Osborne refuses to rule out income tax cut for high earners

George Osborne refused four times on Sunday to rule out a cut in the top rate of income tax to 40p in the next parliament, prompting Labour opposition claims that he is planning a "tax cut for millionaires".

The chancellor said his priority was tax cuts for low and middle earners but declined to make a commitment not to reduce the top rate further from its current level of 45p.

On a trip to the southwest, prime minister David Cameron will promise "low taxes", emphasising plans by his Conservative party to raise the tax-free allowance again while lifting the threshold for the "higher" 40 per cent rate of income tax to £50,000.

Party aides insisted that talk of low taxes did not imply plans to change the top rate of income tax, paid on earnings over £150,000.

But in a speech on Monday, Ed Balls, the shadow chancellor, will claim that the Conservatives have a "secret plan" to give another tax cut to the highest earners.

The coalition in 2012 announced it would cut the top rate from 50p to 45p. Mr Osborne wanted to lower the rate even further - to 40p - the rate that applied during most of the time the last Labour government was in power - but he was thwarted by his Liberal Democrat coalition partners.

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In his speech he will say that under a Conservative government, millionaires would pay less while millions of people would pay more.

The party's plans are "extreme spending cuts which are a grave threat to our living standards and our public services," he will say.

David Gauke, a Treasury minister, retaliated with the accusation that Labour had a "secret plan for £3,028" of tax rises for every working family. But that claim has already been questioned by the Institute for Fiscal Studies think-tank as neither "sensible" nor "helpful" - because it is based on several erroneous assumptions.

Voters will be subjected to a barrage of claims about tax and living standards in the final weeks of the general election campaign.

Labour says a "cost of living crisis" has left households feeling poorer than at the start of the parliament in 2010.

Mr Cameron will on Monday present analysis saying that 94 per cent of working households are £200 a year better off after the most recent Budget. Pensioner households are £180 better off, he will say.

Monday will see about half a million older people given significant new freedom to access their savings under sweeping reforms to the pension system.

From April 6, an estimated half a million savers with "defined contribution" pension pots will be given new flexibility to take their savings as a lump sum from the age of 55, removing the need to buy an annuity - an insurance product that gives a guaranteed income.

Steve Webb, the Lib Dem pensions minister, said that the reforms would mean a "better retirement" for millions.

But a poll of 1,000 people by consultancy PwC found that more than half of adults approaching retirement have not been contacted by their pension provider ahead of the reforms.

Providers have taken on hundreds of extra staff and many are extending their opening hours on Monday - which is a public holiday - to deal with an expected wave of demand from people who want to cash in their pensions.

Mr Webb recently urged savers not to rush into making a decision.

But as the launch date drew near, a survey of 13 providers by the Financial Times has found most preparing for a sharp rise in customer inquiries.

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