Brown heads off tax rebellion

Updated 23.40 Mon Apr 21 2008

Keywords: treasury, alistair darling, labour, gordon brown, politics

Gordon Brown has promised Labour MPs he will "sort out" problems with the abolition of the 10p rate of income tax.

In an address to the party's MPs in Westminster, Mr Brown assured backbenchers he was listening to their concerns over the impact of the change on the poorest households at a time of rising food and fuel prices.

"It is difficult out there and I understand that" - Gordon Brown

Less than two weeks ahead of key local elections on May 1, the Prime Minister said the party had a "responsibility to unite" and to show the electorate that "we get it".

Mr Brown spoke to the Parliamentary Labour Party immediately after the Treasury promised a review of possible measures to improve the lot of low-income households without children, who are expected to be worst-affected by the scrapping of the 10p rate.

"I understand how difficult it is when food prices and fuel prices are rising," he said.

"It is difficult out there and I understand that. People want to know we get it and understand their anxieties."

But more than 35 Labour MPs have signed a rebel motion, which challenges Mr Brown's decision to scrap the 10p bottom rate of income tax.

The number of backbenchers putting their name to the amendment tabled by former minister Frank Field heightens the prospect of a significant rebellion when the Commons votes on the issue early next week.

Mr Field's amendment would delay the scrapping of the 10p rate until measures have been introduced to compensate those who lose out from it.

Earlier, Chief Secretary to the Treasury Yvette Cooper told the House of Commons that a previously-announced inquiry into tackling child poverty would be extended to include the childless poor.

It is expected to recommend measures in time for Chancellor Alistair Darling's Pre-Budget Report in the autumn, perhaps involving changes to the tax credit system.

Conservative leader David Cameron said 5.3 million people had lost £700 million as a result of the change and offered to work with the Government to devise a way of compensating them.