Miliband urges party unity on tax

David Miliband warned Labour was now the "political underdog"

Foreign Secretary David Miliband has warned Labour that squabbling over the abolition of the 10p income tax rate raises the risk of electoral defeat.

In an article for the News of the World Mr Miliband praised Gordon Brown's "strong values and deep convictions".

But he warned that Labour was now the "political underdog" in the polls.

Six ministerial aides have called for action to help low-paid workers who lost out through the tax change, but the Treasury has refused to back down.

Mr Miliband warned that the party would face electoral defeat if members argued "among ourselves, failing to defend each other and our leader".

People will only listen to our claims about what we have done right if we are candid about what we have not David Miliband Foreign Secretary

He went on to call on ministers to "see the world through the eyes of voters".

"People will only listen to our claims about what we have done right if we are candid about what we have not," he said.

"Employment has never been higher but people are worried about housing.

"Crime is down but people think crime has gone up. Universal nursery education has been delivered but more and more people are concerned about care for elderly parents."

Brown 'furious'

Labour MPs have been protesting against the decision to abolish the 10p income tax rate.

The change means that people who would have paid income tax at the lowest, introductory 10% rate will now have to pay the 20% rate.

EFFECTS OF TAX CHANGES Winners: Most people/ with incomes of £18,000+ Under £18,000 but aged 65+ and therefore eligible for higher personal allowances Under £18,000 but with young children and therefore eligible for child tax credits Losers: Under £18,000 and ineligible for working tax credits because under 25 Retired early and therefore ineligible for higher personal allowances Part-timer working insufficient hours to qualify for tax credits Different personal circumstances may affect final amounts Source: PWC Tax changes explained Send us your comments

It is part of a range of changes which come fully into force in the new tax year. Child benefits, state pensions and tax credits have all gone up.

The Commons Treasury committee has said childless single people earning under £18,500 will lose up to £232 a year.

On Saturday, Downing Street dismissed calls for a rethink over the abolition of the 10p rate, and denied it would offer concessions to critics.

One of six ministerial aides who have protested - MP David Anderson - told the Evening Standard on Friday that Labour should not be "making poor people poorer" while at the same time cutting inheritance tax for the better off.

Mr Brown is understood to believe the row has been exaggerated by the media and has urged Labour MPs to look at the government's overall tax changes, which he says have helped low-paid families.

MPs will get a chance to vote on the 10p tax issue the week after next, when ex-minister Frank Field plans to table an amendment to the Finance Bill calling for compensation for those affected.