Lib Dems aim to lift more out of poverty

THE LIBERAL Democrats will steal a march on the other parties this week with plans for sweeping changes to the welfare state to lift more people out of poverty.

The plans include increasing child benefit by pounds 5 a week for each family by scrapping the married couple's tax allowance; and phasing out mortgage interest tax relief to pay for more generous housing benefit allowances and a new benefit for home-owners.

The Government is likely to seize on the plans to scrap mortgage interest tax relief in its attack on the Liberal Democrat document, Opportunity and Independence for All, of which the Independent has obtained a copy. It will be published on Wednesday and contains firm policy proposals for the election manifesto, once endorsed by the annual party conference next month.

Tax relief on mortgages is seen as a subsidy for home-owners, and its value has been reduced by the Chancellor, but the Tories believe scrapping it would hit middle- class voters.

The Liberal Democrats say most people would gain from their tax plans. Any losses would be reduced by raising the starting point for higher rate tax and giving a tax credit against investment income.

They would use the revenue released by scrapping the tax relief on mortgage interest to enhance housing benefit to enable the unemployed to earn more in work without losing benefit and lift themselves out of poverty. Echoing Labour themes, the paper says the Liberal Democrats wish to restore fairness on taxation and take about 50,000 low earners out of the tax net altogether.