Tax middle class more, urges Lib Dem memo

THE Liberal Democrats were embarrassed yesterday as the party mistakenly instructed its MPs to call for a controversial tax rise on people earning £50,000 a year or more, overshadowing the conference’s backing for the coalition’s austerity economics.

Vince Cable launched a blistering attack on his partys Conservative coalition partners. Picture: PA

Officials issued a crib sheet to MPs – and copied in journalists –suggesting that among the “lines to take”, the party should call for an extra cash-grab on the “richest” in society.

The document said: “In these difficult times, it is important that everyone makes their contribution. It is right that we ask the broadest shoulders to bear their fair share: it is unrealistic to cut more money from welfare spending without increasing taxes on Britain’s richest.

“We are looking at how the richest 10 per cent of people, those earning over £50,000, could make a further contribution. The vast majority of people would consider £50,000 a very large salary: these are not the middle-income earners.”

Sources moved quickly to disassociate themselves from the commitment last night, insisting that raising taxes for people earning more than £50,000 was “definitely” not party policy.

However, sources did say they wanted to examine taxes on the “wealthy”, who could be lined up to pay extra on inheritance tax and capital gains tax, and receive lower pensions relief.

Aides also said that Mr Clegg was examining plans to restrict free bus passes to pensioners in high-income brackets. Such a shift would not apply to Scotland as the issue is devolved.

The proposals come as leading economic analysts warn of two more years of severe cutbacks – or tax rises – after the next election, when more fiscal austerity has been pencilled in by the coalition before 2017.

Mr Clegg has already said the party’s mansion tax plans, which would raise £2 billion a year from those with homes worth more than £2 million, would be a red line in negotiations.

The confusion over the party’s tax policies cast a shadow over a day which otherwise saw Mr Clegg win a major victory as delegates supported his call to stay the course on fiscal austerity.

Business Secretary Vince Cable – who had previously said he opposed parts of the party’s motion on the economy – eventually backed down, attending the debate on the economy and then voting for the motion itself.

He is understood to have decided to back the motion for fear it would be seen as a test of Mr Clegg’s leadership credentials.

The conference also stuck by the coalition on the top rate of income tax, narrowly rejecting a call to increase today’s 45p rate.

The memo this year was understood to be based on party leader Nick Clegg’s 2012 comments that “the vast majority of people – 90 per cent of the people in the country – would think a salary of £60,000, £70,000, £80,000 is a considerable amount of money”. He added: “People – decent, fair-minded folk who are earning far, far more than the national average – understand that they do need to make a fair contribution.”

In his keynote speech to conference yesterday, Dr Cable launched a tirade against the Conservatives, saying they had “reverted to type” as the “nasty party”. Mr Cable singled out the campaigning tactics of the party’s Australian spin chief Lynton Crosby as he highlighted an admission from Home Secretary Theresa May about how the Conservatives are viewed by voters.

He said: “Theresa May once described the Tories, a decade ago, as the Nasty Party. After a few years trying to be nice and inclusive it has reverted to type: dog whistle politics, orchestrated by an Australian Rottweiler.

“Hostility towards organised labour, people on benefits and immigrant minorities. The list of people the Tories disapprove of is even longer: public sector workers, especially teachers; the unmarried; people who don’t own property.

“Their core demographic excludes pretty much anybody who wouldn’t have qualified for the vote before the 1867 Reform Act.”

The Tories hit back last night by accusing Mr Cable of electioneering ahead of the next General Election and “starting the dirty fight two years early”.

Alex Johnstone MSP said: “To suggest all the negative policies of the coalition government are associated with the Conservatives and the positive ones are with the Liberals is insulting the intelligence of the electorate.”