Minister withdraws threat to resign over 10p tax

Labour has averted a disastrous resignation by a ministerial aide in protest over plans to abolish the 10p lower rate of income tax. Angela Smith, a parliamentary private secretary (PPS) at the Treasury, had told colleagues she would stand down rather than be forced to support the measure when it is voted on in the next two weeks. But after frantic talks with Ministers and whips, the MP for Sheffield Hillsborough decided not to quit.

A Treasury aide said: "Angela Smith had concerns about the impact of the tax changes. She raised those concerns with senior ministers, but that is the end of the matter. She is not resigning from her role as Parliamentary Private Secretary."

Her change of heart will intensify speculation that Gordon Brown is preparing concessions to the critics of the tax plan. More than 70 Labour MPs have come out in opposition, threatening to inflict a humiliating defeat on the Government on the issue. The Labour revolt may force him to bow to demands to compensate the 5.3 million people on low incomes who will lose out. Max Telfer, the chairman of the Labour Party in Ms Smith's Sheffield Hillsborough constituency, confirmed she had told him of her intention to quit. He said: "The decision on the 10p tax band affects a lot of people in our constituency and she feels this is a matter of principle. In the area that Angela has her surgeries and does her work it's an issue."

He warned that anger could lead to Labour losing power to the Liberal Democrats in Sheffield in the local elections. "The Prime Minister would be advised to rescind his decision," he said. Janet Anderson, a former Labour minister, also denounced the planned tax rise. She told BBC Radio 4's PM programme: "It has taken the Government a long time to wake up. Frankly I didn't come into the Labour Party – I don't think anyone came into the Labour Party – to penalise people on the lowest incomes, very often doing the most menial jobs."