Lib Dems 'to raise tax allowance'

Updated: 

Autumn Statement 2013

Raising the personal income tax allowance to £12,500 will be a key Liberal Democrat demand in any coalition talks after the 2015 election, the senior minister who will lead the party's negotiating team will say today.

Treasury Chief Secretary Danny Alexander will confirm that increasing the threshold will be written into the party's manifesto for the contest, and a rise of at least £500 - giving a tax cut of £100 - would be earmarked for the first Budget or Autumn Statement after the election.

The Lib Dems have made raising the point at which people start paying income tax to £10,000 a priority in Government, and Mr Alexander indicated pressure was mounting for George Osborne to signal a further rise to £10,500 in this month's Budget.

In his keynote speech to the Lib Dem spring conference in York, he will say: "We will fight the next election with our own ideas, our own policies, our own values - no one else's.

"And I can tell you that a top priority in any negotiation will be our aspiration to raise the personal allowance dramatically again in the next Parliament.

"To raise it to £12,500... That would be a further tax cut for working people of £500.

"At our first fiscal event in the next Parliament, we would deliver another tax cut of at least £100.

"A two term Lib Dem government would then be delivering a tax cut for working people of £1200 - that's £100 a month."

Party leader and Deputy Prime Minister Nick Clegg has called for this month's Budget to be used to signal a "workers' bonus" £100 tax cut by raising the threshold to £10,500.

Mr Alexander, the Chancellor's deputy in the Treasury, will say: "Every day in the run up to the Budget Nick and I are drawing strength from our party's growing campaign to press for a further rise in the allowance to £10,500.

"That would be another £100 tax cut for working people on top of the £700 (already delivered)."

As well as claiming credit for the rise in the personal tax allowance, Mr Alexander will also state that the economic recovery was a Lib Dem achievement.

He will tell activists: "Britain is on its way back. We know that Governments don't create jobs and growth.

"It is the hard work of millions of people and hundreds of thousands of businesses that does that - but Government can and must create the right conditions for this to happen.

"Be in no doubt that the right conditions for this recovery would not have happened without the Liberal Democrats in Government.

"Every job that's been created, every apprenticeship opened up, every pension boosted has our Liberal Democrat DNA running through it."

He will say that the rise in the tax allowance was "forced through" in the face of opposition from the Tory wing of the coalition., but the Conservatives were now trying to take the credit for the policy.

"We have had to fight for this at every Budget and at every Autumn Statement since 2010.

"And what a fight it has been.

"It started in those election debates when the Conservatives said 'we cannot afford it'.

"In 2010 the Conservatives wanted inheritance tax cuts for millionaires, we fought for and delivered tax cuts for working people.

"In 2011 the Conservatives wanted 'shares for rights', we fought for and delivered tax cuts for working people.

"In 2013 the Conservatives wanted a tax break for married couples that excluded millions of families, we fought for and delivered - you guessed it - more tax cuts for working people.

"Now, belatedly, some Tories are lamely trying to claim credit.

"Don't get me wrong, it must be hard to be a Tory in a Treasury delivering so much Lib Dem policy, so it's no surprise if some of them have gone native."

Mr Alexander has been appointed by Mr Clegg to lead talks with the Tories or Labour if next year's election throws up the possibility of another coalition.

He will be joined in the Lib Dem team by David Laws, Lynne Featherstone and Steve Webb - who have all been ministers in the current Coalition - along with Baroness Brinton.