'We will raise �12bn from rich'

'We will raise �12bn from rich'. Lib Dem leader Nick Clegg spells out his tax policy.

Nick Clegg MP, Lib Dem leader

ANDREW MARR: Now then, big tax cuts: 4p off the basic rate and big cuts in public spending too.

Nick Clegg seems to be leading the Liberal Democrats in a very different direction from his predecessors.

You may remember how they used to be a virtue of being the only party which actually wanted to put taxes up.

Now more traditional Lib-Dem activists might find the changes rather hard to swallow, so is this Nick Clegg's Clause IV moment - challenging his party to follow him down a new path?

Well he joins me now from Bournemouth where the Liberal Democrats are holding their conference. Good morning to you, Nick Clegg.

NICK CLEGG: Good morning, Andrew.

ANDREW MARR: Are you, are you above all focusing on the outcome of the next General Election, expecting - as most people seem to - that the Conservatives will be the large party, and positioning your party to join them in government?

NICK CLEGG: Oh, not at all. What we're addressing is not some sort of speculation about the outcome of the next General Election, which incidentally I think is much more uncertain than you've just predicted, but actually are addressing ourselves to the vast majority of British people and British families who are very worried about how they're going to find the money to put food on the table, fill their car with petrol, pay for their heating bills.

And in adopting the proposals which we're discussing in the coming days, we will be the only party in British politics with a plan, a clear plan to restore fairness in the tax system and fairness to the vast majority of British families.

That's what we're about this week.

ANDREW MARR: Well let's go into some of the detail of that. You are already committed to a 4p tax cut and you've made it clear that you're going to focus any tax cuts on people at the bottom.

Can you explain clearly what that will mean for higher rate taxpayers, who will be paying how much more?

NICK CLEGG: People who depend upon, take their income in capital, which quite a lot of wealthy people do, and higher rate earners who make significant pension contributions will pay more.

We are basically saying that the loopholes, these exemptions that are presently only enjoyed by the rich, so that you have this grotesque spectacle of hedge fund managers paying less tax on their capital than their cleaners on income, that should change, so capital is taxed as income; and equally that we, all of us - everyone watching this programme - shouldn't through their own taxes be paying twice as much to help wealthy people make their pension contributions than people on ordinary incomes. That should be a relief, if you like, which is the same for everybody.

ANDREW MARR: How much money... ? Sorry...

NICK CLEGG: Those two measures...

ANDREW MARR: How much money...

NICK CLEGG: I was going to answer that.

ANDREW MARR: How much money you need to raise from the rich?

NICK CLEGG: We are proposing from those two measures alone to raise about �12 billion from the rich, which I should specify is twice as redistributive as what we went to the country with in our 2005 General Election manifesto.

We're not being punitive to anyone. We're just simply saying that we need a fair, simple, transparent tax system where everyone pays their fair share and that it shouldn't just be the rich who enjoy these great, big, multi-billion pound loopholes in the system.

ANDREW MARR: And so is it possible to say at what level of income, wealth you think people should start to pay more?

NICK CLEGG: No, it is not possible because of course it depends, as I've explained, whether you take income in through capital, whether you make significant pension contributions.

And of course another leg in our whole tax approach is to shift tax from people, from income, and onto things which are bad for the environment - so if you do lots of things that are bad for the environment, you will under our scheme pay a bit more. ANDREW MARR: You see you sound, if I may say so, like David Cameron but a bit more so.

NICK CLEGG: (laughs) Let me explain why it is so very, very different to any approach ever adopted by the Conservative Party. The Conservative Party, you're right, talks about fairness. They talk the talk these days, but do they walk the walk?

Their only tax proposals, inheritance tax proposal, which are the only tax proposals they've put forward since George Osborne and David Cameron took over, will only benefit the very wealthy. The Conservative Party is as wedded now as it always was to top down tax cuts, which they hope will sort of somehow trickle down towards ordinary people, ordinary families.

ANDREW MARR: Yeah, so you've got disagree�

NICK CLEGG: I don't want... I don't want a tax system which trickles on people. I want bottom up tax cuts for people at the low and middle incomes, which are socially just and fair.

ANDREW MARR: But you both want tax cuts and you're both focusing now on public spending. You want 20 billion out of public spending - heck of a lot - and you're not suggesting that's just going to come from waste because all opposition politicians claim that they can take huge amounts of money out from waste and they're always wrong.

NICK CLEGG: Sure. Let me tell you... let me explain what we're saying. Government expenditure, spending in our name has increased, has more than doubled from about �300 billion when Tony Blair came to power to over �600 billion now.

You know millions of pounds a day are spent in our name. I just don't believe - like many people I meet - I don't they believe that central government, the man, the woman in Whitehall always knows how that money should be best spent.

So it is I think reasonable for us to say, as a party that is quite sceptical about over centralised, over weaning, intrusive central government, to say hang on a minute, let's say some of that - we're saying about 3%, about 20 billion - and we're identifying already some of those savings - we're saying we should scrap ID cards, scrap the Child Trust Fund...

ANDREW MARR: Scrap the Business Department.

NICK CLEGG: ...take above average income families... Scrap a department or two. And more measures, which we will unveil between now and the next General Election. And what we're then saying is first, first that money which we've identified will go on our spending priorities - on hard to teach children at school, on care for the elderly.

And then any money that is left over - this is the key thing - I don't believe it's right to simply say well hand it back to Gordon Brown, the Treasury to do with what they will. Let's hand it back in more tax breaks for, for those families...

