Brown Faces Growing Revolt Over U.K. Tax Increase

Brown Faces Growing Revolt Over U.K. Tax Increase

By Gonzalo Vina

April 23 (Bloomberg) — Prime Minister Gordon Brown’s government faces a growing rebellion against a plan to raise tax on 5.3 million of the poorest families as seven more Labour lawmakers signed a resolution opposing the measure.

At least 46 parliamentarians from the ruling party signed an amendment to the Finance Bill seeking a delay the introduction of the tax change, according to Frank Field, who proposed the measure. A defeat would be the first on a Finance Bill in at least 90 years for a government.

A defeat would leave a huge hole in the budget -- and in the prime minister's credibility and authority,'' said Philip Cowley, a Nottingham University professor who tracks voting in Parliament.That’s not the same as it being a vote of confidence.’’

Lawmakers are concerned that the abolition of the lowest 10 percent tax band, to pay for a cut in the headline tax rate, hits people on low incomes. The plan, proposed by Brown 14 months ago when we was finance minister, came into effect on April 1 although it has yet to get approval from Parliament.

No one in the right mind wants to vote against the government,'' Field said in an interview with the Guardian today.But this is in a different category to anything we have faced over the past 11 years. The golden threat that ties us together is to protect the poorest.’’

Meeting Rebels

Chancellor of the Exchequer Alistair Darling met rebels yesterday, seeking to defuse the crisis by promising to compensate those hit by the changes in the current fiscal year, according to people present at the meeting. Darling told BBC television on April 20 that he is unable to re-write the budget.'' Today, Darling wrote a letter to John McFall, chairman of a cross-party panel overseeing Treasury policy, saying he is looking attwo ways’’ to help those affected by the change. Darling is considering direct payments or changes to the tax credit system and promised a decision by the time of the pre- budget report due in the fourth quarter.

Pensioners between 60 and 64 years old will be helped through a mechanism that already exists to pay the winter fuel allowance.'' He will also ask the Low Pay Commission to look at further changes to the minimum wage. Backdating BenefitsAs a sign of the government’s intent, we do not wish to wait unnecessarily until November,’’ Darling said. Whatever conclusions we come to, all the changes will be backdated to the start of this financial year.'' Meetings yesterday failed to halt the rebellion, with more members of Parliament signing on with Field to oppose the Brown decision overnight. The revolt adds to a list of setbacks faced by Brown since he became prime minister in June.There can be no question of not going ahead with the abolition of the 10p rate of tax,’’ said Michael Ellam, a spokesman for Brown. ``That was the right thing to do.’’

Labour has trailed the Conservatives in polls since Brown retreated from calling an election in October. Backing for Labour fell to 30 percent this month, according to Populus Ltd., the lowest in any Populus poll since Brown took over from Tony Blair. The Conservatives had the support of 40 percent of voters.

Brown’s popularity ebbed after a worldwide credit crunch raised the cost of mortgages and forced the government to nationalize Northern Rock Plc. Ministers also have struggled to cope with the loss half the population’s bank data and unpopular programs for national ID cards and extending detention limits.

Brown also faces a revolt over government plans to allow police to hold terrorism suspects up to 42 days without charge, the longest in the Group of Seven nations.

To contact the reporters on this story: Gonzalo Vina in London at gvina@bloomberg.net.
Last Updated: April 23, 2008 06:43 EDT

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