pension funds for the very rich; we’ve clamped down on avoidance – the steps taken already will raise an extra £7bn every year by the end of this parliament. And our priority in government – from the front cover of the Lib Dem manifesto to the pages of the Coalition Agreement – is freeing the lowest-paid from income tax altogether… and cutting income tax for millions of ordinary workers.

“Whether you call them the ‘squeezed middle’, ‘hard-working families’, or, as I have, ‘alarm clock Britain’… it’s the people who whose incomes are too high to qualify for welfare benefits but too low to provide any real financial security who need this extra help. Over the last few decades wage rises have outpaced the increase in the allowance… so that more people have been sucked into the income tax net.

“At the last election my party promised to raise the personal allowance for ordinary taxpayers to £10,000 and I am extremely proud that the Coalition has committed to doing so over the course of this Parliament. I want to make clear that I want the Coalition to go further and faster in delivering the full £10,000 allowance.
Because the pressure on family finances is reaching boiling point … these families cannot be made to wait.

“Delivering the £10,000 personal allowance more quickly will need to be fully funded. But to those who say: we cannot afford to do this. I say: we cannot afford not to do this.

“It is often said that to govern is to choose… and, in particular, to choose whose side you are on. That is especially true when there is no money around. My choice – the Liberal Democrat’s choice – is clear: I want to help hard-pressed and hardworking families. If that means asking more from those at the top – so be it.

“We are committed to eliminating the deficit… and eliminate it we will. But I am determined that we do so in a way that is fair…that rebalances our economy…that gives the right people the right rewards.
“People look to the Liberal Democrats to keep this Coalition anchored in the centre ground. They want economic competence, but they want compassion too.
It is our job to make sure this government delivers both.”

The ASA ruled that the image used in an advertisement for L’Oréal Paris’ Revitalift Repair 10 was altered to change Rachel Weisz’s complexion, making it appear smoother and more even. It was judged to be in breach of industry code and “misleadingly exaggerated” the performance of the product.

The advertisement has been banned in its current form and the ASA has warned L’Oréal not to use digital retouching to misrepresent the effect of their products.

Commenting, Jo Swinson said:

“The beauty and advertising industries need to stop ripping off consumers with dishonest images. 

“The banning of this advert, along with the previous ASA rulings banning heavily retouched ads featuring Twiggy, Julia Roberts and Christy Turlington, should act as a wake-up call. Thankfully the advertising regulator has again acknowledged the fraudulent nature of excessive retouching.
 
“The Royal College of Psychiatrists has spoken out about the harmful influence of the media on body image and has highlighted the airbrushing and digital enhancement used to portray physical perfection as an area of concern.
 
“There needs to be much more diversity in advertising – different skin colours, body shapes, sizes and ages.  Studies show that people want to see more authenticity from brands.  Images can be aspirational without being faked.

“The Campaign for Body Confidence challenges the narrow ideal of beauty perpetuated by the media and other industries. Tonight the All Party Parliamentary Group on Body Image is hosting a screening of the documentary Miss Representation which explores the impact on society of such an intense focus on women’s appearance, instead of their achievements. 

“The film shows how media misrepresentation and under representation of women results in a leadership gap and the silencing of difference.”  

More power for Scotland

The Secretary of State for Scotland, Michael Moore, is determined to move Scotland forward towards greater devolution.  As well as delivering the Scotland Bill, he is paving the way towards Home Rule.

In an interview with Liberal Democrat News he said: “These are exciting times for Liberal Democrats. We are leading the charge. The central issue at the moment is the independence referendum, which was in the SNP manifesto at their victory last May. We are clear, however, that they do not have the legal powers necessary [to instigate independence]. We are looking carefully as to how that referendum takes place. My job is to work with the Scottish Government to make sure we can devolve powers that are legal, fair and decisive.

“The referendum must be overseen by the Electoral Commission. On timing, we believe that a referendum needs to take place as soon as possible, as the uncertainty is extremely unhelpful to business.”

Combining questions on a ballot paper is complex, and devolution is a separate issue to independence. So, while the Secretary of State is consulting the Scottish people on this, the Coalition government’s view is that there should be a simple, straightforward, ‘yes-no’ question on independence.

