Inside Parliament: Budget rebels defy Labour whip on cutting tax

Heseltine seizes on `proof' that Opposition plans 60p top rate

T en Labour MPs last night defied the Labour leadership and voted against a 1p cut in the standard rate of income tax to 24p in the pound at the end of the five-day Commons debate on the Budget.

Tory MPs claimed Labour whips were standing guard at the division to stop more Labour MPs rebelling by voting with the Liberal Democrats against the tax cut. Labour officially abstained, but the vote will be used by ministers to embarrass Tony Blair, the Labour leader.

The Labour MPs voting against the 1p tax cut were: Dennis Skinner, Terry Lewis, Tony Benn, Jeremy Corbyn, Ronnie Campbell, Max Madden, Lynne Jones, Denzil Davies, Colin Pickthall and Eddie Loyden. The Labour chief whip, Donald Dewar said: "They are all well known to take an idiosyncratic line. It was a very good result for us."

In a series of votes at the close of the debate, the official Labour line had been to abstain on a motion setting the income tax rates for 1996-97, including the 1p reduction in the basic rate. Labour has opposed every other reduction in income tax since 1979. But Mr Brown told the Commons that people had "suffered enough". The Liberal Democrats opposed the cut.

In the debate, Michael Heseltine, the Deputy Prime Minister, claimed that Labour was planning a top rate of income tax of 60p in the pound as the Budget debate ended much as it began - with both sides trying to brand the other as the "high-tax party".

"There's nothing new about the Labour Party," Mr Heseltine declared. But there was nothing new about the Deputy PM either as he offered the House a pale imitation of his Labour-bashing extravaganzas of yesteryear.

With snow falling outside the Palace of Westminster, the five-day debate ended with a defeat by 307 votes to 290 for a timely Labour attempt to pave the way for a cut in the 8 per cent VAT on domestic fuel. "Today's weather reminds us that pensioners can't afford to turn up their heat quite so easily as we can in the House of Commons," said John Prescott, seemingly unconscious of the metaphor. The deputy Labour leader seemed almost pained that Mr Heseltine had delivered a speech "more appropriate to a circus" rather than concentrating on the serious issues of the Budget.

Much of the debate revolved around the Government's claim, rather loosely put by Mr Heseltine, that the Budget "will deliver an extra pounds 9 a week" to the average earner.

Alan Beith, the Liberal Democrat economics spokesman, and Mr Prescott both seized on the figure, asking if it assumed a 4 per cent average pay increase. If teachers were to get such an increase it would eat up the extra pounds 878m the Government had promised for schools, Mr Beith suggested.

"Here's the Government telling us that they have a 4 per cent pay policy," Mr Prescott said. The claim brought Kenneth Clarke, the Chancellor, to his feet to clarify matters.

The figure given by ministers that the average family with one wage-earner and two children would be pounds 450 better off next year was based on Treasury assumptions about earnings, inflation and the effect of the Budget changes, Mr Clarke said. Eclipsing his colleague, the Chancellor asked what changes Labour would make, if pounds 9 a week was not good enough. "This whole nonsense is based on the assumption that the Labour Party have got an opinion one way or the other about the changes we have made in personal taxation.

Mr Heseltine's assertion that Labour was planning a higher top rate sprang from a Commons written answer put down on 2 November by the frontbencher Nigel Griffiths, Labour MP for Edinburgh South, asking what the yield would be from a 60 per cent upper rate.

To Tory cheers, the Deputy Prime Minister demanded: "What possible interest has a shadow Treasury spokesman of the Labour Party got in asking the Treasury to calculate what is the product of a 60 per cent upper-rate tax band? Is it idle curiosity, or is to help with the arithmetic?" Shouts from Labour MPs that Mr Griffiths was a trade-and-industry spokesman did not trouble him. "All I tell the people of this country: Labour is planning a 60 per cent tax rate."

Meanwhile, in the House of Lords the Government suffered its first defeat of the new session as peers insisted, by 108 votes to 85, on higher standards of training for probation officers. New rules came into force on Monday ending the requirement for a two-year social work course. It will be replaced by a National Vocational Qualification with some higher education content.

The Probation (Amendment) Rules are the subject of a judicial review brought by the National Association of Probation Officers. No date has yet been fixed for a hearing.