Lib Dems vow to slash taxes for poorer people by cutting billions in Whitehall waste

Unveiling his proposals to 'make Britain fairer' on Thursday, he said struggling families hit by the credit crunch and soaring food and fuel prices should pay 'much less' tax.

He also promised to close gaping 'loopholes' in capital gains tax and pension tax relief which benefited hugely wealthy City high-fliers.

New vision: Nick Clegg wants to 'make Britain fairer' by offering tax breaks to poorer families and reducing government waste

Party leader Mr Clegg also outlined ambitious plans to cut £20billion of Whitehall waste in order to reduce the overall burden of taxation.

One eye-catching initiative was to reduce the number of MPs by 150 - from 646 to 496.

His pledge to hand back spare public money rather than spend it on schools, hospitals and welfare if he came to power was seen as a further shift to the Right.

It came less than two years after the party leadership won a bruising battle with activists to end its commitment to raising them to fund services.

He risks infuriating grassroots LibDem activists at the expense of reassuring Middle England voters that the party is no longer out of step with their aspirations.

The LibDems have already pledged to cut the bottom rate of income tax from 20p to 16p.

Setting out his vision of the future, Mr Clegg said: 'How can it be fair that the poorest pay the highest portion of their income in tax? Struggling families should be paying less tax - much less.

'Every family is tightening their belt at the moment. Government must tighten theirs, too.

'We'll get wasteful government spending under control and look for ways to cut the overall tax burden.

'Every tax cut we propose will put more money in the pockets of struggling families, not millionaires.'

The Liberal Democrats want to close 'millionaire' loopholes and offer private treatment for those waiting too long on NHS waiting lists

Publishing a 16-page document entitled 'Make It Happen' on Thursday, which sets out his vision for the future, Mr Clegg said he wanted to raise green taxes to punish 'polluters'.

Other proposals in the pamphlet which signify a shift to the Right are a 'care guarantee' that NHS patients who are not treated on time will be able to go private - funded by the NHS.

On education the LibDems would axe 'pointless' targets in the classroom and reduce 'stressful' national tests.

But they would allow private firms, as well as churches and parents' groups, to take over state schools to help boost pupil success.

Energy companies would be forced to use their £9billion 'windfall profits' to cut people's bills through fairer prices and insulating homes.

The party would scrap unpopular council tax and replace it with a local levy, invest in public transport including a high-speed London-to-Scotland rail link and scrap the controversial DNA database.

Mr Clegg would also axe plans to build more nuclear power stations, scrap the identity card scheme, have 150 fewer MPs and independently audit MPs' expenses.

Labour and the Tories are committed to the same spending levels but Mr Clegg says they are not 'set in stone'.

The LibDems could also save billions of pounds for the public purse by scrapping the Department for Business, Enterprise and Regulatory Reform and shifting parts of the civil service to cheaper locations outside London.

Shadow chancellor George Osborne has said Mr Clegg can afford to make such pledges because his party - the third largest at Westminster - is not expected to win power.