Tories shrug off claims their tax cuts are helping the rich get richer

A Treasury minister has dismissed criticism of the Government’s tax cuts for the highest earners as the “politics of envy”.

Chris Philp made the comment as the Liberal Democrats claimed that families in the “squeezed middle” would lose hundreds of pounds next year despite Kwasi Kwarteng’s mini-Budget because of the effect of a little-publicised “stealth tax”.

On Friday, Mr Kwarteng announced that as well as reducing the basic rate of income tax from 20 per cent to 19 per cent from April, the Government would scrap the 45 per cent additional rate of income tax for those earning over £150,000.

Appearing on BBC Breakfast on Saturday, Mr Philp, the Chief Secretary to the Treasury, responded to claims that the Tories were just helping the richest.

“To get Britain growing we need to reduce the burden of taxation,” he said.

“We’re not into the politics of envy where we want to deliberately penalise people who have been working hard.”

However, according to a Lib Dem analysis, even after the 1p cut to the basic rate, a typical family will still see their tax bill rise by £290 next year as a result of frozen income tax thresholds.

When Rishi Sunak was chancellor, the Government made a decision to freeze income tax thresholds, preventing the amount someone can earn tax-free from increasing in line with inflation. The measure was confirmed in Mr Kwarteng’s financial statement on Friday.

‘Stealth tax rise will wipe out Kwarteng’s tax cuts’

With inflation much higher than previously expected, the frozen thresholds will raise billions more than the Office for Budget Responsibility forecast earlier in the year.

According to House of Commons Library research commissioned by the Lib Dems, the total tax take from the move will reach £32.4 billion over the next two years – £6.5 billion more than the OBR forecast in March.

A household with two adults paid the median salary of £31,876 will pay an extra £290 in income tax compared to what they would have paid if the thresholds were not frozen, despite the basic rate being cut.

The family’s tax hit would then rise to £590 in 2024-25, with inflation in that year also now expected to come in above the OBR’s forecast from March.

With the Lib Dems expecting to fight a series of close battles with the Conservatives for control of Blue Wall seats in the south of England at the next election, the party is anxious to convince middle-income voters that they will not see the benefit of Liz Truss’s tax cuts.

Sir Ed Davey, the Lib Dems’ leader, told The Telegraph: “At a time when mortgage rates, food prices and energy bills are all going up, the Conservatives are hammering families with a £32 billion tax grab. It shows Liz Truss and Kwasi Kwarteng are totally out of touch with the British people.

“This stealth income tax rise will more than wipe out the tax cuts announced this week for most people. Those in the squeezed middle are being left out in the cold, while only a tiny minority of the very wealthiest will benefit.

“It is a deeply flawed and unfair approach that shows the Conservatives don’t have a credible plan to fix the economic mess they’ve created.”