Austerity and deficit reduction are being used as a cover-story for conducting class war against the poor, an economics professor who served as Greece’s finance minister has said.

Yanis Varoufakis noted simultaneous reductions in taxes on the wealthy and cuts to spending on social security amounted to a redistribution of wealth away from the poor to the rich.

“The problem is that austerity is being used as a narrative to conduct class war,” Mr Varoufakis told the BBC’s Question Time programme.

“To be talking about reducing the state further when effectively what you are doing is reducing taxes like inheritance tax and at the same time you are cutting benefits – that is class war.”

Under David Cameron the Conservatives have cut the top rate of income tax paid by the wealthiest, and pledged to cut inheritance tax for estates of up to £1m.

Corporation tax has also been dramatically reduced, while VAT, a flat tax, has gone up. £12bn cuts to the social security budget are in the pipeline. The income tax allowance has been increased and council tax frozen in most areas.

Mr Varoufakis led the negotiations between Greece’s leftist Syriza government and the troika of international creditors, attempting to strike a way forward without austerity. Greece’s government ultimately committed to austerity and Mr Varoufakis stepped down.

Yanis Varoufakis leaving Greece's Ministry of Finance after his resignation

At a rally in July Green Party leader Caroline Lucas said Mr Varoufakis’s government was being deliberately humiliated by international creditors because it had questioned austerity.

Earlier this month former head of the civil service Lord Turnbull said deficit reduction was simply a “smokescreen” for a Conservative attack on the state.

Speaking at the Lords economic affairs committee, Margaret Thatcher’s former principal private secretary challenged George Osborne face-to-face.

“The idea that this debt is impoverishing people is I think an economic fallacy,” he told the Chancellor.

“I think what you’re doing, actually that you want a smaller state. There are good arguments for that, and some people don’t agree with that – but you don’t tell people that’s what you’re doing.

“What you tell them is this story about impoverishment of debt, which I think is a smokescreen. I think the whole idea of the urgency and the extent of reducing debt, I just can’t see the justification of it.”

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Also speaking on Question Time Mr Varoufakis praised British institutions like the NHS and universities and said Britain should abandon the current establishment enthusiasm for imposing market economics on them.

“This market fetishism entered realms it was never meant for,” he said.

Mr Varoufakis also welcomed the election of Jeremy Corbyn and said he hoped the new Labour leader would reinvigorate left-wing politics in the same way Margaret Thatcher did for right-wing politics in the 1980s.