Greeny News

Treasury chief secretary Danny Alexander insists in interview that emergency budget has been fair but warns of more cuts

A clampdown on tax avoidance among the super rich is to be announced at the Liberal Democrat conference next week as part of a drive to show that Nick Clegg's party remains committed to fairness.

David Cameron has given the Lib Dems clearance to announce introduction of measures against tax avoidance. The Treasury held back from any move in the budget in June to allow consultation.

With the left of the party anxious ver some parts of the coalition's programme, Clegg is expected to deliver "a chin up, chest out" speech, emphasising that distinctive Liberal Democrat policies are being put into action for the first time in the party's history.

Before the election the Liberal Democrats estimated that a general anti-avoidance rule could raise £2.1bn in corporation tax per year, but many see such a proposal as too intrusive and likely to hand the Inland Revenue excessive powers. A review into non-domicile tax status has yet to be completed.

Alexander drew fire in August for appointing Sir Philip Green, the Monaco-based billionaire retailer, to oversee a government efficiency review. today, while defending the appointment, he also said: "I hold no candle for Sir Philip."

Sir Philip has been criticised for the way his Topshop and BHS family business is largely owned by his wife, Tina, who lives in Monaco. Although he pays tax in the UK, the arrangement is thought to save them tens of millions of pounds in tax.

The Treasury on Thursday condemned the UK's staggering £42bn tax gap, the difference between tax collected and tax that should in theory or in law be collected.

Alexander, overseeing the most difficult spending round since the war, regards taking on tax avoidance as vital to show the government is spreading fairly the responsibility for tackling the deficit.

In the face of polls showing support for the coalition deficit programme is dropping, Alexander issued an uncompromising message, saying: "This has to be done. We inherited from the previous government the largest structural deficit in Europe. Public finances had never been this bad in modern times. This year the government was spending £150bn more than we raised in taxation. Under Labour, for every £4 spent, £1 had to be borrowed. That is not a sustainable situation."

He conceded that some cuts due to be announced on 20 October were going to be "very, very difficult" for some people. "Some things people value are going to have be cut, and, yes, some things will have to end."

Axlexander also claimed the coalition had a mandate from the electorate to eradicate the structural deficit by 2015, saying "there is a widespread understanding for what we are doing". He argued: "When we came into office, there was a serious danger inside the eurozone â€" questions were being asked about the ability of countries to pay off their debt.

\\ "Those kinds of questions can be asked to start from the UK. We took the country from the danger zone, by acting quickly."

He also defended the fairness of the emergency budget and his approach to the spending round. "If you look at what we've done from April 1, 900,000 low-paid workers will no longer pay income tax, a first step to a £10,000 tax-free threshold. There is a pay freeze where people who earn less than £21,000 will still get a pay rise.

"We've increased capital gains tax. We have reintroduced the earnings link for pensions. Labour had 13 years to do this and we have done this in 13 weeks. So I am not going to take any lecture on fairness from Labour."

The central figure in the talks coaliton in dramatic days after the election, he denied any suggestion that both sides can join or create an informal pact in the next election. He knew the government would have to make some very unpopular decisions, but he denied his party was losing its identity.

"I think what the government set out to do over five years was a blend â€" I'd say a pretty even blend â€" of Lib Dem and Conservative ideas. People will have to judge us over 5 years. People will have to judge what we said we were going to deliver. We have been effective in doing that."