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Darling moves to avert tax defeat Rebels keep up pressure on Brown
(about 1 hour later)
Chancellor Alistair Darling is to meet Labour MPs in an attempt to avert a House of Commons defeat on the abolition of the 10p income tax rate. Prime Minister Gordon Brown's attempt to head off a defeat over the abolition of the 10p income tax band appears not to have won over rebel Labour MPs.
Some 40 Labour MPs are said to have so far signed a rebel motion challenging Gordon Brown's decision to scrap it. Some 40 are now said to have signed a motion challenging the decision - enough to beat the government if repeated in next week's Commons vote.
They are angry that millions of low earners have been left worse off after changes in last year's Budget. The MPs say more than five million low earners have been left out of pocket.
The prime minister said he understood their concern and would look at ways of helping those who lost out. Mr Brown has promised to look at ways to help the worse off. The cabinet is meeting now and may discuss the issue.
The Finance Bill - which enacts the Budget including scrapping the 10p tax band - 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 when the 10p rate is considered next week. 'No-confidence vote'
Compensation calls 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.
Frank Field, the Labour MP heading the revolt, said he now had the support of 40 Labour MPs. Labour whips have told MPs a vote against the bill would amount to a vote of no confidence in the government.
The backbenchers have put their names to his amendment, which would delay getting rid of the 10p rate until measures are in place to compensate those who lose out. Frank Field, the Labour MP heading the revolt, said 40 backbenchers had signed his amendment, which seeks compensation for those who lose out from the 10p tax move.
But it is not known how many will vote against the measure. In total, more than 70 Labour MPs have signed motions raising concerns about the issue.
If all the Opposition parties vote against the government - as is expected - then the government has an overall majority of only 36.
EFFECTS OF TAX CHANGES Winners: Most people with incomes of £18,000+Under £18,000 but aged 65+ and therefore eligible for higher personal allowancesUnder £18,000 but with young children and therefore eligible for child tax credits Losers: Under £18,000 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 £18,000+Under £18,000 but aged 65+ and therefore eligible for higher personal allowancesUnder £18,000 but with young children and therefore eligible for child tax credits Losers: Under £18,000 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
Pendle MP Gordon Prentice told BBC 2's Newsnight: "People who have lost out have got to be fully compensated and they have got to be told when they are going to get their money by the end of next week." He said: "The division is not about defeating the government at all. It is about saying the Budget will go through.
"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 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.
If all the opposition parties vote against, then 36 Labour rebels would be needed to defeat the government.
Pendle MP Gordon Prentice said: "People who have lost out have got to be fully compensated and they have got to be told when they are going to get their money by the end of next week."
'We get it'
He added: "The fact is that if the Budget goes down, if this key clause goes down, then I don't think the government can survive."He added: "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 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 on Monday by promising to "sort out" the financial impact of the tax change on some of Britain's poorest households.
BBC political editor Nick Robinson said that the prime minister told a meeting of the Parliamentary Labour Party that people wanted to know: "Do I get it?". BBC political editor Nick Robinson said the prime minister had told a meeting of the Parliamentary Labour Party that people wanted to know: "Do I get it?"
He went on to say that "We get it", and promised that Treasury ministers would begin work immediately with those with concerns. He went on to say that "we get it", and promised that Treasury ministers would talk to those with concerns.
Party whips have also told MPs a vote against the bill will be a vote of no confidence in the government. class="lp" href="http://news.bbc.co.uk/1/hi/talking_point/default.stm">HAVE YOUR SAYI will benefit from the tax changes but I think they are immoral Christine, Belper class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=4644">Send us your comments
Mr Darling has said he "would return" in future Budgets to help those hit by the move. Chancellor Alistair Darling has said he "would return" in future Budgets to help those hit by the move.
BBC political correspondent Carole Walker says the chancellor will come under pressure to spell out more details of the government's plans when he talks to Labour MPs. 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.
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 of income tax has been lowered from 22p to 20p. Meanwhile, the basic rate of income tax has been lowered from 22p to 20p.
The Commons 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 Commons 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 have been introduced in April - child benefits, state pensions and tax credits have gone up. The government says the changes are already benefiting millions of people. Scrapping the 10p rate was part of a range of measures which took effect earlier this month. Child benefits, state pensions and tax credits have gone up.
The government says the changes are already benefiting millions of people.