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Darling 'promises to act on tax' Darling 'promises to act on tax'
(19 minutes later)
Chancellor Alistair Darling has told MPs he will act "within this financial year" to answer concerns about ending the 10p tax rate, the BBC has learned.Chancellor Alistair Darling has told MPs he will act "within this financial year" to answer concerns about ending the 10p tax rate, the BBC has learned.
He made the commitment during a meeting aimed at quelling a rebellion which could see the government lose a Commons vote next week, several MPs said.He made the commitment during a meeting aimed at quelling a rebellion which could see the government lose a Commons vote next week, several MPs said.
Some 39 Labour backbenchers have signed a motion criticising the change.Some 39 Labour backbenchers have signed a motion criticising the change.
Meanwhile Treasury committee MPs are to hold a short inquiry into the effect of axing the 10p income tax rate.Meanwhile Treasury committee MPs are to hold a short inquiry into the effect of axing the 10p income tax rate.
Opponents say it is unfair as it will hit some 5.3 million of the UK's lowest earners.Opponents say it is unfair as it will hit some 5.3 million of the UK's lowest earners.
Following a cabinet meeting earlier, the government said it would be "working hard" to allay fears.Following a cabinet meeting earlier, the government said it would be "working hard" to allay fears.
'Compensation''Compensation'
Mr Darling's meeting was part of this strategy and, according to several MPs, he promised: "We will take action within this financial year."Mr Darling's meeting was part of this strategy and, according to several MPs, he promised: "We will take action within this financial year."
EFFECTS OF TAX CHANGES Winners: Most people with incomes of £17,500+Under £17,500 but aged 65+ and therefore eligible for higher personal allowancesUnder £17,500 but with young children and therefore eligible for child tax credits Losers: Under £17,500 and ineligible for working tax credits because under 25Retired early and therefore ineligible for higher personal allowancesPart-timer working insufficient hours to qualify for tax credits Different personal circumstances may affect final amountsSource: PWC Tax changes explainedAnalysis: Darling's optionsEFFECTS OF TAX CHANGES Winners: Most people with incomes of £17,500+Under £17,500 but aged 65+ and therefore eligible for higher personal allowancesUnder £17,500 but with young children and therefore eligible for child tax credits Losers: Under £17,500 and ineligible for working tax credits because under 25Retired early and therefore ineligible for higher personal allowancesPart-timer working insufficient hours to qualify for tax credits Different personal circumstances may affect final amountsSource: PWC Tax changes explainedAnalysis: Darling's options
Some MPs said they thought Mr Darling might consider backdating compensation for those who have lost money as a result of the tax change. Some MPs said they thought Mr Darling might consider backdating compensation for low earners who have lost money.
But Treasury sources said all options were on the table and no details had been decided. After the meeting, Mr Darling said it had been "very useful".But Treasury sources said all options were on the table and no details had been decided. After the meeting, Mr Darling said it had been "very useful".
The Finance Bill - which enacts this year's Budget - was given a second reading on Monday evening when MPs approved it by 298 votes to 223.The Finance Bill - which enacts this year's Budget - was given a second reading on Monday evening when MPs approved it by 298 votes to 223.
But the government faces a likely rebellion next week when amendments are put forward relating to the abolition of the 10p rate, introduced in last year's Budget. But the government could faces a likely rebellion next week when amendments are put forward relating to the abolition of the 10p rate, introduced in last year's Budget.
Frank Field, the Labour MP heading the revolt, said 39 backbenchers had signed his amendment, which seeks compensation for those who lose out from the 10p tax move. Frank Field, the Labour MP heading the revolt, said 39 backbenchers had signed his amendment, which seeks compensation for those who lose out.
'Commitment''Commitment'
If they, and all opposition parties back him, the government would be defeated.If they, and all opposition parties back him, the government would be defeated.
Mr Field said: "The division is not about defeating the government at all. It is about saying the Budget will go through. The cross-party Treasury committee's inquiry will look into the effects of the abolition of the 10p rate, as well as the impact of other Budget decisions on low-income households.
"But, as it goes through, we want a commitment from the government that those maybe five million plus people who lose out as a result of the abolition of the 10p [rate] will be compensated for that loss and that that compensation will be backdated to the beginning of the financial year." It aims to produce its recommendations for action before the Finance Bill completes its final passage through the Commons, probably no earlier than June.
BBC political editor Nick Robinson said this could delay any rebellion by Labour MPs during next week's vote on Mr Field's amendment.
It would also mean any Commons embarrassment came after next week's local elections in England and Wales.
Earlier, the prime minister's spokesman said Chief Whip Geoff Hoon had told ministerial colleagues it was "important that all ministers in cabinet explained to those who had concerns what the government's position was".Earlier, the prime minister's spokesman said Chief Whip Geoff Hoon had told ministerial colleagues it was "important that all ministers in cabinet explained to those who had concerns what the government's position was".
HAVE YOUR SAYI will benefit from the tax changes but I think they are immoral Christine, Belper Send us your commentsHAVE YOUR SAYI will benefit from the tax changes but I think they are immoral Christine, Belper Send us your comments
But he again refused to say whether Gordon Brown saw the issue as a "confidence vote", simply describing it as "important". But he again refused to say whether Gordon Brown saw the tax issue as a "confidence vote", simply describing it as "important".
The spokesman said the government would be "working hard during the course of the next week to persuade MPs of the merits of its case".The spokesman said the government would be "working hard during the course of the next week to persuade MPs of the merits of its case".
It is not known how many Labour MPs will vote against the abolition of the 10p rate but more than 70 have signed motions raising concerns about the issue. It is not known how many Labour MPs will vote against the abolition of the 10p rate but, in recent months, more than 70 have signed motions raising concerns about the issue.
Pendle MP Gordon Prentice said: "The fact is that if the Budget goes down, if this key clause goes down, then I don't think the government can survive."Pendle MP Gordon Prentice said: "The fact is that if the Budget goes down, if this key clause goes down, then I don't think the government can survive."
Mr Brown tried to head off the rebellion at a Parliamentary Labour Party meeting on Monday by promising to "sort out" the financial impact of the tax change on some of Britain's poorest households.Mr Brown tried to head off the rebellion at a Parliamentary Labour Party meeting on Monday by promising to "sort out" the financial impact of the tax change on some of Britain's poorest households.
MPs' report The changes, which came into force this month, abolished the 10% starter rate of income tax, but lowered the basic rate from 22% to 20%.
In the meantime, the cross-party Treasury committee will hold an inquiry into the effects of the abolition of the 10p rate, as well as the impact of other Budget decisions on low-income households.
It aims to produce a report with recommendations for action before the Finance Bill completes its passage through the Commons.
Under the tax changes, which came into force this month, low earners who would have paid income tax at the lowest, introductory 10% rate now have to pay the 20% rate.
Meanwhile, the basic rate has been lowered from 22p to 20p.
The Treasury committee has said single people with no children earning under £18,500 will lose up to £232 a year as a result of the changes.The Treasury committee has said single people with no children earning under £18,500 will lose up to £232 a year as a result of the changes.
Scrapping the 10p rate was part of a range of measures which took effect earlier this month. Ministers say rises in child benefits, state pensions and tax credits have gone up, benefiting millions of people.
Child benefits, state pensions and tax credits have gone up. The government says the changes are already benefiting millions of people.