“The suggestion of a third option, ‘Devo-max’ question would not resolve the issue and may well end up in the courts,” explained Michael. “For instance, 55 per cent of the people could vote for full independence and 75 per cent plus vote for Devo-max. Alex Salmond believes if that was the result, then full independence would carry the day. Most democratic people would strongly disagree.”

“This party has always been in the forefront of the debate for Home Rule,” continued Michael. “The Liberal Democrats in the Coalition are delivering greater powers in the Scotland Bill. But the Liberal Democrats are not stopping there. Willie Rennie has asked Ming Campbell to set up a Commission to look at what powers Scotland should have within the UK. This would be similar to the Constitutional Convention, the Scottish Parliament and the Calman legislation for the Scotland Bill. In that way you get common ground and consensus before legislation.”

There are a number of important questions the SNP has left unanswered: What regulation would be applied to Scottish banks and who would enforce it? Would they be prepared to buy out the UK Government’s stake in RBS? Which currency would Scotland adopt? What would happen to Scottish membership of international organisations (including the EU), our armed forces, pension liabilities? What are the bottom line costs of independence?

As Nick Clegg said last Sunday on BBC’s The Andrew Marr Show, “You would have thought for a party whose sole purpose in life is to advocate independence, they [the SNP] would have been able to provide answers about what it means for defence, for taxation, for investment, the currency, and that’s what I think we should focus on.”

“Today’s figures show that on the whole young people have not been put off by the changes in the student finance system. 

“This is due in no small part to the serious effort put in by the Coalition Government and many others in making sure that each young person and their parents knew all the facts about funding higher education. 

“In particular, many families clearly now understand that all graduates will pay less each month towards the cost of their university education than they did before.

“There has been a larger drop in the number of older students applying to university. The Government will have to take a serious look at why this has happened, particularly as mature students for the first time also do not have to pay for their university education  in advance.

“However, because part-time students have more flexibility in when they apply, there are still good opportunities for people looking to start university this year to put in an application.”

Today I want to make clear that I want the Coalition to go further and faster in delivering the full £10,000 allowance.

Because the pressure on family finances is reaching boiling point.

Yesterday’s GDP figures remind us that the road to the UK’s economic recovery will be long and progress will be uneven.

Those GDP figures remind us that we cannot simply ride out these troubles.
Waiting for the good times to roll around again, nor can we return to business as usual.

The financial crash and the recession that followed were unprecedented, and they were global. But the UK’s weakness in the face of those events was a damning indictment of the way our economy had been run.
An economy that became closed, elitist, driven by vested interests. Where we prized recklessness and short-term gains, and undervalued stability and hard work.

So picking ourselves up for good means fundamental reform. Hitting the reset button to ensure that not only does prosperity return, but, this time, it’s properly shared and really lasts.

The first part of that is clearly deficit reduction.
Filling the black hole; wiping the slate clean;
Preventing years of higher interest rates and fewer jobs;
Ensuring that the next generation does not pay for this generation’s mistakes;
Creating the sound public finances, the macroeconomic stability that we know is a prerequisite for lasting growth.

But, beyond that, we must also rebalance our economy: ending our overreliance on financial services and the South East;
Shifting from consumption to investment;
From debt-driven bubbles to sustainable growth.

And there is another element of rebalancing.
Rebalancing our tax and benefits system, because both need to be rebuilt with work at their heart, restoring some sense to the assistance and rewards the state provides.

We cannot pin all our hopes on the traders or the bankers. It will be the millions of hardworking Britons who deliver the nation from these difficult times. So we must now make the most of all of our human capital. And we must help struggling families stand on their own two feet.  That means a benefits system that gets more people into work and a tax system that ensures work pays.

Today I want to say a word on each.

First, benefits.

I have always believed in a welfare system that helps those in need – those who cannot work must be protected. And those who have jobs must be confident that, should they lose them, there is a safety net in place.

That is precisely why, in the Autumn Statement last year the Coalition committed to the full uprating for pensions and out-of-work benefits from April – 5.2%, in line with inflation. Not everyone agreed that “the unemployed” should receive the full uplift, certainly not in the current climate. And, if you believed everything you read, you would think that these benefits are, essentially, unlimited handouts for the ‘idle poor’.
But that just shows what is so often wrong with this debate.

