Compensation for victims of income tax change

Gordon Brown bought off the great 10p tax revolt today with cash payments for pensioners and childless people.

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In a major retreat, women aged 60 to 64 will get a lump sum, probably £100 or more, to compensate them if they lost out from the scrapping of the starter rate of income tax.
It will be delivered into bank accounts by the autumn in the same way as the annual winter fuel allowance.

Money will also be found for people without children on low incomes who do not qualify for tax credits.

Mr Darling gave no details except that Treasury officials were trying to reward those who lost out, probably using the tax credit system and averaging £2 a week.

The U-turn - the third major rewriting of tax reforms this year - was rushed out to try to get Mr Brown off the hook before Prime Minister’s Questions.

Brown grilled over northern rock

LONDON (Reuters) - Prime Minister Gordon Brown faced a political and public backlash on Monday after his decision to take ailing bank Northern Rock into public ownership, the first UK nationalisation since the 1970s.

The government will announce new legislation allowing it to take over Britain’s fifth-largest mortgage lender after rejecting two private sector-led bids on Sunday and ending five months of uncertainty over Northern Rock’s fate.

Even temporary nationalisation, however, will carry political and financial risks for a government already tarnished by the debacle, as it links its fate to a mortgage bank at a turbulent time for Britain’s housing market, with home repossessions, bad loans and job cuts all set to rise.

It is also facing the threat of a drawn-out legal battle with shareholders, who stand to lose most or all of their investment.

Northern Rock has borrowed about 25 billion pounds from the Bank of England since the global credit crisis last year wrecked its funding model, sparking the first run on deposits at a British bank for some 140 years.

With a national election due by May 2010 at the latest, turmoil over the past five months has dented both the Labour government’s popularity and the prime minister’s reputation as a guardian of financial stability.

Shareholders reacted with anger as the suspension of Northern Rock shares left them unable to sell their stock.
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