Film rescue package set for Budget

His intention was signalled in the Lords by Treasury spokesman Lord Davies of Oldham in an exchange in which the sudden decision to axe reliefs for film-makers came under fire from peers of all parties.

Lord Davies said Brown would be 'looking towards ensuring that there is proper consideration for the film industry' but defended the decision to stop abuse forthwith.

He said the halted abuses included 'an extraordinarily advantageous scheme for a limited number of people, and the Treasury had the right - and in fact the duty - to put an end to it'.

He added: 'The Treasury remains on the side of the film industry, to the extent that we intend to ensure the support which has been offered in the past with regard to legitimate tax reliefs, is made available.

'In fact the industry is in discussion with the Treasury with regard to the future position on this.'

He said what had been terminated were 'certain highly aggressive tax planning schemes that used general accounting principles to create paper trading losses for wealthy people'.

Protests were lead by Viscount Falkland, Lib Dem, who said the film industry accepted the closing of a tax loophole, but it was 'not expected to be introduced as abruptly and with such a retrospective flavour as it was'.

He claimed it had caused the termination of 40 film projects and put a number of production companies at risk.

Lord Trefgarne, Tory, said the government should be ashamed that a dozen films were being cancelled or delayed and film workers were being put out of work.

Baroness McIntosh of Hudnall said projects that had taken years to prepare were being 'quite unfairly punished'.