Chancellor on luxury ski holiday as pain of VAT rise hits Britons

The Chancellor, who claimed "we're all in this together" when he called for public spending cuts at the 2009 Tory conference, enjoyed a New Year break at Klosters in Switzerland – said to be Prince Charles's favourite ski resort.

Meanwhile, Britons were bracing themselves for higher bills from today as the rate of VAT rose by 2.5 per cent to 20 per cent.

Labour leader Ed Miliband warned that the tax increase would cost families almost 400 a year and put up to 250,000 jobs at risk.

"The squeeze starts here," Mr Miliband said. "The squeeze designed in Downing Street which will come to your street, to the High Street, to every street up and down the country."

Mr Osborne accused Mr Miliband of "opportunism", challenging him to explain how Labour would make up for the revenue that would be lost if the planned VAT rise were scrapped.

But the Chancellor faced damaging accusations himself yesterday from commentators who labelled him "insensitive" for taking a lavish holiday at a time when families were struggling to make ends meet.

It is estimated that the break enjoyed by Mr Osborne, his wife Frances and their two children would normally cost about 11,000.

Unite general secretary Len McCluskey said: "This is graphic proof that we're not all in this together."

John O'Connell, from the TaxPayers' Alliance, said: 'It won't be a very happy new year for many taxpayers, so some will see this as highly insensitive given their own circumstances."