Income tax break at core of Lib Dem manifesto

The Lib Dems said this would put 700 back into the pockets of low and middle class families and restore the link between pensions and earnings.

Party Leader Nick Clegg made the pledge as his party launched its Change the Works for Yorkshire manifesto, outlining the Lib Dems' plans for the region.

The announcement came on the same day Mr Clegg made his first visit to the region during the election campaign.

While at Leeds Rhinos' Headingley stadium, the Sheffield Halham MP said his party would commit, if elected, to a radical shake up of the UK tax system.

After engaging in a quick game of touch rugby for the cameras with youngsters from the Stanningley Storm under-10s, Mr Clegg said he would "close tax loopholes at the top" and increase taxes on "polluting aviation". In turn, close to 20 per cent of taxpayers in Yorkshire would pay no income tax at all with "nearly everyone else" receiving 700 back.

Mr Clegg told the Yorkshire Post: "At the moment there are multi-billion pound loopholes in the tax system which only benefit the wealthy who can employ a team of lawyers and accountants to exploit them.

"We need meaningful tax breaks which will benefit ordinary people like here in Yorkshire."

He added his party would adopt a comparable taxation policy as seen under the Tories in the 1980s, when income tax and capital gains tax were charged at the same rate.

The Lib Dem manifesto itself includes a strongly worded attack on the UK banking industry, repeating the party's pledge to break up the country's banks and promises to make sure they again begin to lend money to local business.

Mr Clegg promised to stop consumers being "ripped off" by bank charges as he sought to position the Lib Dems as the party of fairness.

Banks, he said, would be banned from imposing excessive penalty charges for going overdrawn, which he described as "seriously out of order", and the party would seek to impose a cap on the interest rates charged by credit cards.

Mr Clegg said he also wanted to boost the power of consumers by forcing low-cost airlines to disclose the full cost of flights up front and establish a ban on private wheel-clamping firms.

Cuts in rail prices and alterations to the charging process for energy, so that the first units used are the cheapest, were also promised.

"Consumers still get a seriously raw deal in this country, " he said. "We have still got far too many vested interests in the business world who are ripping people off."

The Lib Dems are targeting a number of marginal seats in Yorkshire, including York Outer, Bradford East and Sheffield Central – all of which are held by Labour.

Mr Clegg said he would spend an extra 220m on Yorkshire's schools and invest in hundreds of extra police officers, with the latter being paid for by scrapping the Government's proposals for ID cards. He also promised to cut class sizes and create more one-on-one tuition for students.

The Lib Dems would create thousands of new jobs in green industries during their first year in office, with a proposition for Yorkshire to "get making things again".

Sticking with employment Mr Clegg added that no young person would be allowed to claim jobseekers' allowance for more than 90 days before getting a job or training.

In Yorkshire, the party is also seeking to distance itself from recent expenses and lobbying scandals.

Mr Clegg pledged to give people the power to sack MPs found to be corrupt and issued a veiled attack on Labour and the Tories by saying his party would act to "get the big money out of politics".

He said a Liberal Democrat government would also ensure all MPs pay taxes in the UK and ensure fair voting systems to end so-called "jobs for life" for MPs.

And he dismissed comments made earlier in the day by the Government's transport secretary Lord Adonis, who said voters in marginal seats should not vote for the Lib Dems in order to prevent the Tories securing a win.

Mr Clegg said: "I say to anyone who votes, vote with your heart. Vote with the values and policies that you believe in."

Clegg calls on banks to make lending their top priority

There should be no rush to re-privatise the bailed-out banks until the flow of lending has been restored, according to Nick Clegg.

The Liberal Democrat leader said the part-nationalised institutions should be forced to lend money before restoring their balance sheets.

He claimed the banks were "hoarding" money in an effort to return to the private sector, resulting in "extortionate" interest rates and excessive penalty charges.

Mr Clegg also promised a Lib Dem government would cap credit card interest rates and limit unfair bank charges.

But he said the problems were the "tip of an iceberg" in the banking sector which was desperate to shake off the shackles of public ownership.

He said: "I think at the moment what the banks are doing is they are hoarding money in order to repair their balance sheets.

"They feel they are in a race to try and extract themselves from public ownership as quickly as possible by building up their balance sheets."

He said the Government was partly responsible for the problem by putting in place overly restrictive capital adequacy requirements.

"Even though we have spent billions bailing them out as taxpayers, the Government perversely has put in place new capital adequacy requirements and is going round pretending that somehow we can recoup taxpayers' money very quickly."