Budget 2012: Coalition niggles to be swept aside for budget statement

Downing Street let it be known that at a meeting yesterday all members of the cabinet, regardless of party loyalty, began thumping the table in approval as it became clear their healthcare bill was finally passing into law.

NHS reform has been the coalition's biggest headache in recent times, but such a display of unity is characteristic of the firmness the Government wants to display at the moment.

Certainly there has been no shortage of pictures showing 'the quad' - David Cameron, Nick Clegg, George Osborne and Danny Alexander - discussing the crucial budget speech which will be delivered at 12.30pm today.

The most speculated over measure is the abolition of the 50p top rate of income tax for those earning above �150,000 - something many Conservatives believe is required to speed economic growth, but which is politically dangerous as Labour will undoubtedly brand it a tax cut for the Tories' 'rich friends'.

The second most anticipated measure is an accelerated move towards lifting anyone earning less than �10,000 out of paying income tax altogether.


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Mr Osborne is expected to announce today that by April 2013 those earning less than around �9,000 will no longer have to pay any income tax, with the �10,000 target reached in April 2014, much quicker than previously planned.

The Eastern Daily Press has obtained figures, based on the most recent official data, showing that raising the allowance to �10,000 would mean 38,400 people in Norfolk having been lifted out of income tax.

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In Suffolk some 41,500 low earners would have been lifted out of income tax and in Cambridgeshire the figure would be 25,600.

Meanwhile anyone that earns between �10,000 and �116,210 will save around �379 a year as a result of the measure according to the Institute of Fiscal Studies.

With such powerful numbers at stake it is no wonder there has been a tussle within the coalition to take credit for the measure.

The Liberal Democrat version of events, which has gained traction, is that they were the ones calling for low earners to be lifted out of income tax, and that they won that concession from the Tories in return for allowing their coalition partners to abolish the 50p rate of tax.

The Lib Dems also suggest they were only prepared to accept the abolition of the 50p rate in the budget if counter measures were brought in to make high earners pay more tax elsewhere.

North Norfolk MP and business minister Norman Lamb said: 'If you're going to do anything with the 50p rate of tax, then you have to ensure the wealthy make their contribution in other ways.

'It's essential they pay their fair share and that they are seen to pay their fair share.'

A so called 'mansion tax' on homes worth over �2m may be one way the Chancellor achieves that, alternatively Mr Clegg has talked of a 'tycoon tax' - a general rule that high earners must pay a percentage of their overall income to the Treasury.

But some Tory backbenchers have been dismayed at how their Lib Dem partners have been able to take possession of the plan to raise the income tax allowance.

South West Norfolk Tory MP Liz Truss explained: 'Conservatives have called for and wanted to raise the allowance. We all happen to agree that it's a great idea to take low income earners out of tax altogether.'

Furthermore she argues the case for scrapping the 50p tax rate is logical and must be made forcefully, claiming a lower rate will encourage entrepreneurs to the UK boosting growth and bringing in more revenue.

One thing Norfolk coalition MPs appear united on is the need for the Chancellor to make some sort of announcement relating to fuel duty - some even highlight it as the top priority, but even here there are dividing lines.

For example, its unlikely many Lib Dems would support Ms Truss' ideas on how a reduction in fuel duty should be paid for - by cutting subsidies to firms developing green technology, in particular those working on biomass incineration.

But whatever niggles go on behind the scenes the coalition is well aware that if the public are to accept today's budget it must be presented from a united front.

Broadland Conservative MP Keith Simpson said: 'My overriding suspicion is that the public like the coalition. They like it because it's trying to sort out the deficit and rebuild the economy. Therefore they will put up with a few arguments here and disagreements there.

'But as soon as people start saying 'that was our policy, this was there's' and start playing politics with it then the public see that as negative. You are effectively starting to unpick the basis of the coalition.'

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