Page last updated at 18:34 GMT, Tuesday, 7 July 2009 19:34 UK

Government defeats 10p tax rebels

The government managed to head off a previous revolt in 2008

Gordon Brown has survived a Commons revolt over his decision to abolish the 10p starting rate of income tax.

Rebel Labour MPs joined the Tories and the Liberal Democrats in seeking to compensate more than a million people who have lost out by the changes.

But the prime minister won comfortably by a margin of 43 votes.

Some Labour rebels, such as Greg Pope and Sally Keeble, backed down after ministers warned defeat would cause "chaos" by wrecking this year's Budget.

The revolt was led by former minister Frank Field, who warned ministers they were playing for "very high stakes" and needed to offer more than just "warm words" or face a huge rebellion on their own benches.

He said abolition of the 10p band was a "denial of all that we have come into public life about, and this is our last chance before the general election to rectify it".

And he rejected as "ludicrous" warnings by ministers that voting for his amendment could wreck the Finance Bill, arguing that "we are not rejecting the Budget".

Treasury Financial Secretary Stephen Timms warned the move would plunge the government's finances into "chaos" by preventing it from collecting income tax this year and having to repay that already collected.

Treasury sources said Alistair Darling advised them his legal advice was that their amendment to the Finance Bill would invalidate the collection of income tax - and that all income tax paid since 6 April might have to be repaid.

Mr Field told MPs he had been warned that if the government was defeated it would be "pushing the nuclear button" on Britain's income tax system and that it could even lead to the "collapse of the currency".

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