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Ministers face new 10p tax fight Ministers face new 10p tax fight
(about 1 hour later)
MPs are debating the bill which enacts the Budget, amid new pressure over the abolition of the 10p income tax band.MPs are debating the bill which enacts the Budget, amid new pressure over the abolition of the 10p income tax band.
Two Labour MPs have proposed amendments to help 1.1m people not compensated by the government's £2.7bn package. A Labour MP has proposed an amendment to help 1.1m people not compensated by the government's £2.7bn package.
Minister Jane Kennedy said "concrete" proposals, "implementable as soon as possible" would be brought forward by the time of the pre-Budget report.Minister Jane Kennedy said "concrete" proposals, "implementable as soon as possible" would be brought forward by the time of the pre-Budget report.
The Tories said the Budget had been a "fiasco" which had "unravelled on a scale unprecedented" in recent history.The Tories said the Budget had been a "fiasco" which had "unravelled on a scale unprecedented" in recent history.
In May, Chancellor Alistair Darling quelled a possible backbench rebellion when he announced a £2.7bn compensation package for those who lost out.In May, Chancellor Alistair Darling quelled a possible backbench rebellion when he announced a £2.7bn compensation package for those who lost out.
'Rabbit out of hat''Rabbit out of hat'
But 21 MPs have signed amendments to the Finance Bill by two Labour MPs to help 1.1 million people not covered. But 21 MPs have signed an amendment to the Finance Bill by North-West Leicestershire MP Labour MP David Taylor to help 1.1 million people not covered.
The amendments have been tabled by North-West Leicestershire MP David Taylor and Birmingham Selly Oak MP Lynne Jones. Birmingham Selly Oak MP Lynne Jones, who also put forward an amendment, has told MPs she will not put it to the vote but is seeking "cast iron" assurances that the 1.1m people will be compensated.
Opening the debate for the government, Ms Kennedy said the existing compensation package had reduced the number of households who had lost out from 5.3m to 1.1m, and halves the loss for the 1.1m.Opening the debate for the government, Ms Kennedy said the existing compensation package had reduced the number of households who had lost out from 5.3m to 1.1m, and halves the loss for the 1.1m.
FROM THE TODAY PROGRAMME More from Today programmeFROM THE TODAY PROGRAMME More from Today programme
Asked by Labour backbencher Frank Field, who led the rebellion which prompted the £2.7bn package, for some news on what the government planned to do for the remaining 10p tax losers, she said: "Can I reassure him that as the chancellor has said ... we will return to this issue at the pre-Budget report.Asked by Labour backbencher Frank Field, who led the rebellion which prompted the £2.7bn package, for some news on what the government planned to do for the remaining 10p tax losers, she said: "Can I reassure him that as the chancellor has said ... we will return to this issue at the pre-Budget report.
"We will bring forward proposals, they will be concrete proposals, they will be implementable as soon as possible.""We will bring forward proposals, they will be concrete proposals, they will be implementable as soon as possible."
But shadow chief secretary to the Treasury Philip Hammond spoke of the "fiasco of the 2008 budget and finance bill" which he said had "unravelled on a scale unprecedented in modern political history".But shadow chief secretary to the Treasury Philip Hammond spoke of the "fiasco of the 2008 budget and finance bill" which he said had "unravelled on a scale unprecedented in modern political history".
Taper mechanismTaper mechanism
He said the £2.7bn package had not been a well-thought through measure but a "rabbit out of the hat", shortly before the Crewe and Nantwich by-election.He said the £2.7bn package had not been a well-thought through measure but a "rabbit out of the hat", shortly before the Crewe and Nantwich by-election.
He said the Conservatives would not restore the rate, should they win the next election - as they agree the tax structure should be simpler but added: "What the government has to do is deliver it in a way that is not carried on the backs of the poorest taxpayers."
If there was a single way of solving the entire problem we absolutely would have done it Kitty UssherEconomic Secretary to the TreasuryIf there was a single way of solving the entire problem we absolutely would have done it Kitty UssherEconomic Secretary to the Treasury
Jeremy Browne, for the Liberal Democrats, told MPs that even a moment's examination of the 10p tax abolition would have shown it would be "disadvantageous to millions of people".
He accused Mr Brown of trying to ape the Conservatives by "achieving the Thatcherite dream" - a 20p basic income tax rate - and said it was a "manifestly political move" which was about "positioning" as Mr Brown sought to succeed the then prime minister Tony Blair.
Mr Taylor's amendment - signed by 21 MPs, 19 of them Labour - would introduce a taper mechanism into the £600 increase in personal allowances for income tax offered by the chancellor.Mr Taylor's amendment - signed by 21 MPs, 19 of them Labour - would introduce a taper mechanism into the £600 increase in personal allowances for income tax offered by the chancellor.
He believes this would compensate all of those who lost out from the 10p change were compensated and told the BBC earlier he hoped to get a commitment from the Treasury that all of those who lost out would be compensated within this financial year. 'Copper-bottomed guarantee'
Ms Jones' plan would let people choose whether to opt in or out of the 10p rate. He believes this would compensate all of those who lost out from the 10p change but during the debate said it was just one "suggestion" for the government to consider as they prepare the pre-Budget report.
'Key message' He said he would only put his amendment to the vote if the government was not able to reassure him adding: "I will be waiting to hear an absolute copper-bottomed, concrete rooted guarantee that the government and the Treasury team in particular are focused on this 1.1m [people]."
On Saturday, the Commons Treasury select committee said the £2.7bn package would make up the losses of most of the 5.3 million affected by the 10p decision, but leave 1.1 million of the poorest workers up to £120 a year worse off. The Commons Treasury select committee said the existing £2.7bn package would compensate most of the 5.3 million affected by the 10p decision, but leave 1.1 million up to £120 a year worse off.
Economic Secretary to the Treasury Kitty Ussher told BBC Radio 4's World at One programme: "If there was a single way of solving the entire problem we absolutely would have done it.
"We felt that this [the compensation package] was the right thing to do to return money to people in the current international economic circumstances."
The Conservatives are putting forward their own amendment to "force the government to come back to Parliament with a full report on proposals" to help the 1.1m - which Parliament would then vote on in the autumn.The Conservatives are putting forward their own amendment to "force the government to come back to Parliament with a full report on proposals" to help the 1.1m - which Parliament would then vote on in the autumn.
Vince Cable, Treasury spokesman for the Liberal Democrats, said the "key message" was that in future the government had to be clear, about which households benefit and which households lose out under tax changes.
The chancellor's compensation package was produced after Labour backbenchers had threatened to block the Budget by preventing the Finance Bill passing through Parliament.The chancellor's compensation package was produced after Labour backbenchers had threatened to block the Budget by preventing the Finance Bill passing through Parliament.
The decision to scrap the lowest 10p tax rate, made by Gordon Brown in his last Budget as chancellor in 2007, came into force in April this year - alongside a reduction in the basic rate of tax from 22% to 20%.The decision to scrap the lowest 10p tax rate, made by Gordon Brown in his last Budget as chancellor in 2007, came into force in April this year - alongside a reduction in the basic rate of tax from 22% to 20%.
In addition to the row over the 10p tax rate, changes to vehicle excise duty on the most polluting cars are also likely to be scrutinised, as the Finance Bill returns to the Commons on Tuesday and Wednesday.