Liberal Democrats pledge to spend extra £1bn a year on NHS

http://www.theguardian.com/society/2014/oct/04/liberal-democrats-pledge-nhs

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The Liberal Democrats will today move to outflank their Tory coalition partners by pledging to spend an extra £1bn a year on the NHS – over and above the amount promised by David Cameron – as the party tries to overcome dire poll ratings in the runup to the general election.

As the Lib Dem cabinet minister Ed Davey predicted in a Guardian interview that the “Cleggmania” of 2010 will be replaced by “Clegg respect” next year, the party announced that it would target a series of tax and pension reliefs for the well off to provide extra funding for the NHS from 2016.

The announcement by Danny Alexander, the Lib Dem Treasury chief secretary who spoke of the need to fund “the jewel in our country’s crown”, came as the party gathered in Glasgow for the last of the pre-election conferences of the main UK parties.

In a Guardian interview on the eve of the conference, Davey acknowledged that the Lib Dems face a challenge to explain both their achievements in office and their proposals for the future after a succession of opinion polls have placed them well below 10%. A Times/YouGov poll , which gave the Tories their first poll lead in three years, placed the Lib Dems on 6% – just over a quarter of the 23% Clegg secured in the 2010 general election.

Davey, the energy and climate change secretary, laughed off the polls as he told the Guardian: “I joined when we were 4% in the polls.”

Davey acknowledged that the party has a tough job to explain what officials are describing as the “twin pillars” of the Lib Dem conference – its achievements in office and its plans for the future. “Look, of course we need to get our distinctive message out,” he says.

Party figures will no doubt wave the Lib Dem manifesto from the last election in Glasgow to show that it has delivered – or even bettered – its first two commitments in 2010. These were: raising the tax free personal allowance to £10,000 – it will actually be raised to £10,500 next April – and targeting resources at poorer pupils in the “pupil premium”.

Davey believes the public is prepared to give Clegg a fresh hearing even though opinon polls suggest the electorate have long memories of the pledge that was tucked away on page 39 of its manifesto in 2010 – the scrapping of “unfair tuition fees for all students taking their first degree”.

The deputy prime minister had to apologise for that pledge after Vince Cable, the Lib Dem business secretary, trebled university tuition fees after the 2010 election.

Davey said: “I think people are going to reassess Nick over the next few months on that ground. I think we won’t see a return to Cleggmania but I think we are going to see Clegg respect because I think he has been one of the bravest, most courageous politicians of our generation.

“Yes, he’s taken brickbats but he has delivered more Liberal Democrat policies to make us a stronger and fairer society than any previous Liberal leader for several generations.

“At the moment, at this time in the electoral cycle, people are not quite focusing yet on the actual issue, the question in front of them. They are not quite focused on the leaders, they have images in front of them and so on but during general election campaigns people tend to start looking at parties and leaders rather more closely.

“They hear what they’re saying, we get more air time under the Representation of the People’s Act, our vote tends to go up during general election campaigns and I think people will look at Nick afresh.”

Davey made clear that the Lib Dems would fight the election campaign as the party entrenched in the centre ground of politics. He illustrated this by describing the Tories as the “slash and burn” party who want to deliver even more austerity while Labour has no credible record on which to base its plans.

The announcement by Alexander of plans to introduce an extra £1bn a year for the NHS from the financial year 2016-17 is designed to illustrate this strategy. It goes further than the ring-fencing promised by the prime minister in his speech to the Tory conference last week in which Cameron pledged to ensure that NHS spending would rise in the next parliament at least in line with inflation.

But Alexander said that Labour’s “deficit amnesia” raised questions whether the extra £2.5bn pledged by Labour for the NHS – with £1.2bn funded by a mansion tax on properties worth more than £2m – was realistic. The NHS proposal will be included in the Lib Dem general election manifesto because the coalition partners have decided not to agree any detailed fiscal plans – beyond seeking to eliminate the structural deficit by 2018 – after April 2016. But Alexander will challenge George Osborne during the forthcoming negotiations before the autumn statement, in which the chancellor will set out spending plans up until April 2016, to implement the Lib Dem proposal from next year.

