10p tax help too slow - Darling

Chancellor Alistair Darling has admitted to MPs that ministers should have moved “faster” to compensate those who lost out over the 10p tax rate.

And he said he wanted to do more to help the million people not compensated by his £2.7bn emergency package in May.

He said compensatory measures for the over-65s and many parents were brought in when the tax rate was scrapped.

But he said: “Should we have gone faster and further? Yes we should, which led to my announcement in May.”

Mr Darling was answering questions from MPs on the Treasury Select Committee which is holding an inquiry into the effects of the 10p tax band being axed.

Fiscal rules

Before he announced concessions in May, it was estimated that 5.3m low-paid people would have been left worse off by the change - which threatened to provoke a backbench rebellion by Labour MPs.

He told MPs he did not accept he had put the government’s own fiscal rules, which require public sector borrowing to be held below 40% of national income, at risk by his concessions.

He said it would have been wrong to take the money out of the economy, by tax increases elsewhere, at a time the economy was slowing.

In May, just weeks after the Budget and following a rebellion by Labour MPs, he announced a £2.7bn package effectively giving an extra £120 this year to all basic rate tax payers.

Conservative MP Philip Dunne quoted an interview Mr Darling did shortly after becoming chancellor, in which he said that any tax changes should be “made at the proper time, in the context of the Budget, or the pre-Budget report”.