Brown's tax changes in disarray as Government forced into u-turn

4.00.00pm UTC (GMT +0000) Wed 23rd Apr 2008

Gordon Brown [Image: Rex Features]

Labour MPs today called off their revolt over the abolition of the 10p income tax rate after Alistair Darling promised to compensate poor households who will lose out. The Chancellor said he would use the minimum wage, tax credits and winter fuel payments to compensate the estimated 5.3 million families who will suffer financially from the abolition of the 10p rate. Changes, he said, would be backdated to April 2008. Frank Field responded by saying he would withdraw his rebel amendment that had attracted the signatures of 45 Labour MPs and threatened Gordon Brown with his first Commons defeat as prime minister. Both Nick Clegg and David Cameron raised the issue at Prime Minister's questions today. Nick said that the lowest earners were being made deliberately worse off by the Government's tax changes, and criticised Labour for doing the job of the Tories.

Nick Clegg said "Gordon Brown's tax changes are now in total disarray. In a last-gasp attempt to appease its own backbenchers, the Government has cobbled together a set of half promises which will not even be properly revealed for another seven months. People who have just seen their tax rates doubled are unlikely to be comforted by the reassurance that the Government is going to tinker with an overly complex and failing tax credit system, which people under 25 aren't even entitled to. The Prime Minister is desperately shifting in the wind as he tries to avert political meltdown."