Martin Broughton, the outgoing president of the CBI and chairman of British Airways, last night condemned the Government's 50p income tax rate as an act of "economic vandalism".

Speaking at last night's CBI annual dinner, where Gordon Brown gave a keynote speech, Mr Broughton criticised the Government for failing to spell out, in last month’s Budget, a credible plan for bringing public borrowing under control, and accused Labour of using the tax rise to divert attention away from the country's growing debt problem.

Mr Broughton also questioned the Treasury's economic forecasting. He said: “The use of heroic growth assumptions, together with a timetable extended to 2018, amounted to a serious failure to address the deficit in a way which gives confidence to buyers of our public debt.

"To then try to divert media attention from this failure by tearing up the manifesto commitment to the country’s entrepreneurial class — the major job creators — was nothing short of economic vandalism. What’s more — the tax take is likely to be minimal.”

Mr Brown defended the tax rise. He told CBI members: “I do not like doing it as much as you will not like the measure, but I say to you: if we are to restore our public finances, coming through what is a difficult recession where we have had to wipe out billions of pounds as a result of banking failures, where we’ve got a massive loss in tax revenues as a result of the failures in the financial sector as well the loss of revenues in the corporate sector, we have a duty to act.”

Mr Broughton’s speech, which preceded Gordon Brown’s address to the CBI, comes amid growing anger at the 50p rate, which will apply to earnings of more than £150,000 from next April.

Business leaders have warned that the measure will drive wealth creators from the UK, in particular the City of London, which remains a key foreign exchange earner for the economy despite the financial crisis.

Mr Broughton will dispute comments from Lord Myners, the City Minister, claiming that investors, in their approach to business, acted as “absentee landlords . . . I seem to recall it was investors who, far from being absent, pushed hard for companies to leverage themselves up to fund share buybacks.”

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