Rich should pay more tax, says leading Lib Dem

Danny Alexander, the Lib Dem Treasury Secretary, says he wants tax to be fairer for those on low incomes (Getty Images)

The Government plans to force the very rich to pay higher taxes in an attempt to allay public fears that its spending cuts are hurting people on low and middle incomes the most.

Danny Alexander, the Liberal Democrat Chief Treasury Secretary, said yesterday: "In 2012, we need to redouble our efforts to ensure that those with the broadest shoulders bear the greatest share of the burden."

In a New Year message to his constituents in the Scottish Highlands, Mr Alexander said the Coalition was already "raising more from the wealthiest" but promised it would go further in the coming year. He warned the period of deficit reduction and cuts will continue until 2017, which "will require further difficult spending decisions". He added: "With more austerity now needed, and with grossly excessive top pay awards showing total disconnection from reality, we will need to look at further steps to ensure greater fairness this year, too."

Lib Dem ministers will press the case for a "wealth tax" such as the so-called "mansion tax" on homes worth more than £2m their party advocated at the 2010 general election.

Tory ministers including George Osborne, the Chancellor, are more inclined to close tax loopholes rather than impose new taxes. One target will be rich individuals who invest in high value properties in London but evade taxes because ownership is registered offshore.

David Cameron and Nick Clegg will outline measures to curb excessive pay awards for top executives in an attempt to meet public concern on the issue. Ideas include boosting shareholders' powers to approve pay packages and allowing employee representatives to sit on remuneration committees.

Tories and Lib Dems admit privately that Labour leader Ed Miliband appears to have struck a chord with the public on this agenda. But today one of his informal advisers urges him to be much bolder and criticises Labour's lack of progress under him. Lord Glasman, a Labour peer, says: "Ed... has not broken through. He has flickered rather than shone, nudged not led."

Writing in the New Statesman, Lord Glasman says: "On the face of it, these look like bad times for Labour and for Ed Miliband's leadership. There seems to be no strategy, no narrative and little energy. Old faces from the Brown era still dominate the Shadow Cabinet and they seem stuck in defending Labour's record in all the wrong ways – we didn't spend too much money, we'll cut less fast and less far, but can't tell you how."

He adds: "It is time for him [Mr Miliband] to bring the gifts that only he can bring. He should leave behind state orthodoxies and trust his instinct that change is essential."