For one thing, for decades now benefits have been uprated in line with prices while earnings have generally increased at a faster rate. So the value of benefits such as Jobseekers Allowance have actually shrunk over the years compared with the incomes of those in work.

But, even more importantly, abuse of the benefits system by a minority has obscured the needs of a deserving majority.
The older people who have contributed to our society for their whole lives.
Those who cannot work due to disability or serious illness.
And – the group most often forgotten – working people who have been laid off, through no fault of their own. And, most often, for short periods of time.

Yes, sometimes the system is exploited – and that cannot be accepted.
But the majority of people who claim JSA are off benefits within three months.
People who pay their taxes, support their families, but are temporarily down on their luck. So we need a benefits system that helps those who can work into work.

And it is that simple principle that drives the Coalition’s welfare reforms. From the Universal Credit, to the benefits cap, to the Work Programme and the Youth Contract.

While the economy was booming. We saw four and a half million people stuck on out-of-work benefits.

The number of young and unemployed hardly changed. There are now 2.6m people on incapacity benefits. 900,000 of them have been parked there for 10 years or more. And where children grow up in homes where no one works they are twice as likely to experience long spells of unemployment themselves.

It isn’t right; the country can’t afford it.  The Coalition is determined to see it change.

Nearly 70 years ago, when William Beveridge designed the welfare state he imagined a system that would give people protection from cradle to grave. Not one that would act as a crutch every day in between. The state must offer security in hard times.
But it should not, he warned, ‘stifle incentive, opportunity, responsibility’.
In the words of another great liberal, John Stuart Mill, ‘assistance should be a tonic – not a sedative’. I couldn’t agree more.

Tax – the different traditions

And it is those same values, that same belief in the potential of ordinary men and women to flourish that needs to be instilled in our tax system too.

My philosophy on tax is simple: The system should reward effort, enterprise and innovation and bear down on those things which are bad for our society.

That sounds like a proposition with which most people would agree. But attitudes to tax are a good proxy for our deepest political instincts.  And the three major political traditions in the UK – conservatism, socialism and liberalism – have very distinct approaches.

For those on the philosophical right, taxes are necessary but there is an understandable fear that tax-done-badly can threaten entrepreneurialism and business, strengthening the hand of an intrusive state. That wariness means the right can be less inclined to promote tax as a way of redistributing wealth and opportunity, putting less of an emphasis on using the tax system to tackle inequality, for example, between those who earn their income and those who are asset rich. 

For the traditional left, on the other hand, taxes are the principal means of redistribution. Socialists will support a penal rate of tax on the highest earners, simply because it makes them poorer.

For them, tax is a badge of socialist success: the more, the better. They would rather draw money in through the state and then hand it back to people rather than letting them keep more of their earnings in the first place. 

The liberal approach, put most simply, is based on a profound commitment to the value of paid work.

Citizens are empowered when they can keep the fruits of their own labour. As Gladstone said, it is better for money to ‘fructify in the pockets’ of the people who earn it, rather than in the Treasury and fiscal liberalism supports taxes on unearned wealth, precisely to lighten taxes on the wages of the hardworking. 

A simple choice

Those principles could not be more important today. Because, in developed economies around the world, in every country now seeking to get back on the right path, where money is scarce, where every day families are tightening their belts, the biggest question we face is this: how is that burden shared?

That’s why, this week, we heard President Obama devote his State of the Union Address to greater fairness in the American tax system. It’s why tales of tax avoidance are filling our newspapers everyday. And every politician now has a simple choice: do you support a tax system that rewards the hard-working many? Or do you back taxes that favour the wealthy few?

I know which side of the line I stand on: The UK’s tax system cannot go on like this.
With those at the top claiming the reliefs, enjoying the allowances, hiring other people to find the loopholes, while everyone else pays through the nose.

So the Coalition is calling time on our unfair and out-of-whack tax system.

We’ve put up Capital Gains Tax – Ending the scandal, under Labour, of a hedge fund manager paying less on their shares than their cleaner paid on their wages.

We’ve reduced tax breaks on pension funds for the very rich.

We’ve clamped down on avoidance and taken steps to raise an extra £7bn through closing the tax gap.  

