Chancellor unveils concessionary tax deal

Government plans to compensate those adversely affected by the recent abolition of the 10p rate of income tax, have been described as a ‘climb-down’ by opposition parties.

In a letter to the chairman of the Commons Treasury committee, Chancellor Alistair Darling pledged to review the national minimum wage, tax credits and the Winter fuel payments system to help lower earners.

The concessionary deal, which is to be backdated to the beginning of the financial year, comes in the wake of fierce criticism from Labour MPs and growing concerns of a backbench rebellion.

Despite being accused of making a ‘u-turn’ and ‘panicking’ by Conservative leader David Cameron, Gordon Brown insisted that he has made ‘the right long-term decisions.’

Earlier this month the 10p starting rate of income tax was scrapped, meaning that those who earn less than £18,000 per year and are ineligible for working tax credit would be financially worse off.

While the Prime Minister admitted that the proposed compensatory package would not help everyone affected by the tax changes, the Trades Union Congress (TUC) has welcomed the latest move.

Responding to Darling’s statement, Brendan Barber, TUC General Secretary, said: ‘The Chancellor has been right to listen to MPs and unions who have said that the abolition of the 10p tax has hit the poor.

‘Let us hope that [this ...] signals the start of a new commitment to a progressive tax system and the relief of poverty.’