07/08/2011 06:20 BST | Updated 06/10/2011 06:12 BST

Liberal Democrats Dampen Conservative Hopes To Cut Top Rate Of Tax From 50p

Liberal Democrats have once again dampened Conservative hopes to cut the 50p tax rate, in a fresh sign of tension in the coalition over economic policy.

Speaking on Sunday morning the party’s former Treasury spokesman Lord Oakeshott said there was “no room” for tax cuts:

"It's certainly not a priority, I mean incentives work just as well for people at the bottom as they do at the top and at the moment there's no room for tax cuts like that. What we've got to do, as Vince [Cable] says, is get more money into the economy but also make the banks lend”

But a survey for grassroots Tory website ConservativeHome has shown 90% of party members want a tax reduction on petrol or corporation tax to promote economic growth.

Writing in the Sunday Telegraph, the website’s editor Tim Montgomerie said:

“A massive 90 per cent of Conservative Party members believe that some tax cuts are necessary to get the economy going.

“Our ConservativeHome survey found that only a few favoured unfunded tax cuts – rather, grassroots Tories want to finance them from faster and deeper spending cuts. There is wisdom in this: it was Labour’s massive increases in spending that got us into this mess, and it should be spending control, not higher taxes, that get us out.”

The news also follows reports George Osborne is planning to cut the top rate of tax to 45p.

Last week Liberal Democrat Chief Secretary to the Treasury Danny Alexander said Conservatives who wanted to cut the 50p tax rate were living in "cloud cuckoo land".