Tory tax policy a mess, says Balls

Shadow chancellor Ed Balls has sought to step up pressure on the Government over the controversial cap on tax relief for charitable giving, describing the move as "cobbled together at the last minute".

Mr Balls said there was a "massive outcry" against the plans, which, he said, came at a time when charities were under pressure from public spending cuts.

"If you cobble something together at the last minute and you don't think about it, you don't talk to the charities, you don't talk to the Charity Commission, it all falls apart," he said

"What is so difficult is that the Government cut taxes for the richest people but they are taking the money away from the charities. Where is the fairness in that?"

His remarks came after David Cameron gave a strong hint that he is poised to water down the proposed cap, saying he was ready to listen to critics and take time to "get it right".

The Prime Minister said he wanted to see more philanthropic giving to charities - something a Treasury minister conceded would fall under the plans announced by Chancellor George Osborne.

Downing Street confirmed that a full consultation is to be held over the summer on Mr Osborne's policy, which would see a limit on a range of income tax reliefs of £50,000 or 25% of income, whichever is the greater.

The Treasury has said the move, announced in the March Budget and due to be introduced through the 2013 Finance Bill, will crack down on wealthy individuals who use reliefs to minimise their tax contribution.

It released figures showing that 6% of £10 million-plus earners paid less than 10% in tax and another 3% came in below the basic 20% rate. Fewer than three-quarters paid more than 40%.

Charities have denounced the Chancellor's policy as "a shambles" and warned it would hit good causes like medical research, education and help for the vulnerable, while raising "relatively small amounts" in additional tax.