And our priority in Government, from the front cover of the Liberal Democrat manifesto to the pages of the Coalition agreement, is freeing the lowest-paid from income tax altogether and cutting income tax for millions of ordinary workers.
Raising the personal threshold to help the squeezed middle

Over recent weeks you will have heard a great deal about fairness at the top, through Vince Cables’ reforms to curb excessive executive pay.

You will have heard a great deal about fairness at the bottom, through reform of our welfare system to ensure benefits are fair and reasonable, and to get more claimants into work.

This is about fairness in the middle. More money in the pockets of the people who need it.

 Whether you call them the ‘squeezed middle’, ‘hard-working families’, or, as I have, ‘alarm clock Britain’, cutting income tax is one of the most direct tools we have to ease the burden on low and middle earners. The people whose incomes are too high to qualify for welfare benefits, but too low to provide any real financial security. The group whose plight the Resolution Foundation has done so much to highlight.

The working mum whose bills keep rising but whose wages do not.

The father kept awake in the dead of the night, worried tomorrow the company will be laying people off. 

The young couple who used to look forward to the holiday they would book or the car they would buy, but who now know that if the boiler breaks or the washing machine packs up, the money just isn’t there.

Go back 50 years or so and many more working people were exempt from income tax thanks to a more generous tax-free threshold. But over the last few decades wage rises have outpaced the increase in the allowance. Sucking more and more people into the income tax net. And, while in the early 70s, the Personal Allowance was worth around 28% of average earnings. By 2010 that had dropped to around 20%.

At the last election my party promised to raise the personal allowance to £10,000 for ordinary taxpayers. And I am extremely proud that the Coalition is on track to do so over the course of this Parliament. We’ll make sure that anyone earning £10,000 or less will pay no income tax at all and for those on middle incomes, the first £10,000 they earn will be tax free.

For millions of basic rate taxpayers – ordinary, hardworking people – that means paying £700 less in income tax each year, around £60 a month.

In the 2010 Budget we increased the tax allowance from £6,475 to £7,475. This year we have already announced a planned rise of an additional £630 – meaning that a total of 1.1 million more people will no longer pay income tax at all.

But today I want to make clear that I want the Coalition to go further and faster in delivering the full £10,000. Because, bluntly, the pressure on family finances is reaching boiling point.

Compared to those at the top, these families have seen their earnings in decline for a decade and that’s got worse since 2008, with lower real wages and fewer hours at work.

Ongoing consolidation in the UK public finances has meant necessary increases in taxation, reductions in spending, restrictions on public sector pay, and higher contributions on pensions.

Last year brought much higher world inflation, some food prices have doubled, some energy prices have gone up by 50%.

And, yes, we are now seeing some moderation in inflation.

But, in just three years, real household disposable incomes have fallen by some 5 per cent, one of the biggest squeezes since the 1950s, since the records began. These families cannot be made to wait.

Household budgets are approaching a state of emergency. And the Government needs a rapid response.

Delivering the £10,000 personal allowance more quickly will need to be fully funded. We cannot just cut taxes by raising borrowing – that is just extra taxation deferred. And it would undermine our success in restoring stability and credibility to the public finances. So we need to find the money. And that will not be easy, of course. 

But to those who say: we cannot afford to do this. I say: we cannot afford not to do this. And it is because of the pressure our economy is under that there is now an urgent need to give families more help; an urgent need to rebalance our tax system so it rewards work and encourages ordinary people to drive growth. And that means those who are better off paying their fair share.

In its recent excellent report Divided We Stand, the OECD noted how the incomes of the richest 1 per cent have soared away from everyone else over the last 20 years and showed that these people could be making a bigger tax contribution.

They also made clear that the right way to do this is not to increase marginal tax rates on work any further. This would simply drive many of the rich away to other countries.  Or encourage them to use tax avoidance mechanisms more aggressively.
Instead, they suggest, governments need to look at tackling industrial-scale tax avoidance.

As well as at the allowances and reliefs which favour those on very high incomes that is how we can raise the average taxes paid by the very rich, without any further rise in marginal rates.

To that end the Coalition set up the Aaronson Review to look at a General Anti-Avoidance Rule on tax so that the tax industry cannot spend all its time creating ever more contrived schemes, undermining the principles and intentions of the system.

