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Treasury attempts to prevent rebellion over 10p tax rate

21/04/2008

Chief secretary to the Treasury Yvette Cooper has today addressed the House of Commons in an attempt to prevent a backbench rebellion over plans to abolish the 10p tax rate.

Labour MPs are unhappy at prime minister Gordon Brown's plans to remove the lowest tax band.

Critics claim the move will leave the lowest paid workers worse off and affect around five million people.

Ms Cooper said that the measures, introduced in Mr Brown's last budget as Chancellor of the exchequer last year, would leave the "majority of households" better off.

"These are major reforms and the majority of households are better off or the same, though same are paying more as a result of this package," she said in opening the second reading debate on the Finance Bill.

"It is hard in any one Budget to help everyone, and those who lose in any one year may have benefited in previous years or may also benefit in the next," she added.

The chief secretary did say that an inquiry into child poverty in Britain would be increased to include the low-incomes families affected by the tax change.

"We will be consulting with stakeholders with MPs and different groups on the next phase to tackle poverty and inequality in Britain," she said.

Speaking on the Today programme earlier, Conservative shadow chancellor George Osborne accused the government of not taking appropriate action to help those on low incomes.

"I cannot think of another example in recent British history where a tax change has targeted a tax rise on some of the lowest paid people in the country," he said.

Liberal Democrat Treasury spokesman Vince Cable voiced similar concerns, claming: "Cuts in the basic rate of tax are welcome but this cannot be at the expense of those on very low incomes."

Mr Cable also criticised Labour MPs for joining the Lib Dems in opposing the measure "at the 11th hour".

Mr Brown defended his actions by emphasising Labour's fight against poverty during a speech to the Scottish Trades Union Congress earlier today.

The prime minister claimed Labour had done more "in the last 50 years for poverty than any other government".

Mr Brown addressed Labour MPs at a Parliamentary Labour Party meeting at the House of Commons this evening setting out his position on the tax change.