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Party leaders vow to help those hit by 10p tax rate cut

22 April 2008 / by Daniela Gieseler
In a meeting with Labour MPs who have raised concerns about scrapping the 10p tax rate, Gordon Brown conceded that he understood their worries that the new regulation makes the poorest poorer. He promised to work on the problems with the Chancellor in time for the Pre-Budget Report next autumn.

People on low incomes, particularly childless couples, single people and pensioners are hit hardest by the new regulation which came into effect earlier this month. The change means that low earners who would have paid 10 per cent of their incomes earlier are now taxed at 20 per cent.

"I understand how difficult it is out there. I understand that people out there are fighting the elections and questions are being asked," Brown told his MPs.

"With food prices rising, fuel prices rising, people want to know that we do get it, that we understand what is happening to them."

The Prime Minister's attempt to appease his MPs comes as up to 70 of his party members affirmed they would back an amendment brought forward by former Labour Welfare Minister Frank Field due for vote on Monday. The amendment demands compensation for those losing out because of the tax change.

The 10p tax issue has caused a major rift within Labour and, in the worst case, the concerned Labour MPs could force through the amendment against the government next Monday.

However, for Gordon Brown, far more than losing this key vote is at stake. The issue might cost Labour thousands of votes in the local elections coming up on 1st May, and could cause a major blow to the Prime Minister's credibility.

Hence his call for unity in yesterdays meeting: "We cannot have the Budget defeated. We have a responsibility to listen, to hear and to understand what has been said. But there is a responsibility for all of us to unite."

Earlier in the afternoon the Treasury offered a concession to the rebel MPs when Yvette Cooper, Treasury Chief Secretary, announced that a planned review of measures against child poverty will be extended to look into measures to support low income households without children.

Tory leader David Cameron offered to work with the government in order to find ways to compensate the low-paid hit by the abolition. He said it had cost 5.3 million tax payers £700 million and he intends do his utmost to get it back for them.

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