There are a range of other, specific areas where we need to be tough too, not least stamp duty avoidance, particularly on higher end property sales and the transferring of assets and income abroad to avoid UK tax.

We need to look at what more can be done to “green” the tax system. Not just because we care about the planet we leave our children – although that would be reason enough. But because, when the decision is between taxing pollution or taxing hard-graft, the right impulse is obvious.

And, there is another big part of the tax system where I believe we need to be much more ambitious: Serious, unearned wealth.

The eye wateringly lucrative assets so often hoarded at the top. We still live in a society where, for so many people. How much you earn can never compete with how much others own. Our tax system entrenches that divide. And we need to be bold enough to shift the burden right up to the top.

I know the Mansion Tax is controversial, but who honestly believes it is right that an oligarch pays just double the Council Tax of an average homeowner even if their house is worth one hundred times as much?

And who seriously thinks we would kill aspiration through a levy on the 0.1% of the population who own £2 million pound homes? The Mansion Tax is right, it makes sense and the Liberal Democrats will continue to make the case for it. We’re going to stick to our guns.

So, to finish as I began: we are living in tough times. And many families are feeling the pinch. We need more of those who can work in work, and real rewards and incentives for those who are.

It is often said that to govern is to choose and, in particular, to choose whose side you are on. That is especially true when there is no money around. My choice – the Liberal Democrat’s choice – is clear:

I want to help the hard-pressed and the hardworking. If that means asking more from those at the top – so be it.

We are committed to eliminating the deficit, and eliminate it we will. But I am determined that we do so in a way that is fair.

That rebalances our economy.

That gives the right people their dues. 

People look to the Liberal Democrats to keep this Coalition anchored in the centre ground. They want economic competence, but they want compassion too.
It is our job to make sure this Government delivers both.

Thank you.

“This is very welcome news for both the Post Office and Royal Mail and demonstrates our commitment to ensure a sustainable future for both.

“Post Offices are a vital part of our communities and are the lynchpin of our towns and villages. More than 20m people visit a Post Office every week to send letters to loved ones, to manage their finances or to renew passports for holidays and hundreds of thousands of pensioners rely on them every day for their pensions.

“Labour left Royal Mail in a terrible mess and it is Liberal Democrats in the Coalition Government who have stopped closures and put Royal Mail and the Post Office on a secure footing. Our plans mean that we will never see the kind of planned closures that devastated local communities under the previous Government.

“Labour said our plans would lead to more closures as the Royal Mail moved away from using the Post Office network. Today’s announcement proves that they were, once again, wrong.”

“This announcement shows the Liberal Democrats’ commitment to tackle out of control executive pay.

“Liberal Democrats have no problem with people being highly paid but there should not be rewards for failure.

“This problem can only be solved by companies and their shareholders.  It’s not government’s role to micro-manage company pay but there are things we can do to address what is a clear market failure.

“With millions of people experiencing pay freezes and uncertainty about their jobs, the right thing to do is to shine a light on the murky world of executive pay and boardroom behaviour.”

“Sharon is one of the most influential thinkers and legislators in Europe on financial services and the Eurozone crisis. Her re-election is good news for Europe and the UK.

“As party leader, I am proud that we have a leading Liberal Democrat in such a prominent and powerful position on the international scene. As UK Deputy Prime Minister, I am delighted and relieved to know that the EU financial services brief is in such expert hands.

“In the wake of the financial crisis, it is absolutely right that we undertake a complete overhaul of the rule book governing global finance and banking at the European, national and international level.

“Ministers and industry figures must now redouble our efforts to re-engage across Europe, pro-actively work with our partners to shape EU legislation that builds a more responsible, safe and successful banking sector, and deploy our financial expertise to help resolve the ongoing Eurozone crisis.

“I look forward to working with Sharon over the coming months in addressing these overwhelmingly important issues for the UK and Europe as a whole.”

Between now and the Budget, Nick Clegg and the Liberal Democrats in Government will be arguing for faster tax cuts for hard-working families, promoting work and growth, and rewarding innovation, paid for by increasing the amount paid by the richest.

