18 Sep 2011

Danny Alexander clamps down on Britain’s richest

Danny Alexander tells Channel 4 News his plans to target the rich with a new team of tax inspectors, and help the poor by raising the income tax threshold to £12,500.

The message from the Liberal Democrats to wealthy tax avoiders today was: we will find you and your money and you will pay your fair share.

Chief Secretary to the Treasury Danny Alexander said the party wanted to raise the amount you can earn without paying tax to £12,500 pounds.

He told Channel 4 News: “For the next parliament, our focus is on income tax. It has always been a liberal philosophy in a sense to reduce taxes on labour and increase taxes on wealth, consumption, environmental pollution.”

Mr Alexander said the move would come instead of cutting VAT – a measure the Labour opposition prefers. He said: “I would prefer to use the marginal resources that we do have to put money back in the pockets of low and middle earners through the income tax system than some other change.”

LIVE BLOG: Channel 4 News at the Lib Dem conference

Mr Alexander also plans to recruit more than 2,000 tax inspectors to help the Inland Revenue check up on Britain’s richest people.

In his conference speech today Mr Alexander said that a 100-strong “affluence team” is being employed to make sure the richest were paying up.

The team will concentrate on the 350,000 people in the UK whose personal wealth is more than £2.5m. The unit is being drawn from 2,250 newly-recruited tax inspectors expected to be in place within weeks.

Mr Alexander said that the move had been driven forward by the Liberal Democrats and was already “bearing fruit”.

He told conference: “I promised you we’d collect an extra £7bn a year by the end of parliament. And I can tell you we’re already on track to raise £2bn this year.

“It took 12 years for the previous government to take action against the wealthiest 5,000 people – some of whom weren’t paying their fair share of tax. 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 your money’ and you will pay your fair share. Danny Alexander

“These are people who pay or should pay the 50p rate of tax. And my message to the small minority who don’t pay what they owe is simple, I agree with the Chancellor. ‘We will find you your money’ and you will pay your fair share.”

Mr Alexander also announced plans for a new £500m “growing places fund” that would reallocate government money to help kick-start infrastructure projects. He plans to give councils a one-off boost of £100m for housing using money saved by cutting the interest rate they pay the central government.

Bye bye bonuses?

Meanwhile, Business Secretary Vince Cable pledged to bear down on Britain’s culture of excessive pay for senior executives.

Mr Cable plans to give ordinary shareholders powers to prevent company bosses being awarded huge sums without delivering exceptional results.

There is lots of evidence of reward for failure. Vince Cable, Business Secretary

“The performance of companies has not demonstrably improved, yet people are being paid an awful lot more,” he told The Sunday Times. “There’s something happening that isn’t right. You don’t have this problem to anything like the same extent in Scandinavia, Germany, France. It’s a particular feature of our markets. There is lots of evidence of reward for failure.”

The government has ruled out attempting to cap or fix salaries but could make it easier for shareholders to vote on pay in advance, and ensure that their views are binding.

The Business Secretary said: “We wouldn’t want to fix salaries; it is not practical.

“The other route is to try to influence companies directly through their shareholders – getting the shareholders to be more active in influencing pay.

“We will in due course be setting out exactly how.”

50p tax rate

Mr Alexander’s speech follows Nick Clegg’s promise yesterday to block any attempts by the Tories to drop the 50p tax rate.

Chancellor George Osborne has suggested the rate is a temporary measure that could be dropped if it is not raising enough revenue. The Treasury is not expected to publish the income figures until next Spring, however the Institute for Fiscal Studies warned this week that the higher tax rate could prompt losses for the taxman.

There has been speculation that the coalition government is looking to substitute the measure with a 1 per cent annual “mansion tax” on homes worth more than £2m, a land tax and restricting tax relief on pensions to the basic 20p rate.