Clegg in vow over 50p tax rate

Nick Clegg at his conference in Birmingham yesterday (REUTERS)

The 50p tax rate will only be scrapped if it is replaced by another levy and the burden on the poorest is reduced further, Nick Clegg said today.

The Deputy Prime Minister insisted it would not be "morally or economically right" for the levy to go unless his conditions were met.

The future of the top rate has become a source of tension in the coalition amid calls from senior Tories for it to be abandoned. Critics believe the tax is raising little or no revenue for the Treasury, and makes Britain less attractive to entrepreneurs.

But interviewed on the BBC's Andrew Marr show as the Lib Dems hold their annual conference in Birmingham, Mr Clegg made clear he would drive a hard bargain.

"I have got two preoccupations," he said. "Firstly I don't think it is morally or even economically right to unilaterally lower the tax burden on the very, very wealthiest when we haven't made much progress, as we wanted to, on lowering taxes for low incomes.

"If the 50p does not raise money as we hoped from the very, very wealthiest... then of course we could look, as the Chancellor has said, at other ways in which they can pay their share."

He added: "It stays unless we can make more progress on lowering the tax burden on people on low incomes and secondly making sure, as the Chancellor himself has said, we can find other ways that the wealthiest can pay their fair share."

Chancellor George Osborne and Communities Secretary Eric Pickles are among those who have suggested the 50p rate should be dropped if it is not raising revenue.

The Treasury is not expected to publish figures on its effectiveness until next Spring.

There has been speculation that the Lib Dems and Tories are looking at options for substituting the levy with a 1% annual "mansion tax" on homes worth more than £2 million, a land tax and restricting tax relief on pensions to the basic 20p rate.

Mr Clegg also delivered a bleak assessment of the international economic climate amid stalling growth and the crisis in the eurozone.

"I think the situation is very serious," he said. "We are a very open economy. We are hugely dependent on what happens around us, particularly in the eurozone...

"If things are spluttering there, as they are very seriously, then that affects us massively."

The Deputy Prime Minister said Britain had "influence but not control" over what happened in the rest of the world.

But he gave another broad hint that he wanted the coalition to pursue what has been branded "Plan A plus" - with more positive domestic action to get growth going.

"I think there are more things we can do to create jobs today and build for tomorrow," he said.

He highlighted his recent announcement that major infrastructure projects were being prioritised. Treasury Chief Secretary Danny Alexander is also expected to unveil a £500 million fund for local schemes later, investing in areas such as faster broadband and housing.

The Government needed to "foster confidence where we can", even though the "wider context is really tough", according to the Lib Dem leader.

Mr Clegg also backed a controversial loosening of planning laws, saying "some very misleading claims" were being made about the changes.

Currently it was taking "years and years" to get major planning decisions taken.

"We haven't got years," Mr Clegg insisted. "We have got to get moving as a country."

Asked if the Government should slow down the cuts programme, Mr Clegg said: "I think people who advocate that just need to think this through.

"Does anyone seriously think that by ripping up the plan to balance the books that somehow you will create growth by next Tuesday? Actually, it is a complete illusion.

"What you create is outright market panic, high interest rates and more unemployment."

Mr Clegg also rebuked Tory eurosceptics pushing for Britain to pull back from the European Union - accusing them of putting UK jobs and prosperity at risk.

He said the British "bulldog confidence" should be harnessed instead to push for the completion of the single market.

"Our absolute overriding priority if we want to protect jobs, if we want to protect communities, if we want to protect families, is to actually deepen and widen that liberal and open free market right on our doorstep."

He said he hoped the eurozone countries would "get their act together" and make it a success, adding: "The last thing we should do is say 'oh in that case we wash our hands of the whole enterprise and we'll get out'. That will destroy jobs and destroy prosperity in this country."

He went on: "Europe influences us whether you like the EU or not and it has a massive effect on our everyday life. I want us to have the bulldog confidence of the British spirit to, instead of constantly looking for excuses to get out of the game, get out there, shape it, influence it and do so in the national interest."

Mr Clegg said the riots had shown that the UK had been "far too soft on repeat crime for far too long" - but rejected suggestions that was down to the Human Rights Act.

He firmly backed Justice Secretary Ken Clarke's "rehabilitation revolution", but laughed that he might have given the "kiss of death" to the veteran Tory's career by joking in a speech last night that he was the sixth Lib Dem member of the Cabinet.

The comments came as Business Secretary Vince Cable pledged to crack down on Britain's culture of excessive pay for senior executives.

The Cabinet minister signalled moves to make it easier for ordinary shareholders to prevent company bosses being awarded huge sums without delivering exceptional results.

"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."

In another move designed to soothe party activists anxious over high-profile coalition policies and flagging Lib Dem poll ratings, special teams of tax inspectors are to target the highest earners.

And education minister Sarah Teather is expected to give details of the flagship Pupil Premium later.

Funding for the initiative providing extra cash for poorer students is to double to £1.25 billion next year.

A ComRes survey for the Sunday Mirror and Independent on Sunday on the eve of the party gathering in Birmingham suggested the Lib Dems' support has flat-lined at 11%.

Separate research on public attitudes towards public leaders also makes grim reading for Lib Dems.

As part of the study, commissioned by former Tory chairman Lord Ashcroft and published by the Sunday Telegraph, swing voters were shown cards and asked to choose from a series of images they felt represented each party leader.

While David Cameron was compared to a lion, tiger or bulldog, Mr Clegg was associated with a puppet, a chameleon and a drowning man.

Though seen by many as likeable, the Deputy Prime Minister was described as "weak", "indecisive" and "out of his depth".

In a speech kicking off the conference last night, Mr Clegg upped his efforts to differentiate his party from the Tories.

He insisted Lib Dem ministers were fighting "tooth and nail" for the party's values behind the scenes and imposing their will on their "political enemies".

Speakers on the platform also delivered a series of risque jokes about their Conservative colleagues.

Lib Dem president Tim Farron said the party had prevented the Tories pushing through measures in government favouring the wealthy at the expense of the less well off.

"If there was a Conservative majority there is no way the income tax would be being cut for the lowest paid, there is no way that the pension would be increased for poor pensioners, but there would have been income tax cuts for the rich, there would have been inheritance tax cuts for the rich and we would be getting out of this financial mess in a much less fair way," he told Sky News' Murnaghan programme.

"If there was a Conservative majority, this Government would look a lot different - and in most people's eyes a lot worse."

Source: PA