Clarke told to clarify tax plans

DONALD MACINTYRE

Political Editor

Kenneth Clarke was under pressure last night to rule out plans to tax redundancy payments after claims of a sudden surge of applications by employees to leave their jobs before the Budget.

Malcolm Bruce, the Liberal Democrats' Treasury spokesman, yesterday challenged the Chancellor to "come clean" about reports that he was planning to end tax exemption for the first pounds 30,000 of redundancy payments.

The challenge came as Paddy Ashdown, the party leader, renewed his call on Mr Clarke not to deliver a tax cutting budget "for the short-term needs of the Conservative Party".

There have been strong hints that despite earlier reports that the Treasury was considering taxing redundancy pay it had now abandoned the idea.

Mr Bruce said that Mr Clarke had refused to confirm or deny the earlier reports and added: "I'm saying to Kenneth Clarke: 'Stop playing politics with people's lives and livelihoods - come to the House of Commons now and withdraw this madcap scheme."

A tax of the sort envisaged, Mr Bruce said, could hit as many as 500,000 people with tax bills of up to pounds 12,000. He added that either Mr Clarke was planning a "cynical and cruel new tax on insecurity and unemployment", or he was unnecessarily allowing "thousands of employees to swing in the wind" between now and the Budget.

Both the Liberal Democrats and the Labour Party claim to have been "inundated" with calls from worried employees considering taking redundancy.