Cut to 50p top rate will be blocked, says Huhne

David Cameron said today he had confidence in beleaguered Energy Secretary Chris Huhne (pa)

Coalition tensions over proposals to scrap the 50p top rate of income tax grew yesterday when the Energy Secretary, Chris Huhne, warned the Conservatives against "helping their friends in the City".

Mr Huhne also signalled that his party would block any attempt to axe the levy on Britain's highest earners if it went before MPs.

His remarks came despite a new study by the Institute of Fiscal Studies suggesting that the 50p rate may not be raising any revenue for the Treasury at all as high income earners find ways to avoid paying it.

In an interview with Prospect Magazine ahead of the Liberal Democrat conference, Mr Huhne used George Osborne's own mantra that "we are all in this together" to urge the Chancellor to keep the rate.

"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 said. "They are simply not going to get the votes in the House of Commons."

Mr Huhne said the Government should instead focus on lifting the lowest paid out of tax, arguing that it is "nuts" for those on the minimum wage to be taxed at all.

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," he told The Andrew Marr Show on BBC1.