Lib Dem conference: Pensions could boost home ownership, says Nick Clegg

The Deputy Prime Minister said detailed proposals were being drawn up by Liberal Democrat ministers as part of efforts to make the economy “fairer”.

But he also declined to commit to pushing for any specific wealth tax despite promising activists at the party conference that he would play hardball with the Tories on the issue.

Speaking on BBC1′s Andrew Marr Show from the Brighton gathering, he said: “This is part and parcel of something which I think most people agree with which is that as we fill in the black hole in the public finances we have to also got to make sure that we do not put Humpty Dumpty back together again and make the same mistakes, that we re-wire the British economy and make it fairer and give people more opportunities.

“Let me give you one very good example: we have thousands of young people who are desperate to get their feet on the first rung of the property ladder but deposits have doubled and the number of young people asking help from family members has doubled.

“So I can announce today that the Government is going to do something that hasn’t happened before: we are going to work out ways in which parents and grandparents who want to help their children and grandchildren buy a property of their own, we are going to allow those parents and grandparents to act as a guarantee if you like so their youngsters…can take out a deposit and buy a home.

“It is a pension from property scheme.”

Mr Clegg sought to rally his party last night by promising to claw back more money from people who “sit on a fortune” amid rumblings about his leadership and consistently dire opinion poll ratings.

Aides said he would insist on fresh taxes for the wealthy as the price for accepting billions of pounds of extra spending cuts when the coalition sets budgets for 2015-16.

As part of that agenda, Treasury Chief Secretary revealed today that a crackdown on tax dodgers was being extended to all those worth £1 million or more.

But Mr Clegg appeared to signal today that he did not expect the promised fairness to come in the form of a specific extra levy such as the mansion tax on £2 million-plus properties favoured by the party.

Asked if he believed he could persuade his Tory coalition partners to accept a form of wealth tax, he said: “I think there is a very considerable chance, because we have already done a lot of it, to make sure that the top pay more tax.

Pressed to provide a single example of a new measure that could be introduced during this parliament, he conceded that “so far I have failed” to persuade David Cameron and George Osborne to accept a mansion tax.

“But the mansion tax is not the only way in which you can make people at the top make a fair contribution to this huge national effort of balancing the books.

“We have already illustrated through capital gains tax, through stamp duty, through tax avoidance and many other measures … the top 10% pay more and we can do more of that.

“There are numerous ways that we have already done it and numerous ways that you can do more of it. It will bore viewers if we go through all the great encyclopaedic… “

Pushed again, he added: “All of the kind of things we have already done, whether it is on capital gains, whether it is on high property transactions, all of that you can do more of.”

Mr Clegg has already signalled that he would veto any bid by the Treasury to slash another £10 billion from the welfare bill and insist on the pain of future austerity measures being placed more on the better-off.

“I will not accept a new wave of fiscal retrenchment, of belt tightening, without asking people at the top to make an additional contribution.

“I don’t think you can ask people on middle and low incomes, who after all are the vast majority of the British population, to bear the brunt of this adjustment.”

The Deputy Prime Minister insisted his party would “not be bound hand and foot” to Tory spending plans beyond the 2015/16 year as it seeks to differentiate itself ahead of the 2015 election.

But it had no choice but top adopt joint spending plans that went some way beyond the poll as the present parliament would extend into the 2015/16 financial year.

Mr Alexander told the Mail on Sunday that an expanded unit of tax inspectors would “sniff out” cheats.

The move will mean 200,000 more people will be targeted by HM Revenue and Customs’ affluence unit, set up originally to study the affairs of the 300,000 with assets and property of more than £2.5 million.

There will also be separate moves to stop high-earning BBC personalities from using tax avoidance schemes and fines for tax-dodging footballers.

Mr Clegg dismissed news of text exchanges between senior Lib Dems and Labour figures, saying people got “wildly overexcited” about politicians talking to each other.

“Over the last few weeks I have had lengthy conversations with Ed Miliband, David Miliband, Tony Blair, Peter Mandelson, grown up politicians,” he said.

“Talking about other things, talking about Europe, political reform. Talking about things which politicians always will continue to talk about.”

Treasury Chief Secretary Danny Alexander spelt out more details of the policy announcement in an interview with the BBC’s Sunday Politics.

Under the pension scheme, people due a lump sum on retirement would be allowed to use that to underwrite mortgages for younger relatives, he said.

“There are a lot of people out there who already help their children with deposits. That happened to me when I bought my first home,” Mr Alexander said.

“But there are an awful lot of parents out there who don’t have any cash to help their children get on the housing ladder. But in many cases they will have built up a substantial pension pot.

“That is their only asset which they will able to, when they reach retirement age, release a tax free lump sum.

“What we want to do is for parents in that category (to be able to) use that lump sum, which they will get when they reach retirement age, to guarantee part of the mortgage, the deposit on that mortgage, precisely to help their kids or grandkids to get on the housing ladder. It is about intergenerational fairness.”

Mr Alexander also sought to reassure owners of homes worth more than £1 million that they are unlikely to be targeted by the taxman. “It is targeted very much at those people whose affairs are risky. It is not going to mean that anyone who has got a home over £1 million gets a knock on the door from the taxman,” he said.

“If your net worth is more than £1 million you will be within the population that the affluent unit is able to look at. But of course HMRC have a lot of information, they can identify particular groups, particular individuals where there are particular tax risks for example those with properties overseas.

