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PM concedes income tax "mistakes"

30/04/2008

Gordon Brown has admitted mistakes were made during the abolition of the 10p starting rate of income tax.

His comments come after last week's U-turn on the issue of compensation for those left worse off as a result of the income tax changes, following a threatened Labour rebellion led by backbench MP Frank Field.

"I will be honest about it, we made two mistakes," Mr Brown said on the Today programme.

"We didn't cover as well as we should have that group of low-paid workers and low paid, low-income people who don't get the working tax credit.

"We weren't able to help the 60- to 64-year-olds who don't get the pensioner tax allowance. That is now being dealt with."

Mr Brown pointed out the scrapped 10p rate came as part of reforms to cut the basic rate from 22p to 20p and improve tax credits for pensioners, families and the low paid.

And he insisted the decision to abolish the 10p rate was the right one, pointing out it was "interesting" that other political parties were not proposing restoring the starting rate.

"It never did the job of getting people out of poverty," the prime minister said.

"What did the job of getting people out of poverty was the £40 on average a week that people get from the pension credit, the money people get from the child tax credit and child benefit, and the help we give to the low-paid through the working tax credit."