And the Liberal Democrats in Coalition are already making the difference:

• More than 800,000 working people no longer paying income tax
• 23 million working people have been given a £200 tax cut
• In April this year every worker will be given a further income tax cut of £130
• And by the local elections in May this year, 1.1 million of the lowest paid workers, will no longer be burdened by income tax

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Imagine a mum who works 3 days a week as a teaching assistant – earning £10,000 a year or just over £190 a week. Under Labour she paid more than £1,000 in income tax and national insurance. Although she wanted to work more days a week she knew it was not financially worth it. Under Labour; once tax, tax credits and housing benefit has been deducted, for every extra pound she earned she was able to keep just 10.5p.

Under our plan she would see her income tax bill cut to zero making her £700 a year better off.

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The Liberal Democrats are committed to delivering a fairer economy, turning our tax promise into cash in your pocket. It was on the front page of our manifesto and is being implemented because of Liberal Democrats in Government.

As part of this Coalition, Liberal Democrats are calling time on our unfair and out-of-whack tax system.

• We’ve clamped down on tax avoiders – targeting an extra £7bn every year
• We’re taxing the banks by an extra £2.5bn every year
• We’ve stopped inheritance tax cuts for millionaires
• We’ve put up Capital Gains Tax
• We’re ending the scandal, under Labour, of a hedge-fund manager paying less tax on their shares than their cleaner paid on their wages
• We’ve reduced tax breaks on pension funds for the super-rich
• We have retained the 50p rate
• And our overall priority is freeing the lowest-paid from income tax altogether and cutting income tax for millions of ordinary workers

“Lord Patten gets the final word and with it he says what we’ve all been thinking.

“The BBC won’t improve itself by stripping away some of its most valued work. Seven million people listen to BBC local radio across the UK and it is a lifeline for older people and the disabled.

“We can’t expect easy solutions to the BBC’s challenges but it should be possible to meet them without harming local radio and regional TV.”

“Private members’ bills are rarely passed, and it’s even rarer that they do so with the unanimous support of every MP as happened today.

“The current system has had a deadening effect on the performance of live music in small venues. At the moment, the landlord of a small pub could face a big fine and imprisonment for letting a customer play a piano without a licence.

“The support received this afternoon from all MPs from all political parties just goes to show how important live music is in our country and the overwhelming support for changing our obstructive licensing laws.

“We’re now only one step away from the Bill becoming law and creating an even more vibrant and successful live music culture. This will benefit hundreds of small pubs, restaurants, schools, churches and community halls, and strengthen the British music scene immensely.”

A more liberal capitalism

In a major speech on the economy at the Mansion House on Monday, Nick Clegg set out a “liberal diagnosis of what’s wrong; and then a liberal remedy.”

The UK’s capitalism is in crisis, Nick argued, because there is a crisis of power. “We now have an economy driven by immensely powerful vested interests that politicians have abjectly failed to stand up to. The remedy, put most simply, is a redistribution of power.”

“It’s easy to throw rhetorical rocks at directors, bankers and businesses. But, if we are honest, this is as much a failure of politicians and regulators, the authorities too often cowed by corporate power.

“There’s nothing new about it. The agricultural landlords of the 19th Century and early 20th Century were happy for working people to pay more for their food because of protective tariffs. What Lloyd George in 1906 memorably called ‘stomach taxes’. So long as their own profits were protected.

“For liberals – from Gladstone to Grimond – the role of the state has always been to break up unaccountable, opaque concentrations of power. To protect the national interest from those vested interests. That is why, as well as the moves the Coalition government is making to bring greater transparency to government contracting and lobbying, we need real reform of party funding to reduce the influence of those interests in politics. We need tougher border controls between the political class and the corporate world. And we also need a better distribution of power within our economy.

“In an open society, a liberal society, people don’t just hold more power in politics, but in the economy too. And, over time, empowering workers can have a hugely transformative effect over corporate culture.

“Employee ownership has been a touchstone of liberal economic thought for a century and a half. Because we don’t believe our problem is too much capitalism: we think it’s that too few people have capital. We need more individuals to have a real stake in their firms – more of a John Lewis economy, if you like.

“Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better: lower absenteeism, less staff turnover, lower production costs. In general, higher productivity and higher wages, they weathered the economic downturn better than other companies.