“They won’t be going to every single person in that group.”

Otto Thoresen, director general of the Association of British Insurers, sounded a note of caution over the planned help for homebuyers.

He said: “We would want to look closely at the detail of the ‘pension for property’ scheme announced today by Nick Clegg.

“Pensions are designed to mature into a decent retirement income, not for other purposes.

“Any scheme which uses pensions as a guarantee must ensure that it does not inadvertently make the saver worse off when they retire.”

Shadow chief secretary to the Treasury Rachel Reeves said: “Nobody will be fooled by Nick Clegg’s empty words on tax.

“This is the man who backed a £3 billion tax cut for millionaires in the Budget while asking millions of pensioners and families to pay more.

“There’s nothing fair about a family with children paying an average £511 extra from changes the Government has brought in this year, while millionaires will get a £40,000 tax cut next year.

“Nick Clegg is the Deputy Prime Minister of this Government and he must take responsibility for its actions. After so many broken promises, people will judge the Liberal Democrats on what they do, not what they say.”

Under the proposals, parents could allow their children to borrow against the lump sum element of their pension.

Liberal Democrat sources said around 250,000 people had a pension pot of £40,000, with a lump sum element of around a quarter – £10,000 – which could be used as a guarantee.

They estimate that 5% of those with a suitable lump sum would take advantage of the scheme, meaning 12,500 people could potentially benefit.

The plan is still at an early stage and it is not clear if legislation would be required, but the Lib Dems are confident the scheme will be in operation by 2015.

Pension providers and mortgage lenders have been sounded out about the proposals and are prepared to work with the Government on the plan, a source said.

“We are not pretending this is a solution that’s going to be available to all families it’s not something that’s going to get everyone able to help their kids with a deposit, but there are a significant group of people (it will help),” the source said.

The parent’s lump sum would be at risk if the child defaulted on the mortgage repayments, but the rest of the pension would be unaffected.

Although Mr Clegg refused to name an alternative levy on wealth if the mansion tax proposals were blocked by the Tories, the Liberal Democrats had a range of proposals in their manifesto.

The party proposed a £5.45 billion raid on pensions by restricting tax relief to the basic rate and also planned to raise almost £2 billion through reform of capital gains tax.

The mansion tax proposed in the manifesto, levied at 1% on properties worth more than £2 million, would raise £1.7 billion according to the Lib Dem figures.

A source close to Mr Clegg said the Lib Dems would continue to push for a “mansion tax” as their “number one wealth tax”.

The Lib Dems would not accept an “across the board” freeze in benefits for two years, as it had been reported was under consideration.

Lord Oakeshott, the former Lib Dem Treasury spokesman who has suggested the party should consider ditching Mr Clegg as leader, urged him to fight hard for the mansion tax.

“I don’t think a 1% tax on the excess value of houses worth over £2 million is at all difficult to sell,” he said at a conference fringe meeting.

“The evidence of the polls is very strong: voters of all three parties including the Tories are strongly in favour of it so let’s not be shy about that, let’s get out there and say that it’s fair.”

An “explosion” in high-end property prices in central London meant it could now bring in £2.5 billion a year for the Treasury – rather than the £1.7 billion the party calculated before the election.

“It is a very popular policy and we should fight for it.”

In a question and answer session with activists later, Mr Clegg promised to block “wild” Tory demands for another £10 billion to be slashed off the benefit bill after 2015.

“I know there are some people in this hall who think that someone in government is itching to bite out bigger chunks of public spending during this spending review period, which extends from now till April 2015. Let me be really clear – we are going to stick to the spending plans,” he said.

“We might rejig details of it, spend a bit more here by reducing a bit of spending there. But the spending plans as they are set out will be stuck to. Not a penny more, not a penny less.”

The Deputy Prime Minister said he would not allow the Lib Dems to be “bound hand and foot” to Conservative budgets after the next general election.

But he said the party had an “inescapable duty” to agree plans for the 2015-16 financial year.

“If we don’t, I’m not kidding, lights go out, civil servants don’t get paid, those of you in local authorities don’t get transfers from Whitehall,” he said.

“When we look for additional savings in the years ahead the Lib Dems will start at the top and work down. We will not, as some other people seem to be suggesting, start at the bottom and work up.

“I can’t promise you, because it is wholly unrealistic, that there won’t be any changes to the welfare budget – since it now constitutes a third of public spending.

“What I can assure you is that we will not allow some of these wild suggestions that have been made from the right of British politics, that all the savings can be made from welfare. “‘Let’s just scoop out a great £10 billion size hole for welfare’. No.

“Nor will I accept some of the wilder suggestions that we should just wave a wand and say we’ll put a freeze on all benefits for two years across the whole piece.

“Yes, we have frozen some benefits and tax credits already, but the idea that you just freeze it across the piece, that directly hits the most vulnerable in society.

“That is why what I am arguing for on your behalf is yes, a grown up recognition that whoever is in power in 2015 – Conservatives, Labour, Lib Dem, or a combination of those three – the reality unfortunately is more belt-tightening in the years ahead.”

Mr Clegg said he accepted the responsibility to “clear the decks” for coming generations. “But we will do it fairly,” he added.

PA

Source:
http://www.news.ezonearticle.com/2012/09/23/lib-dem-conference-pensions-could-boost-home-ownership-says-nick-clegg/