Stand by your plan: Treasury’s Lib Dem backs Osborne

By Alex Stevenson and Ian Dunt

Danny Alexander demonstrated his complete commitment to George Osborne's 'plan A' in his speech to the Liberal Democrat conference in Brighton this lunchtime.

The chief secretary to the Treasury argued there "could not be a worse time to argue that we should abandon our plan" in spite of opposition anger at the harshness of the coalition's austerity drive.

"We won't do it. It is the foundation for everything else," he insisted.

"It is the foundation for jobs and prosperity in the future."

Alexander confirmed that the Treasury would make plans to cut welfare spending, pointing out that at £220 billion it represents one-third of all public spending.

But he reaffirmed the conference theme, of 'fairer taxes in tough times', by pledging that Lib Dems would put pressure on the Conservatives to raise taxes on the wealthiest.

"Nick and I will negotiate hard to get this right, to make choices that are shaped by our Liberal values and driven by our Liberal Democrat priorities," he said.

This year's double-dip recession has forced the chancellor and his Lib Dem ally to rethink their spending cuts plans, which will now extend into the next parliament for two more years.

"That was the right, pragmatic response to things getting worse," he added.

"We have rebuilt the confidence in this nation's ability to pay its way in the world, we can now put that credibility to work for the British people."

Lib Dems have made clear in Brighton they will publish joint spending plans for the 2015/16 financial year but offer their own agenda for the remaining four years of the next parliament.

Pollsters suggest that the 2015 general election could easily result in another hung parliament in which the Liberal Democrats could again feature. But the party will need to save as many of their 59 seats as possible to have a role, leading to pressure on their activists to demonstrate the difference they are making in power.

"Things are different in this country because the Liberal Democrats are in the government and in the end, people in government judge you by what you do, not what you say," Alexander insisted on the Today programme earlier.

"It's not enough just to say we are making things less bad – we are making society better in a whole range of ways."

"In government I am delivering alongside the Conservatives the very difficult decisions that we need to stabilise the difficult economic situation we face.

"I am delivering extra money for the pupil premium, extra money for post offices, tax cuts for low income earners, crackdown on tax avoiders…  these are things that are happening because we are in a coalition government – because Liberal Democrats have their stamp not just on the government but on the Treasury, too."

Lib Dems: 'We’re coming for your tax haven'

Alexander also used his speech to underline a renewed focus the government is putting on the use of tax havens in a bid to clamp down on tax dodgers.

"We have this message to the small minority of wealthy people who don’t play by the rules: we are coming to get you and you will pay your fair share," he said.

"When I say to the tax dodgers we are coming to get you, I mean those hiding their assets offshore too."

Alexander said a 2009 agreement with Liechtenstein set up by Labour has expected to raise £1 billion, but that figure has now climbed to £3 billion as individuals are given  until 2016 to bring their tax affairs up to date.

The coalition has doubled the size of its team dealing with Liechtenstein and Alexander says he is keen to keep bolstering the tax dodging operations at the HM Revenue and Customs.

HMRC's 'affluence unit' has already been boosted from 200 to 300 employees, but is still dwarfed by the size of the industry dedicated to protecting high-income earners from tax.