Clegg seeking Osborne tax rethink

Nick Clegg is to urge George Osborne to introduce the £10,000personal allowance on income tax more quickly than planned to relieve the growing pressure on household budgets.

The Liberal Democrat Deputy Prime Minister will say that the coalition agreement to raise the threshold gradually over the course of the parliament is no longer enough when family finances are facing a "state of emergency".

He and Chief Secretary to the Treasury Danny Alexander will be lobbying the Chancellor ahead of his March Budget to increase taxes on the wealthy to fund faster tax cuts for squeezed low and middle earners.

In a speech to the Resolution Foundation think tank, Mr Clegg will insist the tax system needs urgent reform so that it "rewards work and encourages ordinary people to drive growth".

In a challenge to his Conservative coalition partners, Mr Clegg will say: "Every politician now has a simple choice: do you support a tax system that rewards the hard-working many? Or do you back taxes that favour the wealthy few?

Nick Clegg wants the 10,000 pounds
 personal tax allowance
introduced earlier than planned

"I know which side of the line I stand on - the UK's tax system cannot go on like this, with those at the top claiming the reliefs, enjoying the allowances, paying other people to find the loopholes, while everyone else pays through the nose.

"This is about fairness in the middle. More money in the pockets of the people who need it."

Sources said Mr Clegg wanted to revisit the "basic principles" of the tax system and felt the case for tax cuts for hard working families as soon as possible was "irresistible".

Raising the income tax personal allowance to £10,000 was a Lib Dem manifesto commitment and endorsed in the Coalition Agreement after the 2010 general election. The first increase in the allowance, from £6,475 to £7,475, was announced in the 2010 Budget. It is set to rise again, to £8,105, in April.

Mr Osborne is aware of the contents of the Deputy Prime Minister's speech, but Treasury sources said it represented Mr Clegg's "personal view" rather than a change of plan. "It's an interesting Budget submission," one said.