Peter Hoskin

A Lib Dem demand that the Tories should get behind

Remember those Lib Dem calls for a mansion tax at the weekend? I said at the time that, ‘the Lib Dems appear to be drawing more attention to which of their own policies they are fighting for within government, whether those policies make it to the statute books or not.’ Well, now they’re at it again.

Nick Clegg is giving a speech this morning in which he’ll urge George Osborne to go ‘further and faster’ in raising the income tax threshold to £10,000 a year. It was the stand-out policy of the Lib Dem manifesto, so it’s hardly controversial that Clegg should want to see it enacted ASAP. But it’s still striking that he’s making this appeal in public. A year ago, he’d have emphasised what the coalition was already doing to raise the threshhold. Now, it’s more what they should be doing.

The Treasury is keeping its distance from Clegg’s speech this morning, claiming that it’s an expression of Lib Dem priorities and nothing more. But I doubt George Osborne will be entirely, or even partially, minded against the Deputy Prime Minister’s demands. After all, raising the threshhold to £10,000 is already government policy; they were just doing it by step. Clegg simply wants to make the full leap from £7,475 to £10,000 around the forthcoming Budget, rather than to £8,105 as was planned. And rightly so, I’d say.

Besides, we read today that Osborne is considering tax cuts for low- and middle-income earners at the moment — so Clegg’s plea may have come at just the right time. There would only be two questions were it to be accepted. First, where would the Chancellor make up the money? Clegg wants various tax loopholes to be closed around the rich, but would Osborne? And, second, what would the Lib Dems ask for then?

Raising the threshhold sooner would be a great and righteous achievement for Clegg and his party. But it would also mean that they’d have to identify new priorities for the three years ahead of the election. This could mean diverting their efforts towards the pupil premium, say. Or perhaps they’d call for the threshold to go beyond £10,000, to offset the effects of fiscal drag. Whatever the case, Osborne will certainly have more LibDemands to consider in future.

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