Rebels await chancellor’s offer

Faced with the threat of a damaging parliamentary defeat, the Government offered a series of concessions to those worst affected, insisting that no one would lose out as a result. A set of promises rushed out on Wednesday placated the rebels, who dropped a proposed amendment to the Finance Act. However, the Social Market Foundation think tank said yesterday that, because ministers were only willing to spend around £1 billion on the package, most losers would not be compensated. Barely one in five would see any benefit, it said. "This is likely to mean that the compensation package will help less than a quarter of the losers," said Ian Mulheirn, the foundation's chief economist.

Alistair Darling on Tuesday tried to buy off Labour’s tax rebels with an offer to speed up help for some of the 5.3m poor people hit by the abolition of the 10p tax band.

The chancellor’s concession appeared to take some steam out of the rebellion. Frank Field, whose call for compensation to offset the tax change has become a focus for Labour discontent, admitted the number of Labour MPs prepared to vote down the government’s Budget legislation next Monday had fallen from 39 to 31.

24,000 households, mainly low-paid childless people, part-timers and early retirees more than £10 a week worse off.

5.3 million households in total are tax losers.

£7 billion - how much it would cost annually to restore the 10p starting rate.

Previously, low earners paid the 10p in the Pound rate on the first £2,230 in earnings above the personal allowance of £5,225.

The architect of Labour's 10p tax rebellion said yesterday that ministers must provide up to £1bn in compensation for those affected by the changes before the local elections next week, if they are to defuse the row.

Insisting he did not want to bring the government to its knees, the former minister for welfare reform Frank Field said the Treasury had £1.2bn in unclaimed working tax credits with which it could fund the package, a move that would take the sting out of the issue for voters.

Admitting he was in a cat and mouse game with the government, Field said: "No one in the right mind wants to vote against the government, but this is in a different category to anything we have faced over the past 11 years in that the golden thread that ties us together is to protect the poorest.