Tax victims 'will get handout'

The Government has promised backbenchers it will compensate those who lost out in the 10p tax row.

Chancellor Alistair Darling was forced to offer a £2.7 billion handout to taxpayers in May in an effort to help those hit by the abolition of the 10p income tax band.

Former minister Frank Field, ringleader of the Labour rebellion which forced Mr Darling's announcement, asked in the Commons how ministers would "fully compensate" the 1.1 million households short-changed by the policy.

He raised the possibility of a censure motion if the Government fails to meet its commitments on the issue.

Treasury Financial Secretary Jane Kennedy said: "We will return to this issue at the Pre-Budget Report. The Chancellor will bring forward proposals, they will be concrete proposals.

"They will be implementable as soon as possible."

Ms Kennedy's assurances persuaded 20 Labour MPs who had signed a motion calling for additional measures to help low-paid workers not to press for a Commons vote on the issue.

The 10p starting rate of income tax was abolished by then-chancellor Gordon Brown in his final 2007 Budget, allowing him to cut 2p off the basic rate.

But Mr Darling was forced to unveil the compensation package following an outcry from traditional Labour supporters and a potential rebellion on the backbenches.

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