Coalition negotiations over Chancellor George Osborne’s Budget are set to go down to the wire as the Tories and Liberal Democrats battle it out over tax cuts for top earners.
Following their return from the United States, David Cameron and Mr Osborne yesterday held a conference call with Nick Clegg and Treasury Chief Secretary Danny Alexander to discuss the latest proposals.
The “Quad” will meet again on Monday to finalise the details – just two days before the Chancellor delivers his statement to MPs in the House of Commons.
Although yesterday was the deadline for the Budget “scorecard” to be presented to the Office for Budget Responsibility so it can calculate the economic impact of the changes, No 10 indicated the negotiations continue next week.
“The OBR is an integral part of the Budget process and that process is ongoing,” a Downing Street spokeswoman said yesterday.
The Lib Dems reacted to reports that Mr Osborne is planning to cut the 50p top rate of tax for people on incomes over £150,000 with a demand that any reduction is offset by new taxes on the wealthy.
Labour leader Ed Miliband denounced a tax cut “targeted at the richest people in Britain” as the “wrong priority”.
“We should be spending our resources helping our young people who don’t have jobs back into work,” he told a Labour youth conference in Warwick.
A cut in the top rate of tax would be hugely popular with Tory MPs who believe it would provide a much-needed stimulus to enterprise and growth – as well as giving them a welcome “victory” within the coalition.
One industry that is set to benefit from next week’s statement is high-end television production, with dramas such as Downton Abbey in line for a tax break worth tens of millions of pounds a year.
The Chancellor is expected to announce a consultation on extending to cinematic-style TV production the existing tax relief worth £100m a year to the UK film industry.
TV companies could see their corporation tax burden reduced by about 20 per cent to 25 per cent if the changes go through.
Mr Osborne hopes to help UK companies compete in the increasingly popular market for film-standard TV series, until now dominated by US hits such as Mad Men and The Wire.