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20bn efficiency savings possible, Lib Dems say

The government could make £20 billion of efficiency savings, the Liberal Democrats believe.

In a Westminster briefing yesterday campaigns chair Ed Davey said his party would assess departmental spending to identify where increased expenditure in recent years has led to declines in its "quality".

He told reporters: "There's clearly a lot of waste¿ we may be able to reduce the cost to the taxpayer."

The Lib Dems' plans to replace council tax with a local income tax will prove roughly neutral, as the 4p-in-the-pound increase on the current council tax will be offset by a 4p reduction in income tax payments.

Despite this the party cannot guarantee net tax cuts.

Instead its first priority will be diverting identified savings away from "Labour priorities" to "Liberal Democrat priorities", Mr Davey explained. Only after that process is complete will the tax burden proposed by the party be quantifiable in overall terms.

"The savings package will involve reallocating money within the same spending area," he added.

"I wouldn't see it as a short-term move, nor as a philosophical shift¿ it's a response to long-term trends in government expenditure."

Duncan Brack, chair of the party's federal conference committee, said most taxation policy was decided in 2006 and 2007.

Mr Davey made clear the most wealthy in Britain would still pay more overall and could only provide "guaranteed" tax cuts for those on low and middle incomes. But he admitted this conference would see a move away from last year's infamous "clobbering" of top earners.

"It is our objective, our hope, to deliver net tax cuts," he said.

The party is making institutional changes which will be approved at conference. Their goal is to change its processes so it can cope with Nick Clegg's leadership goal: doubling the number of MPs in the next two general elections.