Lib Dems hit back after Tories outflank them on personal tax allowance

Nick Clegg accused the Tories of wanting to 'cut taxes for the wealthiest, paid for by the working poor' (PA)

To say that the Liberal Democrats were miffed when the Conservatives shamelessly stole their tax policy last week is an understatement. Expletives shout out of the mouths of senior figures in the "nice party".

Tonight Nick Clegg hit back at David Cameron’s grand larceny, which leaves both Coalition parties committed to raising the personal tax allowance from £10,000 to £12,500 a year by 2020.

The Lib Dem leader announced that his party would increase it to £11,000 in April 2016 and, unlike Mr Cameron, revealed how his tax cut would be paid for. Rerjecting Mr Cameron’s plan to raise the threshold for the 40p higher tax rate, he drew a neat dividing line: "The difference between the Lib Dems and the Conservatives is that we want to cut taxes for working people, paid for by the wealthiest, they want to cut taxes for the wealthiest, paid for by the working poor."

Once a £12,500 personal allowance is in place, the Lib Dems would start to raise the level of income at which workers pay national insurance (NI), helping those on about £8,000 a year. But with money tight, that might not happen until after 2020.

The NI move is long overdue. Allowing the lowest-paid to keep more of their hard-earned money is arguably a much more urgent priority than raising the personal allowance. But NI is less visible, and very expensive to cut.

It is a pity that politics dictated a bidding war on raising the allowance once the Coalition started down that track.