Leading article: Reform in the wrong direction

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The prospect of Labour backbenchers revolting over the Government's decision to scrap the 10 per cent income tax band is a miserable business for Gordon Brown, and for a party committed to the redistribution of wealth. It is ironic, too, for Labour's record since 1997 has been marked by a commendable shift of money towards the less well-off.

But now, as MPs go aback to their constituencies for an uncomfortable recess, Labour has hanging round its neck a "reform" that clearly rewards middle-income earners and penalises the poor. As presentational failures go, this is as bad as it gets.

True – not all low earners will be hit. Many of the 5.3 million Britons who stand to lose out, and earn less than £18,000 a year, will find tax credits cover all or most of their losses. But that won't help Mr Brown. No wonder that Labour MPs are fuming, for the affair is turning into a debacle, further eroding Mr Brown's reputation as a man the nation can trust with its money.

If the Prime Minister thinks poor voters will accept that complex tax credits will compensate them for an immediate and visible loss in earnings, his political antennae are not switched on. Worse, the muddle presents him as a purely political animal, obsessed with short-term expediency. It looks as if last year's cut in the basic rate of tax from 22p to 20p in the pound was a bone thrown to Middle England – the hope being that no one would investigate the real nature of the "tax cut" too closely. One year on and the manoeuvre doesn't look clever. Indeed, it looks unsavoury.

The aspersions now being cast on Mr Brown are, of course, unfair. It is absurd to suggest, as some Tories appear to be claiming, that the Government is deliberately kicking the poor in the teeth, or that Mr Brown doesn't "care" about the low-paid. Yet, reminders that the Prime Minister cares a great deal about the poor only beg the question of why this change was put forward. It suggests a lack of judgement, a worrying breakdown in communications between the Government and the Treasury and a lamentable failure of intelligence in the Prime Minister's immediate circle.

Now Labour MPs can do nothing except grit their teeth, because the change cannot be reversed by a flick of the switch; the billions that that would require aren't there. Meanwhile, they must watch David Cameron's Conservatives shed tears on behalf of the low paid – never a constituency the Tories have taken much notice of before.

If Mr Brown treats this as a wake-up call, the Government may yet recover its reputation for competence. He had better do so, for as matters stand, it looks increasingly adrift.

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