UK Politics

Lib Dem Jeremy Browne backs calls for tax rate cut to 40p

A former Liberal Democrat minister has backed calls from Conservative backbenchers for the top rate of income tax to be cut from 45% to 40%.

Jeremy Browne told the BBC that people at all levels of society must pay less tax if the UK was to succeed in the fast-changing global economy.

He is at odds with his own party, which has rejected calls for a cut.

Mr Browne, who is on the right of the party, was surprisingly sacked by Nick Clegg in last autumn's reshuffle.

He was replaced at the Home Office by Norman Baker, who is regarded as being more left-leaning.

At the time, party sources suggested Mr Browne had failed to make his presence felt at the department, particularly over immigration and the row about the use of vans carrying posters urging illegal immigrants to "go home".

'Rewarding work'

Mr Browne, who also spent two years as a Foreign Office minister, has kept a low profile since his exit from office but is about to publish a book about his vision for the future of Britain and how it can succeed in "the global race".

In a film for the BBC's Sunday Politics show, he said the UK must pursue a course of "unambiguous and authentic liberalism" to prosper in an age when economic power was shifting from west to east.

"In the face of globalisation, the biggest danger for Britain is not bold, innovative change but not being willing to change enough," he said.

"That means supporting a dynamic economy that rewards work and wealth creation and reduces taxes for people both on low earnings and people on high earnings."

Tax burden

Since 2010, the government has increased the threshold at which people start paying income tax on their earnings to £10,000, taking thousands of low-paid workers out of tax altogether.

The personal allowance, the amount of income which is tax free, will rise to £10,500 next year.

Jeremy Browne
Mr Browne is at odds with party policy on the issue of tax rates

Mr Browne said he backed these steps but believed there must also be a focus on reducing the burden of tax at the other end of the income scale.

"It is time to cut the top rate of tax back down to 40p".

The Lib Dems have fiercely resisted Conservative calls for the top rate of tax to be cut further.

Earlier this year, Chief Secretary to the Treasury Danny Alexander claimed that any further cut would happen "over his dead body" while the party was in government.

Labour raised the top rate to 50% in 2010, after it stood at 40p for most of the Brown-Blair years.

'Smaller state'

Chancellor George Osborne cut the rate, payable on the portion of income over £150,000, to 45p in 2013 but Labour has said it would increase it again to 50p to help eliminate the deficit in the next Parliament.

Tory MP John Redwood has suggested the cut to 45p has substantially increased the amount of tax being paid by the wealthiest and contributed to a £9bn increase in tax receipts this year.

The Lib Dems back the status quo, putting Mr Browne at odds with own party on a key economic issue.

Mr Browne also called for parents to be given more choice over which school their children go to and to reduce the overall size of the state - views likely to put him in conflict with many in his party.

"We also need to transform the role of the state, making it smaller, more responsive and more efficient," he added. "That means reforming public services to promote individual choice, including school vouchers."

"Instead, if we get stuck in the past with an unaffordable public sector, high levels of debt, old-fashioned class based social structures, creaky infrastructure and widespread educational under-achievement. we will fail."

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