Danny Alexander plans to recoup £900m from tax-avoiders

Danny Alexander, the Chief Secretary to the Treasury, launched a "ruthless" campaign against tax dodgers in a new effort to claw back the £7bn being lost through avoidance, evasion and fraud.

Attempting to appease party members nervous about the extent of spending cuts, Mr Alexander said £900m had been earmarked by the Coalition to target high earners using loopholes to lower their tax bills.

The funds will be spent by HM Revenue & Customs over the next four years, with all those earning more than £150,000 a year placed under stricter scrutiny. Officials said the drive, including a five-fold increase in prosecutions for tax evasion, would save £7bn by 2014.

The move also suggests the 50p top tax rate will remain in place for some time to come, a revelation that will anger many backbench Tories keen to see it rescinded.

The Liberal Democrat leadership hopes to use the initiative to avoid criticisms from members that the Coalition has taken a tough line on benefit cheats, while protecting the wealthy from sharing the deficit's burden.

Clamping down on tax dodgers, especially high earners, was central to the Liberal Democrats' pitch to voters during the election campaign. At the party's conference yesterday, Mr Alexander said tax evasion and avoidance were "unacceptable in the best of times, but in today's circumstances it is morally indefensible".

"Decisions we make in the Spending Review will ensure the taxman has the resources to be ruthless with those often wealthy people and businesses who think they can treat paying tax as an optional extra."

Officials believe around £19bn a year is currently lost to the taxman through evasion, avoidance and fraud. Around £14bn is lost through evasion and avoidance, with another £5bn lost through organised criminal attacks on the tax system.