Wyre Forest Liberal Democrats

LIBERAL DEMOCRATS LAUNCH ALTERNATIVE BUDGET 2005

FINANCIAL DISCIPLINE, FAIRER TAXATION AND ECONOMIC STABILITY

The Liberal Democrat vision for the Economy

Today at the launch of the Liberal Democrat Alternative Budget, Liberal Democrat Leader, Charles Kennedy MP and Liberal Democrat Shadow Chancellor, Dr Vince Cable MP, emphasised the need for fairer taxation and tough choices in public spending.

Mr Kennedy said:

"When it comes to electoral success economic credibility is crucial. Which is why the Conservatives are still unelectable.

"I am determined that, at the General Election, we will maintain the reputation for economic integrity that we have built up over this Parliament.

"We have a reputation for being straight forward on tax. That will not change. But the difference between the parties on tax take is minimal. The real issue will be one of principle and of priority.

"In principle it is important that the tax burden does not fall disproportionately on the poor and vulnerable. We also believe that the priorities we are setting out for spending taxpayer's money are the priorities of the British people.

"If Labour are true to form, they will duck the issue of taxation. They will spin and obfuscate. They will rule some things out but be coy about what they actually plan to do.

"The Liberal Democrats have been the real opposition to the Government in this Parliament. At this General Election we will be the real alternative to the Government."

On the Liberal Democrat plans, Dr Cable said:

"Economic discipline and credibility are essential. But we intend to balance these economic imperatives with greater fairness.

"Our commitment to fairness is reinforced by a firm commitment to liberal economic policies: economic freedom. Without wealth creation there is no wealth to spread.

"We have identified over five billion pounds a year where low priority spending can be reallocated to our priority areas such as pensions, policing, health and education."

Dr Cable also highlighted the importance of establishing a fairer tax system. Dr Cable said:

"Our tax system currently reinforces rather than mitigates inequality. The poorest 20% pay a higher percentage of their income in tax than the top 20%. People don't want to pay more tax but they want it distributed more fairly.

"That is why we advocate scrapping Council Tax and replacing it with Local Income Tax (LIT). The majority of households will benefit or face no change under our system. Families on average income will benefit by over £450.

"That is also why we are lifting over 400,000 home-buyers, largely first time buyers, out of paying Stamp Duty.

"To enable us to abolish tuition fees and top-up fees, introduce free personal care for the elderly and cut local taxation we have also proposed a 50% tax ceiling on every pound earned over £100,000."

Summing up Dr Cable will say:

"I believe we can have both a liberal and a fair economy; better public services and tax cuts for the average family, strong growth, with tough financial discipline. Our policies are fully costed and will promote economic freedom and social justice."

THE LIBERAL DEMOCRAT ALTERNATIVE BUDGET

Tough Choices

By switching £5 billion per year from low priority spending areas such as abolishing the Child Trust Fund, ID card scheme, final stages of the Eurofighter programme, industrial and agricultural subsidies and the DTI the Liberal Democrats will fund priority programmes such as:

· Pensions - £100 per month extra on the pension at 75

Liberal Democrats will simplify the system and, by guaranteeing a basic pension at 75 of at least £105.45 per week for a single pensioner, abolish the need for means-testing altogether for a million people. Pensions will also be based on long-term residence rather than National Insurance contributions to benefit women who may have taken some time out to bring up a family.

· 10,000 more police on the streets

Liberal Democrats will fund 10,000 more police on top of Labour's plans.

· Smaller class sizes

Liberal Democrats will pledge to reduce class sizes for 5-7 year old children to twenty.

· Maternity Income Guarantee

We will ensure that working mothers will be paid at least £4,420 for the 26 weeks of statutory maternity leave when they are starting a family. This equates to £170 per week, the equivalent of the gross income of the minimum wage for a 35 hour week. Around 200,000 working women have their first baby every year. Under the Maternity Income Guarantee, the majority would be significantly better off - and not one would lose out.

Fairer Taxes

Axing the Council Tax

The Council Tax penalises pensioners and people on low incomes. They pay a far higher proportion of this income in tax than the very rich. A Local Income Tax is based on the ability to pay. It would be run through the existing Inland Revenue Income Tax mechanism - which will save millions of pounds - while ensuring that the typical household and pensioner pay hundreds of pounds less.

Stamp Duty

In recent years first time buyers have been squeezed out of the housing market by the large increases in house prices. It is essential that we start to make the housing market more accessible to these buyers. The Liberal Democrats recongise this need and propose to increase the stamp duty threshold from £60,000 to £150,000 to help first time buyers.

Introducing a 50% rate on every pound earned over £100,000 the Liberal Democrats will fund three policies:

Abolition of tuition and top-up fees

Liberal Democrats will abolish all tuition fees - as we already have in Scotland. No one should be deterred from the chance of a university education because of fear of debt.

Introduction of free personal care for the elderly

The Liberal Democrats will provide free personal care for those people with illnesses such as Alzheimer's and Parkinson's. This will involve implementing the recommendations of the independent Royal Commission on long term care for all of the UK, as we have done in Scotland.

Keeping local taxes down, as Local Income Tax is introduced

Financial discipline and transparency

All spending commitments are fully costed

All our economic policies are based on Government figures. In our autumn conference 2004 we released costings based on our Pre-manifesto. When our full manifesto is launched we will once again set out full details of much our policies cost and how we would pay for them.

Transparency in fiscal policy

We were the first party to advocate giving the Bank of England independent responsibility for monetary policy. We now propose that the Chancellor open up his books and allow the NAO to inspect and evaluate the Government's accounts and forecasts. We also propose that the ONS is made full independent and accountable to parliament.