Deputy prime minister says he wants lower taxes on work and effort but a greater contribution from the wealthy

This article is more than 8 years old

This article is more than 8 years old

Nick Clegg has signalled he will make a tax on wealth a Liberal Democrat priority between now and the next election, saying it will be one way to attack the glass floors that allow the children of the privileged elite to be protected.

In a speech to Demos on "the open society", he said he wanted to go further in an open society approach to tax – by which he meant "lower taxes on work and effort, a greater contribution from the wealthy".

His aides said he was targeting either a mansion tax, restriction of pension tax relief or action on capital gains tax.

He said on Monday: "Wealth inequality is very much greater than income inequality, and widening. The bottom third of households hold just 3% of the nation's wealth. The top third hold three-quarters of it.

"This inequality of wealth then cascades down the generations, potentially widening the opportunity gap."

He said "intergenerational social mobility is the principal objective of the coalition's social policy".

He also underscored his commitment to take action on executive pay by giving shareholders more power.

Proposals to increase transparency within the state will be extended by allowing freedom of information to be extended to non-state institutions that carry out a public function such as Network Rail, he indicated.

The pre-briefing of the speech has focused on Lords reform and Clegg's longstanding opposition to a marriage tax allowances, but his aides said the importance of the speech lay less in individual policy proposals and more in setting out a definition of modern liberal democracy as the advocate of an open society.

He also sought to draw a distinction between Labour's statism, the Conservative belief in non-state societal institutions such as the family and Liberal belief in the individual citizen.

He said the central beliefs of the open society were "social mobility, political pluralism, civil liberties, democracy and internationalism".

He said society was at a critical, and potentially dangerous, moment – both in the world at large and in the UK.

"History teaches that, at times of deep economic uncertainty, societies become more exposed to the forces of division – populism, insularity, separatism, an 'us versus them' mentality," he said.

"Rather than remaining open to the world and facing the future, societies can begin to turn inwards and lose confidence in progress.

"The danger in the UK is that the forces of reaction and retreat overwhelm our instinct for openness and optimism. That we succumb to fear – the greatest enemy of openness – in these dark economic times."

He said Britain's openness was hobbled by closed institutions and vested interests hoarding unaccountable power, wealth and influence.

His targets were "media moguls, dodgy lobbyists corrupting our politics, irresponsible bankers taking us for a ride and then helping themselves to massive bonuses, boardrooms closed against the interests of shareholders and workers".

Other targets include the bar, the unelected House of Lords and party political funding.

He said: "Closed societies – opaque, hierarchical, insular – are the sorts of society my party has opposed for over 150 years."

Although he said aspects of David Cameron's "big society" were compatible with his "open society", including their shared scepticism of the state, he said open society champions are more aware that society and social institutions can be oppressive, leading to a culture of intolerance.

He criticised using the tax system to encourage one form of marriage, saying: "We should not take a particular version of the family institution, such as the 1950s model of suit-wearing, bread-winning dad and aproned, homemaking mother – and try to preserve it in aspic."

He said: "The Lords is perhaps the most potent symbol of a closed society saying it is an issue where the boat needs rocking.

"Lloyd George described the House of Lords as being 'a body of 500 men chosen at random from amongst the unemployed'.

"To be honest, it might be better if it was. Of course, among our peers there are those with valuable experience and expertise.

"But a veneer of expertise can surely no longer serve as an alibi for a chamber which legislates on behalf of the people – but is not held to account by the people.

"The Lords as currently constituted is an affront to the principles of openness which underpin a modern democracy.

"So we will have a House of Lords reform bill in the second session of this parliament. I am hopeful that we can secure a significant degree of cross-party consensus on this, and indeed support from Lords themselves. But let there be no doubt: if it comes to a fight, the will of the Commons will prevail."

He also vowed to clamp down on excessive bank bonuses, saying: "On the eve of bonus season, let no one be in any doubt about our determination to use our clout as the major shareholder in these banks to block any irresponsible payments, or any rewards for failure."

He added: "We cannot rely on moral individuals to deliver a responsible capitalism. Nor can responsibility be mandated from on high, by the state."

He said he wanted "shareholders with real power over boards, workers with a real stake in their businesses – for example, through employee ownership. Only by rewiring the power relations in our economy can we build a responsible capitalism".