The chancellor will be wary of the Lib Dem plans because the extra NHS funds would be raised by hitting higher rate taxpayers.

The Lib Dems propose raising £500m by reducing the lifetime pension tax relief – the amount that can be invested in a pension pot with tax relief – from £1.25m to £1m. They would raise a further £400m by raising the divided tax rate for higher rate taxpayers from 37.5% to the top rate of income tax at 45%. A final £80m will be raised by ending the Tories’ “misguided” scheme of allowing employees to be given shares in their companies free from capital gains tax in return for giving up employment rights.

Alexander said of his proposal, which will be voted on by the Lib Dem conference tomorrow: “Our National Health Service is the jewel in our country’s crown. A comprehensive health service paid for by the taxpayer and delivered free at the point of need was a Liberal idea and is a central part of our vision of a stronger economy and a fairer society.

“We will raise this extra money from asking the better off to contribute a little more in tax. This Liberal Democrat commitment is fully and fairly funded. It is in stark contrast to the Conservatives who have explicitly stated they will target working people on lower incomes to carry the heaviest burden. And any Labour commitment on spending is fatally undermined by their deficit amnesia.”

Davey widened the attack on the Tories, following a public row this week between Clegg and Theresa May over the “snooper’s charter”, by accusing his cabinet colleague Eric Pickles of coming close to abusing his powers by blocking new onshore developments against the wishes of some local councils. This amounts to an attempt to restrict wind turbines by the back door after the Lib Dems rejected Tory plans for a cap on the number of new onshore farms, he said.

“Mr Pickles took some powers to recover planning appeals from about June 2013,” he said. “The net effect of that is that, although investment is continuing, it is not continuing as fast as we had expected. He has these powers to intervene but he is getting close to abusing those powers.”

He added: “I am calling time on Mr Pickles on this one. By getting close to abusing his ministerial power he is trying to implement early their manifesto policy and we haven’t had the election yet.”

Davey said the reason the Conservatives are trying to restrict onshore wind is that “the Ukip tail is wagging the Tory dog”, as Farage’s party frequently denounced the impact of turbines and had pledged to repeal the Climate Change Act.

The energy secretary is also concerned that Conservative attempts to restrict onshore renewables are a mistake that will ultimately lead to higher prices for bill-payers. He warned the Tories have forgotten the role of renewables in protecting the country against price shocks, which will be especially important if a prolonged conflict between Ukraine and Russia leads to an increase in world gas prices.

“Clearly the more gas you are having to import, the more your energy and heating prices are going to be affected by that impact on European wholesale gas markets,” he said. “So you make yourself more secure and you insure yourself against price volatility by investing in energy efficiency and investing in renewables... I think one of the reasons why Conservatives back in 2007, in the early days of Mr Cameron, actually embraced the green agenda was because they could see the link with the energy security agenda and they appear to have forgotten that link.”

Another area where the Conservative policy will lead to higher energy bills is David Cameron’s plan to exempt new starter homes for young first time buyers from some green building standards, he said.

“This is what they are proposing for their manifesto, we would oppose that, strongly oppose it,” he said. “It’s not just bad for the environment, you’re not just locking in energy inefficiency, you’re locking in higher energy bills for those people that live there. So once again they are opting for the higher energy bill option.”

Despite his clashes with Conservatives, Davey is equally clear that he opposes Labour’s promise to reduce gas and electricity prices with an 18 month bill freeze. He refused to say whether the Liberal Democrats would be prepared to accept such a policy in the event of a coalition with Labour, but went on to dismiss Miliband’s plans as “nonsense” and argued the coalition’s efforts to increase competition in the market are a “damn sight better than a government-imposed regulation”.