Chris Huhne warns Tories over 50p tax rate

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 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 actually 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.

Iain Duncan Smith, Work and Pensions Secretary, said on BBC1's Andrew Marr Show: "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."