Labour MPs' rebellion against abolition of 10p tax rate grows

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Gordon Brown faces a "mutiny" by more than 70 Labour MPs unless he backs down over his decision to abolish the 10p lower rate of income tax.

Seventy-four Labour backbenchers have signed Commons motions opposing the move because it will hit the low-paid and pensioners. Other Labour MPs say they will vote against the Government unless it brings in compensation to soften the blow.

Although the Commons is in a two-week recess, MPs claim the rebellion has grown because they have met strong hostility from the public while campaigning for the 1 May local elections. They will warn whips that there must be a climbdown before then to avoid a backlash from its natural supporters.

Frank Field, the former minister for welfare reform, said yesterday: "When MPs come back from the break after campaigning, the Government will have a mutiny on its hands. If the leadership has not appreciated that, we are in dire circumstances."

He said it would be much better for ministers to climb down now than to retreat on the eve of an inevitable Commons defeat. Opposition parties have pledged to join forces with the Labour rebels.

On Monday, Mr Field will table an amendment to the Finance Bill, which rubber-stamps the decision in Gordon Brown's final Budget last year to scrap the 10p rate. It will say that the Commons should deny the Bill a second reading until the Government bringsforward transitional relief for those who lose out from the shake-up.

He will make another attempt a week later when the Bill is discussed in detail at its committee stage. The timing of this crunch vote could be very difficult for Mr Brown, coming three days before the elections.

Three separate Commons motions have been tabled on the issue, two of which are still attracting Labour signatures. Many of the 74 who have backed one or more of them are normally loyal to the Government.

Another Labour MP said: "It is the one issue that is coming up on the doorsteps in the local elections. It is doing us real harm. I will vote against the Government so I can say 'you can't blame it on me'."

Fifty-three Labour MPs have backed a Commons motion, tabled in February, calling on the Government "to make changes to the tax regime to ensure those on low incomes pay less tax." Forty-three have signed a motion expressing concern that the abolition of the 10p rate will hit low income groups, including pensioners aged 60-64. Two weeks ago, 26 Labour backbenchers endorsed a strongly worded motion, saying "despite assurances to the contrary, many people are being made worse off by the abolition of the 10p tax rate". The motion was withdrawn but will be reintroduced if ministers continue to refuse concessions.

Ministers have ruled out a full retreat but may be forced to give some ground to head off a rebellion that would further erode Mr Brown's authority. The Government has said it would cost £7bn to reverse the 10p decision. But Labour opponents insist they are asking for compensation that would cost much less.