A furious political row erupted on Thursday night over figures published by the Treasury showing that a Conservative policy group’s proposals for tax cuts would benefit the wealthy most and slash revenues by £29bn a year – far more than the Tories had projected.
George Osborne, the shadow chancellor, wrote to Sir Gus O’Donnell, the cabinet secretary, complaining that the civil servants who produced the analysis had been used by ministers to produce an “overtly political” hatchet job that went well beyond what was appropriate under Cabinet Office rules.
The Treasury analysis, which was published on its website, was released in response to a freedom of information request from Conservative researchers.
The text accompanying the FOI release initially disclosed that ministers had requested the analysis. The text was amended within 24 hours of publication and that section deleted.
The analysis was based on a report from the Conservative tax reform commission in October that proposed a series of business and personal tax cuts which it said would cost £21bn.
David Cameron, the Tory leader, has sought to distance himself from the proposals and the party has stressed that it will not back unfunded tax cuts.
The official costing of the measures concluded that they would constitute a much bigger drain on the public finances.
It also said that proposals to abolish the starting 10p rate of income tax and cut the basic rate to 20p would benefit those on higher incomes the most.
Married couples would be the biggest winners, with one-parent families and pensioners benefiting less.
Treasury officials disputed the commission’s view that much of the proposed business tax cuts, including a reduction in corporation tax, would be paid for by moving to an accounts-based system for corporation tax.
Instead of raising £4bn with the new system, as the Conservative commission had suggested, the Treasury calculated that this would cost £500m.
Another key difference was the Treasury’s assessment that the commission’s proposed changes to the capital gains tax regime – including the abolition of inheritance tax and scrapping stamp duty on share dealings – would cost £9.4bn. The commission has said this would cost £5.6bn.
A Treasury official said the costings had been carried out in line with the Cabinet Office code and that the text with the FOI release had been amended because it could have been erroneously interpreted to mean ministers had made the FOI request.
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