Budget to be aimed at 'working families'

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Gordon Brown will unveil a "Budget for hard-working families" on Tuesday and is expected to shelve further cuts in income tax to target tax reductions on low earners.

The Chancellor, who will also hail his package as "a Budget for enterprise and employment", has come under strong pressure from cabinet colleagues to woo traditional Labour voters by delaying plans for a further 1p cut in income tax, on top of the reduction from 23p to 22p which takes effect next month.

Senior ministers have urged Mr Brown to spend any money earmarked for tax cuts on raising allowances, which takes more people out of the tax net, or increasing the portion of income covered by the 10p starting rate, which applies to the first £1,500 of taxable income.

Mr Brown will claim that the Government is "working hard for hard-working families" who have earnings just above the level at which they would qualify for state benefits.

Private polling by the Labour Party shows many of these people no longer regard the Government as being "on our side". Measures to boost the incomes of older workers and pensioners will also be a focus.