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Danny Alexander: ‘The coalition has helped, not hurt the poor’ Danny Alexander: ‘The coalition has helped, not hurt the poor’
(4 months later)
Last week’s Observer asserted that the coalition’s economic recovery plan was placing a disproportionate burden on the poorest in our society. I absolutely reject this assertion. Nick Clegg and I led the Liberal Democrats into coalition not just to rescue the British economy from the aftermath of the 2008 crash, but to do so fairly.Last week’s Observer asserted that the coalition’s economic recovery plan was placing a disproportionate burden on the poorest in our society. I absolutely reject this assertion. Nick Clegg and I led the Liberal Democrats into coalition not just to rescue the British economy from the aftermath of the 2008 crash, but to do so fairly.
As the Liberal Democrat chief secretary to the Treasury, I insisted that the government produced distributional analysis at each autumn statement and budget, so we could make sure our policies were protecting the most vulnerable.As the Liberal Democrat chief secretary to the Treasury, I insisted that the government produced distributional analysis at each autumn statement and budget, so we could make sure our policies were protecting the most vulnerable.
Our analysis shows that we are indeed rebuilding and rewiring the economy as fairly as possible. And, crucially, it is more complete and comprehensive than the LSE analysis quoted by the Observer.Our analysis shows that we are indeed rebuilding and rewiring the economy as fairly as possible. And, crucially, it is more complete and comprehensive than the LSE analysis quoted by the Observer.
For instance, the LSE analysis does not take into account the full range of changes to indirect tax, or measures on tax avoidance, or the distributional impact of changes to spending on public services. And it looks at static, immediate costs, rather than also considering whether those costs really represent how the effects of policies are felt in the real world.For instance, the LSE analysis does not take into account the full range of changes to indirect tax, or measures on tax avoidance, or the distributional impact of changes to spending on public services. And it looks at static, immediate costs, rather than also considering whether those costs really represent how the effects of policies are felt in the real world.
Dealing with the deficit is the defining economic issue of our time. I am proud that we have cut it by over a third and that by 2017/18 the structural deficit will be eliminated. We’re ensuring the better-off do their bit. The top 1% of taxpayers now pay more than 28% of income tax revenue, more than at any point under the previous government.Dealing with the deficit is the defining economic issue of our time. I am proud that we have cut it by over a third and that by 2017/18 the structural deficit will be eliminated. We’re ensuring the better-off do their bit. The top 1% of taxpayers now pay more than 28% of income tax revenue, more than at any point under the previous government.
In every single budget we have raised revenues from the wealthiest. In 2010, we increased higher-rate capital gains tax. In 2012, we raised stamp duty on high-value homes and introduced a limit on income-tax reliefs that can be claimed on pensions. And in 2013 we took measures against offshore tax evasion.In every single budget we have raised revenues from the wealthiest. In 2010, we increased higher-rate capital gains tax. In 2012, we raised stamp duty on high-value homes and introduced a limit on income-tax reliefs that can be claimed on pensions. And in 2013 we took measures against offshore tax evasion.
Before 2010, the richest 20% in society contributed around three-and-a half times as much in tax as they received from public spending. Now it is around four times as much. Independent analysis also shows that the tax and benefit reforms we have implemented since the fiscal consolidation began have hit the richest hardest.Before 2010, the richest 20% in society contributed around three-and-a half times as much in tax as they received from public spending. Now it is around four times as much. Independent analysis also shows that the tax and benefit reforms we have implemented since the fiscal consolidation began have hit the richest hardest.
Those on low and medium incomes, by contrast, have benefited. Our flagship Liberal Democrat policy has increased the tax-free personal allowance from £6,475 in 2010 to £10,000 now, with a further rise scheduled in April next year to £10,500. That’s a saving of £805 for a typical basic-rate taxpayer – and more take-home money for more than 25 million working people. More than 3.2 million low-income individuals will be taken out of tax altogether by the end of this parliament.Those on low and medium incomes, by contrast, have benefited. Our flagship Liberal Democrat policy has increased the tax-free personal allowance from £6,475 in 2010 to £10,000 now, with a further rise scheduled in April next year to £10,500. That’s a saving of £805 for a typical basic-rate taxpayer – and more take-home money for more than 25 million working people. More than 3.2 million low-income individuals will be taken out of tax altogether by the end of this parliament.
We’ve helped in other ways too.We’ve helped in other ways too.
Because of this government’s actions, a litre of petrol will be 20p cheaper now than it would have been had we continued with Labour’s fuel-duty hikes. Our reforms to childcare, meanwhile, will give working families government funding of up to £2,000 per child per year to cover costs, while we’re covering 85% of childcare costs for families on Universal Credit.Because of this government’s actions, a litre of petrol will be 20p cheaper now than it would have been had we continued with Labour’s fuel-duty hikes. Our reforms to childcare, meanwhile, will give working families government funding of up to £2,000 per child per year to cover costs, while we’re covering 85% of childcare costs for families on Universal Credit.
There is still no better route to opportunity and success than being able to get a job. And with record numbers in work, our country is in the fast lane of job creation, the envy of our European neighbours. We created the financial climate that has enabled UK businesses to create more than two million more private sector jobs, more than in the rest of the EU combined.There is still no better route to opportunity and success than being able to get a job. And with record numbers in work, our country is in the fast lane of job creation, the envy of our European neighbours. We created the financial climate that has enabled UK businesses to create more than two million more private sector jobs, more than in the rest of the EU combined.
We’ve made sure the 1% benefit uprating cap does not apply to people on disability benefits. We’ve introduced a triple lock on the state pension – making pensioners £440 per year better off than they would have been had the state pension only been increased by average earnings since 2011. And our pupil premium is giving schools extra funding of £1,300 per pupil to raise the attainment of disadvantaged pupils.We’ve made sure the 1% benefit uprating cap does not apply to people on disability benefits. We’ve introduced a triple lock on the state pension – making pensioners £440 per year better off than they would have been had the state pension only been increased by average earnings since 2011. And our pupil premium is giving schools extra funding of £1,300 per pupil to raise the attainment of disadvantaged pupils.
Our support for families with children, and people with disabilities, means these policies don’t actually show up in our published analysis as targeting the poorest households in society, but I have no doubt that it is right they are priorities.Our support for families with children, and people with disabilities, means these policies don’t actually show up in our published analysis as targeting the poorest households in society, but I have no doubt that it is right they are priorities.
It was inevitable that living standards would suffer after a crash as severe as that of 2008. But regaining that lost ground can only be done on the back of a growing economy underpinned by sound public finances and strong business investment. Encouragingly, the most recent monthly ONS figures showed wage growth outstripping inflation.It was inevitable that living standards would suffer after a crash as severe as that of 2008. But regaining that lost ground can only be done on the back of a growing economy underpinned by sound public finances and strong business investment. Encouragingly, the most recent monthly ONS figures showed wage growth outstripping inflation.
The recovery we are beginning to see is only happening because the Liberal Democrats are in government. It is our values and our policies that have placed a sense of fairness at the heart of the recovery plan.The recovery we are beginning to see is only happening because the Liberal Democrats are in government. It is our values and our policies that have placed a sense of fairness at the heart of the recovery plan.
With storm clouds gathering again in other parts of the world, holding our nerve and sticking to this strategy has never been more important.With storm clouds gathering again in other parts of the world, holding our nerve and sticking to this strategy has never been more important.
Danny Alexander MP is chief secretary to the TreasuryDanny Alexander MP is chief secretary to the Treasury