Government faces revolt over 10p tax
The government is aiming to defend itself against a rebellion of Labour MPs over the 10p tax rate.
As the finance bill goes through parliament, allowing the Budget to become law, a group of Labour MPs are pushing the government to provide greater help for those affected by the ditching of the 10p tax rate.
Chancellor Alistair Darling is understood to be meeting with the rebels - thought to number some 30 in total - to ford a way through the impasse.
Gordon Brown, as chancellor, in 2007 ended the low rate of tax for low income workers and cut the main rate of income tax to 20p.
However, the backlash from Labour MPs led to Mr Darling in 2008 to bring in measures to compensate those affected.
But a group of Labour MPs, headed by Frank Field and Greg Pope, claim 1.3 million are still worse off by more than £1 a week.
An amendment to the bill from Mr Field calls for measures "to ensure that no person is worse off by reason of the person's income not being sufficient to secure that the effect of the abolition of the 10p starting rate has not been entirely offset by the reduction of the basic rate".
A Downing Street spokesman said the government was "making its case" for the status quo, and pressed the need for tax credits and measures laid out in the 2008 Pre-Budget Report to be taken into consideration.
"The government... believes we have set out the best and most affordable ways to provide support for lower- and middle-income households," the prime minister's spokesman said.
The Labour rebel MPs are seeing support from both the Conservatives and the Liberal Democrats over the issue.
Liberal Democrat Treasury spokesman Vince Cable claimed those on very low incomes were paying too much.
He said: "This is a situation that Gordon Brown has made even worse, despite the temporary measures he brought in to try to fix a problem of his own making."
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