Huhne in warning to Tories over top tax rate

The Liberal Democrat, a former City worker before entering Parliament, signalled his party would block any attempt to axe the levy on Britain’s highest earners if it went before MPs.

But his comments came as Work and Pensions Secretary Iain Duncan Smith insisted it would be scrapped.

“On the 50p tax rate George Osborne and the Prime Minister both made it clear it was never forever so it is just a matter when they decide that actually it has done whatever it has got to do in terms of getting the deficit down, that was always the position of the government,” Mr Duncan Smith told BBC 1’s Andrew Marr Show.

In an interview with Prospect magazine Mr Huhne said: “If the cut in the top rate of tax is just a way of helping the Conservatives’ friends in the City to put their feet up, then forget it.

He added: “They are simply not going to get the votes in the House of Commons.”

Mr Huhne called for the Tories to focus on lifting the lowest paid out of tax branding it “nuts” that workers on the minimum wage were taxed at all.

“The top priority for tax cuts, if there is spare money, has to be lifting the hard-working low paid out of income tax altogether,” he added. “In the long run, it is nuts to tax someone on the minimum wage, and we should aim to lift thresholds above it.

“I have no ideological attachment to a particular tax rate.

“But if we are to cut the top rate of tax from 50 pence there has to be a cast-iron economic justification. During tough times, we have to be all in this together.”

A report published by the Institute of Fiscal Studies due later this week is said to reveal that the levy, which applies to workers on more than £150,000, may not boost Treasury coffers.

According to the Sunday Times it will say: “It is not clear whether the 50 per cent rate will raise any at all.”

But Mr Huhne said: “I would be astonished if the Treasury review was able to produce a definitive figure for the top tax rate where we start losing revenue, given the number of studies over the years that have come to different results.”

He suggested instead a package that cut the top tax rate but offset any income gains to higher earners by curbing pension relief or applying a high-end property tax.