“Is employee ownership a panacea? No. Does it guarantee a company will thrive? Of course not. But the evidence and success stories cannot be ignored, and we have to tap this well if we are serious about growth. It won’t happen at all without government taking a lead, so I am kickstarting a drive in government to get employee ownership into the bloodstream of the British economy.

“As the debate on a more responsible capitalism moves forward, Liberals will remain set on that goal: an end to crony capitalism, where vested interests trump the national interest; a better balance of power, in the economy – and between politics and business.

“That is the route to a safer, more stable, more prosperous economic future. This is how we will spread wealth and share rewards – a more responsible capitalism, a more liberal capitalism.”

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“I have been in the European Parliament twelve years and I think that is time enough. I have thoroughly enjoyed my time and it was truly a huge privilege; especially to serve as a Vice President of Parliament for the last five years. However, I think all of us, whatever our professions, need to turn a new page from time to time.

“At the mid-term of parliament many members come and go, so accordingly this moment following upon my unsuccessful bid for the Presidency is a good time to take stock. I undertook that bid for reasons that I deeply believe in but such a course of action is bound to lead to reflection. I want to take a break from politics and to take time and assess what next.

“I have been at the service of the people of Yorkshire and the Humber for twelve and a half years. I will always be grateful for the trust that was placed in me to carry out this role, but now is the time for someone with fresh eyes to take over.

“I remain a committed pro-European Liberal Democrat.”

Fiona Hall, Liberal Democrat Member of the European Parliament for North East England and leader of the Liberal Democrat MEPs said:

“Diana has been  a high profile Member of the Liberal Democrat delegation in the European Parliament, which she led from December 2001 until June 2004 and again from June 2006 to January 2007. She was an outstanding and hard working Member and ALDE coordinator of the Legal Affairs Committee. In her 5 years as a Vice President of the European Parliament she made a name for herself as a champion of transparency. In this role, she negotiated the new joint lobby register of the European Parliament and Commission and the new Code of Conduct for MEPs and was a driving force behind greater access to parliamentary documents. A great believer in participatory democracy, Diana was also very much committed to engaging people with the EU legislative process. Her work on the new European citizens initiative ensured that the admissibility criteria and checks were as open, unbureaucratic and citizen-friendly as possible.

 

“This resignation is an entirely personal decision by Diana. Being an MEP is a very demanding and time-consuming job and after 12 years and having achieved so much, I can understand that she might want to turn the page.

 

“On a personal note, I am very grateful to Diana for all the help and support she offered to me personally even before I was elected as an MEP”

TVs, mobile phones, computers and other electrical equipment are the UK’s fastest growing waste stream, with more than one million tonnes generated annually. Despite already existing EU laws, only about one third of e-waste is currently disposed of in an accountable and sustainable way. The rest is either dumped in landfills or shipped – often illegally- to non-EU countries.

UK Liberal Democrat MEP Chris Davies, who negotiated the original EU legislation on waste electrical and electronic equipment (WEEE), said:

“MEPs fought hard to set a higher target for the recovery, recycling and re-use of e-waste. When treated properly our old electrical equipment needs not be rubbish but a valuable raw material.

“The new rules will make clearer what used items can be legally exported. This will help to curb the criminals who ship electronic gadgets overseas where it is dismantled by children and the poor often in hazardous and toxic conditions.

“Our waste must not become anther person’s poison.”

According to the Environmental Investigation Agency, the UK has a persistent problem with e-waste trafficking with up to half of all discarded computers in the UK entering the illegal trade streams.

Sarah Ludford commented:

“Havel’s democratic and human rights credentials underpinned his whole life, while Fraga never renounced or apologised for the repressive standards of the Franco regime he served. Linking the two was a cheap trick, presumably to head off an MEPs’ protest.”

“Buzek has done some good work as President, and it is a pity for him to go out on a sour note. But the suspicion that he orchestrated this twinning deliberately to please his political friends is confirmed by his airbrushing of Fraga’s fascist past out of his tribute.”

“The EU was founded as a reaction to the horrors of dictatorship. It is an insult not just to Havel’s memory, but to that the millions of people who suffered and died at the hands of authoritarian regimes like Franco’s.”