Chancellor Gordon Brown was last night urged to hit the super-rich with 50 per cent inheritance tax to pay for cuts for the middle classes.

Income tax-style bands would also raise an extra £150 million to help Britain's poorest children, an influential think tank said.

Replacing the current 40 per cent rate would cut death duties on almost nine out of ten estates, the Institute for Public Policy Research said.

Only those over £808,000 would be hit, calculates the IPPR, which is closely linked to Tony Blair and Labour.

The party's election manifesto is being written by former IPPR director Matthew Taylor, hired by Mr Blair as Number 10's head of policy.

Shadow work and pensions secretary David Willetts said the IPPR report had "let the cat out of the bag" by showing Labour was looking to raise taxes after the next General Election.

However, Downing Street and Labour distanced themselves from the recommendations and suggestions they would find their way into the manifesto.

A Downing Street spokesman said: "Obviously the IPPR make proposals and issue reports from time to time. 10 Downing Street played no part in this work."

A party spokesman said the report would be studied carefully but added: "That doesn't mean we are going to incorporate the recommendations into the manifesto."

The IPPR argues the measures would counter the "worrying" rise in inequality.

Monday August 23, 2004