Osborne rejects 50p tax rate cut

Chancellor George Osborne has refused to scrap the 50p tax rate on high earners in this month's Budget, despite pressure from the City and Conservatives.

The Chancellor says he cannot reduce the 50% rate whilst public sector pay is frozen and the sector faces further redundancies.

Treasury officials admit they do not know if the top rate tax actually brings in any real revenue as top earners take steps to avoid paying it, according to the Financial Times.

However, new Tory MPs from the Midlands and the North have overwhelmed right-wingers in the party, insisting cutting the rate will not please voters. David Cameron also backs the chancellor's decision.

Osborne says the tax rate will remain at least until the public sector pay freeze is over in 2013.

The Chancellor will outline his economic strategy for the country over the next year on 23 March.