Coalition – tackling long term issues not playing short term politics.

Lords reform, an issue all the parties believe in and the public believe in, but which the proposed solution, by Nick Clegg, is viewed as not the right type of reform, not allowing enough time for scrutiny or just at the wrong time. I’m being generous to those who are purely playing party politics with this issue!

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Lords reform is a big deal and Liberal Democrats want to see it delivered, not because we benefit, but because it’s the right thing to do. However, if we can’t get support for it, we should not enter into tit for tat politics with the Conservatives.  There are other things we need to get done, so lets do them rather than get bogged down on an issue seen as honourable but not a wider priority.

I want to see the drive to renewable energy, properly supported. As reported in the Guardian, the Treasury and Conservative backbenchers are blocking proposals, despite the promise of this Government being the “greenest government ever”. Increased certainty is needed for companies to invest in green technology, certainty we are not providing.

We can work together with the Conservatives, we have delivered:

  • Increase the income tax threshold to £8,105, taking 2m out of paying tax, and a tax cut of £546 to 21m taxpayers
  • Pupil premium for the poorest primary school children, worth £600 each
  • Driving the agenda for banking reform
  • Green Investment bank with £3bn of initial funding
  • Pension rises of 2.5% guaranteed or the rate of inflation, average wage increases if these are higher
  • Simplifying future pensions, so everyone gets £140 a week, no means testing

Coalition requires compromises, but as Andrew Rawnsley said in the Observer “by and large, it is the Lib Dems who have been the grownups of the coalition and the Tories who have been the juveniles”.Ultimately the Conservatives are behaving and wanting to enact policies of the party of old. In reality they could use the coalition to show that they have modernised, in actions not just words.

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A fair tax system – income tax threshold increased to £10k

Nick Clegg on Monday outlined Liberal Democrat reform of the tax system to increase the income tax threshold to £10k a year, meaning that 3.6m people will be taken out of taxation and a tax cut of up to £700 a year for most working people and £100 for pensioners.

The proposals will make a huge difference to many people, especially those on low incomes, our proposals will make a bigger difference to ordinary hardworking people than the Conservative scrapping of the National Insurance increase and their marriage tax allowance. The Conservative proposals would give c. £300 back a year, or £450 a year per couple, compared to £1,400 per couple under the Liberal Democrats (married or not).

The change to the tax system will help to remove the poverty trap (which can be removed further in the long run with a local income tax to replace the council tax) encouraging people to work, as well as a great assistance to young people first starting work. The £10k income tax threshold has been welcomed by Lord Digby Jones and Norman Tebbit, not usual Lib Dem supporters, but policies which get cross party support is always good. 

The policy will cost £17bn a year, but will be funded by a mansion tax on properties over £2m, aviation tax on flights not per passenger, changes to the pensions tax relief for higher rate tax payers, aligning Capital Gains Tax with Income Tax to reduce the rich from tax avoidance and anti-avoidance measures.

Clegg has been prudent in putting some policies on hold

My view is that a lot of what the Lib Dems were looking to do; free personal care for elderly, free childcare, extended shared maternity leave, citizens pensions is not feasible when you are also talking about making cuts in government expenditure not just rebalancing the books. We are already proposing cuts to trident replacement, abolish Child Trust Fund, restricting public sector pay increase for two years to £400 and cancelling ID cards.

You have to be realistic and reasonable. Companies and families adjust to the economic situation and so must political parties. We still firmly believe in free personal care for the elderly and no tuition fees for students, we did introduce these measures in Scotland when we were in coalition government.

We can still say what we stand for and advocate their introduction when the time is right, which is better than being populist and jumping on the nearest bandwagon that rolls by.

The Lib Dems are still proposing pretty serious changes, which would make the UK a fairer country:

  • A fairer tax system – lifting income tax threshold to £10k, effectively a £700 tax cut and taking c.4 million low paid and pensioners out of tax. Paid for by taxes on the wealthy and with green taxes (to change consumption behaviour).
  • A fair start for children – maximum primary school class sizes of 15 for children up to age 8. Most children from impoverished backgrounds will automatically be behind by the time they are 7 so we need to give them as good a start as possible.
  • A fairer economy, investment in green technology and industries, it is a growth industry and we’ll become less dependent on the financial sector.
  • A fairer form of government, more power to local authorities and  electoral reform to enable proper choice for voters people and make sure their votes count.