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Tuesday, March 13, 2012

Going to the wire

Yesterday's Guardian outlines in some detail the frenzied activity that is going on behind the scenes as the UK Coalition partners seek to find a formula they can agree on for next week's budget.

The paper says that it is possible that talks will still be going on at final budget meeting 48 hours before chancellor unveils his plans in Commons. That is unprecedented but a clear indication that coalition politics has landed with a bump in the United Kingdom:

Cameron and Osborne, who fly to Washington on Tuesday for a three-day visit to the US, are due to hold a telephone "quad" discussion with Clegg and Danny Alexander, the chief secretary to the Treasury, on their return to Britain on Friday. The ministers will then hold their final meeting on Monday, 48 hours before the chancellor delivers his third budget.

The prime minister and chancellor were irritated with the Lib Dems after they outlined some of the budget thinking at their spring conference in Gateshead. Clegg announced his support for a "tycoon tax" which would ensure that millionaires pay a minimum amount of tax, around 30% on all their income. It is understood that Osborne may announce a study into the feasibility of such a tax.

Clegg also made clear that he wanted an accelerated move by the chancellor to deliver the coalition commitment to raise the income tax threshold to £10,000 to ensure that low-paid workers are exempt from paying tax. The allowance is due to increase by £630 a year to ensure the £10,000 target is met by April 2015. Senior Lib Dems said over the weekend they would like the target to be met a year earlier.

The deputy prime minister clashed with the business secretary, Vince Cable, by appearing to indicate that the "tycoon tax" was a greater priority than a "mansion tax" that would be levied on properties worth more than £2m. Lib Dem sources also indicated that they were relaxed about dropping the 50p tax rate on those earning more than £150,000 if Osborne agreed to speed up moves on the £10,000 tax allowance.

What matters here is the budget we end up with of course. It is important to Liberal Democrats that the final package is seen to be progressive and help the poorest in our society. If we are unable to deliver on that then Nick Clegg's leadership will be under further pressure within the party.
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