Frank Field, MP for Birkenhead, and one of the most conservative of Labour members, has as a result of a concession by the Chancellor, withdrawn his amendment to the Finance Bill 2008. This would have provided compensation for the estimated five million people who are worse off as a result of Gordon Brown's budget. It remains to be seen how effective the promised compensation deal is.
It comes after a week of fudges. Yvette Cooper announced a review into poverty.
Nick Clegg commented: “After weeks of pressure from all sides, all this tired Government has been able to come up with is yet another review.
“The Treasury shouldn’t need to ‘consult stakeholders’ to work out the impact of doubling the rate of income tax for people on low incomes."
Then there is today's Ofgem Fuel Poverty Summit. Liberal Democrat Shadow Environment Secretary, Steve Webb was scathing:
“The level of fuel poverty in this country is a scandal, with over four million households struggling to meet the soaring cost of energy. The last thing they need is another talking shop.
“The Government must put fuel poverty at the top of its agenda and back
that up by boosting investment in fuel efficiency measures."
Yesterday, we also learned that the Government will delay the release of child poverty figures until June, well after the local elections. They are expected to show a further widening of the wealth gap.
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Just received this from Cowley Street:
In his letter to the Chairman of the Treasury Select Committee, the Chancellor today pledged to help low income families who were made worse off as a result of the doubling of the 10p tax rate.
However, the Chancellor has not promised to ensure all 5.3m people on low incomes who have lost out as a result of the Budget will be fully compensated:
* If the Chancellor is to ensure that all people are fully compensated from the abolition of the 10p rate, the Exchequer will have to spend up to an additional £1.23bn
* Alistair Darling has said he will see if 60-64 year-olds who have lost out can be compensated through the winter fuel allowance. To ensure that all 600,000 people receive full compensation, the winter fuel allowance would have to be almost doubled from £250 to £482 at a cost of £120m
* He announced that he would investigate changes to tax credits to compensate people. However, currently people under the age of 25 are not entitled to tax credits. Furthermore, take up of tax credits by eligible people without children (one of the key groups who lose from the doubling of the 10p rate) is just 22%
* The Chancellor has said that for people currently outside the tax credit system, he will consult the low pay commission on possible changes to the minimum wage:
o The minimum wage for 16-18 year-olds is currently £3.40 per hour, or £6,630 per year (based on 37.5 hour working week)
o The minimum wage for 18-22 year olds is currently £4.77 per hour, or £9,301 per year (based on 37.5 hour working week)
o The minimum wage for 22 year olds and over is currently £5.52 per hour, or £10, 764 per year (based on 37.5 hour working week)
* To ensure that all people on the minimum wage would no longer loose out from the 10p rate, the minimum wage would have to be increased for all people to £18,500 per year - or £9.49 per hour.
Chris Saunders, Liberal Democrat economic policy adviser
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