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Government defeats 10p tax rebels Government defeats 10p tax rebels
(10 minutes later)
Labour rebels have failed to defeat the government over compensation for low paid workers who have lost out over the abolition of the 10p tax rate. Gordon Brown has survived a Commons revolt over his decision to abolish the 10p starting rate of income tax.
Labour rebel Frank Field pushed ahead with an amendment to the Finance Bill despite warnings it could lead to the collapse of the tax system. Rebel Labour MPs joined the Tories and the Liberal Democrats in seeking to compensate more than a million people who have lost out by the changes.
He was backed by the Conservatives and Liberal Democrats and some Labour MPs. But the prime minister won comfortably by a margin of 43 votes.
But the government defeated the amendment in a Commons vote by 311 votes to 268. Some Labour rebels, such as Greg Pope and Sally Keeble, backed down after ministers warned defeat would cause "chaos" by wrecking this year's Budget.
The revolt was led by former minister Frank Field, who warned ministers they were playing for "very high stakes" and needed to offer more than just "warm words" or face a huge rebellion on their own benches.
He said abolition of the 10p band was a "denial of all that we have come into public life about, and this is our last chance before the general election to rectify it".
And he rejected as "ludicrous" warnings by ministers that voting for his amendment could wreck the Finance Bill, arguing that "we are not rejecting the Budget".
Treasury Financial Secretary Stephen Timms warned the move would plunge the government's finances into "chaos" by preventing them from collecting income tax this year and having to repay that already collected.
Treasury sources say Alistair Darling advised them his legal advice was that their amendment to the Finance Bill would invalidate the collection of income tax - and that all income tax paid since 6 April might have to be re-paid.
Mr Field told MPs he had been warned that if the government was defeated it would be "pushing the nuclear button" on Britain's income tax system and that it could even lead to the "collapse of the currency".