Support 100 years of independent journalism.

  1. Politics
31 July 2011

Danny Alexander rules out cut to 50p tax rate

The Lib Dem minister says government is not going to "shift our priority to reducing the tax burden

By Samira Shackle

Danny Alexander has said that the government does not want to reduce the top tax rate, saying that anyone advocating a cut in the 50p tax rate was “living in cloud cuckoo land”.

This follows calls by Boris Johnson and the former chancellor, Norman Lamont, to scrap the rate. Lamont said yesterday that taxes needed to be cut to make Britain as competitive as other European countries.

Speaking on the Andrew Marr Show this morning, Alexander was unequivocal:

We set out in the Coalition agreement, and it’s something that we as Liberal Democrats pushed very hard for, that the Government’s first priority in tax reductions would be tax cuts for people on low and middle incomes. Those very families who are working hard to try and make ends meet. Anyone who thinks we’re going to shift our priority to reducing the tax burden for the wealthiest has got another think coming.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. A weekly round-up of The New Statesman's climate, environment and sustainability content. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A weekly dig into the New Statesman’s archive of over 100 years of stellar and influential journalism, sent each Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.

It’s another clear statement of Lib Dem identity by a senior minister, and will draw ire from elements of the Tory backbench, who oppose the high rate. It also marks a departure from George Osborne’s line, which has always been that the 50p rate is a temporary measure. The Chancellor said in the Budget earlier this year that high personal tax rates “crush enterprise, undermine aspiration and often undermine tax revenues as people avoid them”, but refused to be drawn on when the 50p rate would be brought down.

Osborne is instinctively a low tax Conservative, and if his hands were not tied by the deficit reduction programme, it is likely he would have brought the rate down by now. It has been reported that the 50p rate could be scrapped in 2013, which would seem to go against Alexander’s implication that it is being retained for ideological reasons. Either way, it is not going anywhere soon.