Bank steps in to soothe the City’s jitters

TORY MPs threatened to revolt last night over plans to axe the top rate of income tax south of the Border.

After days of unease, several broke cover to urge Chancellor Kwasi Kwarteng to drop the controversial decision to hand a tax cut to those earning over £150,000.

High Peak MP Robert Largan said the UK faced a ‘deeply worrying time’, adding: ‘I have serious reservations. I do not believe cutting the 45p top tax rate is the right decision when the Government’s fiscal room for manoeuvre is so limited. This is a mistake.’ Former chief whip Julian Smith also urged the Chancellor to ‘make changes’ to last week’s proposals before bringing them forward in a finance Bill next month.

One senior Tory predicted it would be ‘very difficult’ to get the measure through the Commons, adding: ‘People are getting very jittery about the 45p decision.

‘We have just seen the Labour conference, where every shadow minister threw the phrase “tax cut for millionaires” against us. That is going to continue right up to the election and it will hurt us. ‘It is just not worth the political pain.’ The 45p rate – brought in at a rate of 50p by Gordon Brown in 2010 – is paid by 660,000 people on more than £150,000 a year.

A Government source insisted last night that it would be dropped, adding: ‘The top rate of tax was a tokenistic measure when it was introduced and getting rid of it sends an important signal to the markets that we are not going to retain tokenistic measures when we are trying to attract investment.

‘It shows we are serious about going for growth. We knew there would be controversy about it, but it is necessary to do things like this to get the economy moving.’

Tory MP Richard Drax said: ‘I find it strange that people think it’s immoral to lower taxes.

‘It is about making the UK competitive – to bring people here and do business.’