Chancellor Darling admitted yesterday that ‘of course’ he knew that abolishing the 10p tax rate would affect five million low-paid workers.
However, in an interview with BBC’s Andrew Marr he refused to pledge that he would reinstate the 10p tax for the lower paid.
Darling’s remarks stiffened mounting opposition from Labour MPs, with Norwich MP Ian Gibson warning Brown and Darling ‘there will be a poll tax moment’, referring to the issue that spurred the Tories to dump Thatcher.
Gibson was speaking ahead of this week’s debate on the Finance Bill.
In his BBC interview, Darling said: ‘In my last Budget I was able to spend a billion pounds on improving the position for families with children.
‘And in future budgets I also want to do more, because I attach considerable importance to making sure that we help people on lower incomes.’
He insisted: ‘What I can’t do is rewrite the Budget. The financial year has already begun . . . and it isn’t possible once you go into the financial year to unravel the whole thing.
‘What I can say is I intend in future budgets to return to this subject.’
It was put to him ‘if you are saying that, chancellor, you accept this has been a terrible mistake?’
Darling responded that ‘the reform that we made. . . reducing the basic rate to 20p was absolutely right and widely welcomed.’
Interviewer Marr pressed him: ‘so you knew that five point something million people were going to lose out from this and these are single low paid people. How does that make you feel? Did you come into politics to do this?’
Darling said: ‘I came into politics to encourage people to work hard to see the benefits of their work.’
‘And pay more tax as a result?’ interjected Marr.
Darling continued: ‘I also came into politics to help families with children.’
Right-wing Labour MP Frank Field said yesterday that prime minister Brown has been ‘in denial’ for a year over the issue.
Field is putting an amendment to the Finance Bill that requires the government to put in place a package of measures ‘to compensate the five million low paid people who will lose out, before introducing the 10p measure’.
Field said the package will also have to be approved by parliament.
He warned that the 10p move, to abolish the 10p rate, went ‘against Labour MPs’ core belief of protection of the poor’.
Treasury secretary, Angela Eagle, had told BBC Radio 4’s Any Questions on Friday night that people should ‘watch this space’ when she was asked if the government was planning any measures to compensate for the tax changes.
Earlier on Sunday, foreign secretary Miliband warned Labour MPs who have spoken out against abolishing the 10p tax rate.
In an article for the ‘News of the World’, Miliband praised prime minister Brown’s ‘strong values and deep convictions’ but said Labour was now the ‘political underdog’ and would lose the election if people argued ‘among ourselves, failing to defend each other and our leader’.
Seventy Labour MPs, including six ministerial aides, have said they will vote against the axing of the 10p starting rate for tax.
TUC leader Brendan Barber said in an interview yesterday: ‘We have concerns that on a whole range of issues the call has been wrong, that the government has been paying too much attention to the siren voices, those campaigning for the super-rich and the corporate elite.’
He said that the 10p tax move was a mistake and the government could find the money to repay the low paid wage earners who will lose out, if it clamped down on a tax dodge by the wealthy to protect assets by placing them in their wives’ names.
Downing Street said that it would cost £8bn to reinstate the 10p rate of tax.