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Budget 2012: Regional Pay Deals Expected But Coalition Wrangles Continue

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Civil servants could be moved to regional pay deals from as early as next month under Budget proposals that risk inflaming trade union anger.

As political wrangling continued over the final details of the package to be unveiled by Chancellor George Osborne, more details emerged of some expected changes.

North Sea oil firms are to be offered guarantees of long-term tax breaks for decommissioning old rigs in a bid to encourage billions of pounds of investment. And controversial moves to recalculate public sector pay rates to better reflect local variations in the private sector are expected to be accelerated.

Some of the more highly contentious aspects of Wednesday's Budget were discussed in a conference call by the so-called "Quad" of senior Conservative and Liberal Democrat figures at lunchtime. David Cameron, Mr Osborne, Nick Clegg and Treasury Chief Secretary Danny Alexander are due to gather in person on Monday to put the finishing touches to the measures.

It is understood that the Budget "scorecard" has been presented to the Office for Budget Responsibility so it can calculate the economic impact of the changes.

But although that met the deadline set for the independent body to start crunching the numbers, Downing Street indicated that the negotiations would continue into next week.

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Those wrangles are mainly over tax cuts for top earners amid reports the Chancellor will set out moves to scrap the top 50p income tax rate on £150,000-plus salaries. While that would be hugely popular with Tory MPs as a stimulus to growth and a victory within the coalition, the Lib Dems want extra taxes on the rich and help for the lowest paid in return.

The Independent reported that Mr Clegg, whose party was previously opposed to lowering the rate, had struck a deal that a drop to 45p would be countered by a "tycoon tax" on the super wealthy.

His proposal would set a minimum floor on the percentage of overall income paid by the wealthiest. But Labour leader Ed Miliband denounced an income tax cut "targeted at the richest people in Britain" as the "wrong priority" - saying youth unemployment should be the prime focus.

TUC general secretary Brendan Barber said: "Moving to regional pay will not just reduce the pay of millions of public servants, but hit regional economies outside London and the South East as people have less to spend. This budget is shaping up to be a giveaway for the super-rich and a takeaway from Britain's hardest hit regions."

Business Secretary Vince Cable said care needed to be taken over how local pay was implemented to protect career progression in the civil service. He said: "The idea of having more flexibility in the public sector is surely right.

"What we are trying to do is to make sure that throughout the public sector there is more genuine decision making at a local level and you have to take into account pay and conditions.

"But it has got to be done very carefully because in the civil service, for example, you have to have career progression and that kind of national consideration has to be woven into the story as well."

Public and Commercial Services union general secretary Mark Serwotka said: "Driving down pay even further at the same time as cutting public sector salaries and pensions, and planning to cut the 50p tax rate, would not only be cruel it would be economically incompetent and counterproductive.

"Local economies - already suffering from Tory-led, politically motivated butchery - are crying out for investment, not more cuts.

"It appears that next week's budget is shaping up to include the exact opposite of what our communities need to help them get back on their feet."

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