Confusion over plan to tax £1m properties as Nick Clegg woos the left
• Cable would use cash from 0.5% levy to help low paid
• Leader under fire on child benefit and tuition fees
• Leader under fire on child benefit and tuition fees
Vince Cable and Nick Clegg at Precision Disc Castings in Dorset. The politicians laid out their taxation policies at the Lib Dem conference. Photograph: Chris Ison/PA
Nick Clegg's gamble to woo the left of his party and attract disillusioned Labour voters by announcing a new tax on properties worth more than £1m came undone today with criticism and confusion over the detail of the policy.
The Liberal Democrat leader and his Treasury spokesman, Vince Cable, laid out plans for an increase in council tax for millionaires by charging an extra 0.5% on the value of any property over £1m, though the amount taxed would only be the value over £1m. The party said the revenue would enable them to lift the starting rate of tax to a threshold of £10,000, taking 4 million people out of paying tax together.
Under the Lib Dem policy, Buckingham Palace – most recently valued at £935m – would see the Queen pay an extra £4.7 million.
But within hours of the policy being announced, Lib Dem aides admitted they did not know whether the new tax would be based on house sales or Land Registry figures, or a complete revaluation of properties across the country. The shelf life of the new policy was immediately in doubt as it would be administered through the current system of council tax, which would be abolished should the party form part of the next government and be able to bring in its commitment to replace that tax with a local income tax.
The policy appeared to be a clarion call to the left and to those historically Labour- voting constituencies in the north the party thinks it stands a chance of gaining. Cable suggested only 1% of UK properties would be hit.
"We have seen the super-rich pouring their money not into job-creating businesses but into acquiring mansions. And remember too that under the unfair council tax messrs Mittal and Abramovich in their £30m palaces pay the same as a band H family home, though their properties may be worth 40 or 50 times as much," Cable told the conference.
The Tories immediately warned the tax would cost London and the south-east more than the north. LSE academic Tony Travers said the party was unclear about how a pensioner living all their life in a house now costing more than a million would be expected to meet the new tax.
Left-leaning Lib Dem activists and senior members of the frontbench team remain nervous of the Clegg-Cable strategy, after Clegg used an interview with the Guardian to say the party would propose "bold and even savage cuts", earmarking public sector pensions as one possible area to make a real terms freeze.
One MP fighting off an attack from the Tories locally said it was folly to try to "out-Tory the Tories". The backlash was such that at the last minute on Saturday the leader was forced to dilute his vocabulary.
Clegg and Cable are to campaign together as a two-man team during the general election. But other senior members of the frontbench team suggested two of Clegg's ideas were unlikely ever to become official policy. Frontbenchers Steve Webb and Simon Hughes slapped down the leader's admission that he might consider an end to universal child benefit and to the party's pledge to scrap tuition fees, respectively.
Hughes said Clegg would be unlikely to get party acquiescence to drop the tuition fees commitment.
Hughes told Radio 4: "We did look at this formally only six months ago and rejected a change. I don't think it is likely to change again … there are other ways we can find savings, other ways we can cut back on expenditure. These things are always negotiations between party leaders and the party's democratic process."
Steve Webb, shadow work and pensions spokesman, said at a fringe event that Clegg's proposal for a look at whether child benefit should be means-tested was not current policy. He told a Fabian fringe meeting: "We've been able to conduct the review speedily over the last 24 hours – and I am pleased to say that the policy won't be changing. I read … we were going to look at 'middle class child benefit'. I have looked at it – and I have rejected it."
Tomorrow shadow home secretary Chris Huhne will spend the majority of his speech attacking the Conservatives, saying they cannot be trusted on crime.
He will point to research showing that Tory councils are worse at cutting crime rates than the national average. Huhne will say that since the peak in violent crime in 2005-06 violence against the person has fallen by 9%. In Tory areas the Lib Dems say it has fallen by 6% while in Lib Dem areas it has fallen by more than 14%. Since the peak of 2002-03, robbery has fallen by more than 23%. In Tory areas it has fallen by 8% while in Liberal Democrat areas it has fallen by 25%.
Most animosity has been reserved for Clegg's refusal to pledge that the current Lib Dem policy of abolishing tuition fees would be in the next manifesto.
Clegg will ask his party to vote through the document A Fresh Start for Britain on Wednesday by simply agreeing they trust the leadership's instincts on tax and spend. In a Guardian interview on Saturday Clegg said he was unable to pledge that the £12bn commitment would be in his party's manifesto.
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