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Page last updated at 09:55 GMT, Wednesday, 21 March 2012

Lord Lawson: Osborne 'should stick to plan A'

Former chancellor Lord Lawson has said that George Osborne should "stick rigorously to Plan A", on announcing today's Budget.

He was speaking to the Today programme's Evan Davis about the widely touted proposal of phasing out the 50p top rate imposed on earnings above £150,000.

"If 50p tax rate really is temporary, it's time it was removed," Lord Lawson said.

He went to call the measure "gesture politics" because when, taking into account the behaviour of high earners to avoid paying tax, scrapping the 50p tax rate "does not bring in any revenue at all so it does not cost you anything to cut it".

But Lord Lawson maintained that "you need to do something at the other end of the scale, where the tax shoe pinches most" giving the example of young married mothers who give up their jobs to bring up a child because they lose both their income and their tax allowance.

On what we would suggest George Osborne do, he said that "you have got to stop-up a whole lot of tax loopholes", for example the "glaring dodge" of very wealthy people avoiding stamp duty by owning their homes in the name of foreign companies.

He also said that you have to "keep bearing down on public expenditure".

"Financial services is going to be a growth industry," he said, "and if London can retain its place as the finance capital of the world, it is good news for the British economy and for everyone else in the country".

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