ANDREW MARR: Okay, okay.

NICK CLEGG: ...who frankly are really, really worried about how they're going to make ends meet in the months and years ahead.

ANDREW MARR: You just said an interesting phrase there. You said "scrap a department or two". For all those civil servants watching, can you enlighten us on what other departments you plan to scrap?

NICK CLEGG: No. I can certainly tell you that we believe that the...

ANDREW MARR: Do you know what other departments you plan to scrap?

NICK CLEGG: ...the former DTI... No, we're looking... We're going to look very carefully at the way in which Whitehall works. Whitehall and the whole sort of bureaucratic infrastructure of state has ballooned under this government.

I think there are layers for instance of bureaucracy in the health service, which I don't think are any longer justified. These regional quangos, the strategic health authorities - in my own view is they might need to go too. So we're going to have a very hard look at the way in which money has been spent by the government.

ANDREW MARR: So you're going... Sorry, I can...

NICK CLEGG: There are unprecedented num�

ANDREW MARR: Okay, so you're going, you're going to slash into the NHS structural bureaucracy. You've also said, you've also said that you're moving towards top up fees, which people would say is a sort of two-tier NHS.

Everything that you are saying sounds like you're positioning yourself very close to the Conservative Party, and you have said in the past that the party which wins the largest number of seats, largest number of votes has the mandate. Everything points to the same thing: you are thinking about going into government if that's the electoral result alongside David Cameron.

NICK CLEGG: Absolutely not. What I am saying is that I am responding, we are responding to what we hear from people. Not from some Westminster parlour game and playing footsie between different parties. We're hearing from people up and down the country that they are worried about their own economic futures, worried about how they're going to, I don't know, pay for the new school clothes for the children at the beginning of the school term.

Are they going to be able to take the family on a holiday this Christmas, next summer? People are worried and they've become... they've lost faith in the ability of government to fix everything from the centre. I guess what I am saying, which is of ideological significance, is this: if big spending from the centre could produce the fairer, more socially mobile society that I believe in, and I think the vast majority of British people believe in, then we'd already be living in probably one of the most equal and fairest societies in the world.

ANDREW MARR: So it is broke?

NICK CLEGG: And we don't. Inequality has gone up, social mobility's gone down.

ANDREW MARR: The system is broke. What do you say to... I mean a lot of activists will disagree with you about this.

Is it in fact the case that you want and you need in some sense a big bust-up this week in Bournemouth to establish your credentials as leader because you know you're down at 18%, 16% I think in the last poll - not great for you.

NICK CLEGG: Andrew, when I first became leader at the beginning of the year, I was... I'll tell you a little secret in the privacy of this interview. I was told privately that because Gordon Brown at that time was falling over the edge of a cliff, David Cameron had had a couple of years to establish himself and was taking off, that it would be very difficult for me as a new entrant into the national political scene to avoid a great squeeze and that I "shouldn't be disappointed if we're down to 11, 12, 13% by the summer; these things happen." We are a good five, six points well above that prediction. We have actually been much more resilient in British politics than so many pundits and commentators have suggested. And my view is...

ANDREW MARR: Well that's a slight, that's a slightly old game, if I may say so: predict that you're going to be dead and then announce with triumph when you're still just alive.

NICK CLEGG: Well, no...

ANDREW MARR: Can I ask you...

NICK CLEGG: It's not just my prediction, Andrew.

ANDREW MARR: Alright. Can I just ask you the same metaphor. We talked about Labour being in its death throes. If there is a leadership change in the Labour Party - a challenge and then... or Gordon Brown stands up - in your view should there then be a virtually instantaneous General Election?

NICK CLEGG: Yes, I don't think the British people would stand for this endless game of musical chairs from one leader of... one unelected or one unelected by the people leader of the Labour Party after the next and people would quite rightly say look, it's time for a General Election.

My own view is that the great crisis for the Labour Party is yes all the attention is focused on Gordon Brown and his strengths and weaknesses, but I think the problem for the Labour Party is something much more profound, which is they're now on the wrong side of the big arguments about the kind of society people want to live in - a fairer society, a freer society, a greener society - and they're certainly on the wrong side of the argument when it comes to what is the role of central government.

ANDREW MARR: Well you've said...

NICK CLEGG: They've hoarded too much power for themselves at the centre.

ANDREW MARR: If I may say so, you have said it there. They're on the wrong side of the argument. You and the way you've been talking, the Conservative Party, are on the right side of the argument.

NICK CLEGG: Well, I am on the Liberal side of the argument. It is a longstanding tradition in British politics, which we have enshrined in the Liberal Democrats, which says that the way to get the country to the place everyone wants it to be - to a better place - is precisely to let go from the centre, give people back a bit of power, a bit of money, release communities from this straightjacket imposed by Whitehall. That is the way to go forward. The Conservatives...

ANDREW MARR: Okay.

NICK CLEGG: The Conservatives talk, I agree - talk the talk on some of this...

ANDREW MARR: You do sound...

NICK CLEGG: They're very flaky, they have no proposals, they make no tough choices.

ANDREW MARR: Alright. You do sound, if I may say so, very, very like another party leader, but thank you very much indeed for joining us...

NICK CLEGG: Thank you.

ANDREW MARR: ...from Bournemouth, Nick Clegg.

INTERVIEW ENDS

Please note "The Andrew Marr Show" must be credited if any part of this transcript is used.

NB: This transcript was typed from a recording and not copied from an original script.

Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy

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