Brown admits mistake in abolishing 10p rate

borwn10p.jpgBy Patrick Wintour, Nicholas Watt and Allegra Stratton | Gordon Brown yesterday admitted making “mistakes” in abolishing the 10p rate of income tax as the Conservatives ratcheted up the pressure on the eve of the local elections by challenging ministers to publish the Treasury advice on the issue at the time of the 2007 budget.

Both the cabinet secretary, Sir Gus O’Donnell, and the Treasury permanent secretary, Nick Macpherson, separately told select committees earlier this week that the then chancellor would have been briefed on the impact of the abolition of the 10p rate.

“The decision to reform the income tax system and reduce the basic rate to 20p, and abolish the 10p rate … reflected considerable analysis and was taken on that basis,” Macpherson told the public accounts committee.

The Conservatives yesterday put in a request to the Treasury for that analysis under the Freedom of Information Act, in the hope that they can then claim that Brown did not make a mistake, but was aware of the consequences of what he was doing.

The former welfare minister Frank Field spent four months in 2007 trying to extract details of the impact of the 10p tax rate abolition in parliamentary written answers.

In his frankest admission of error, the prime minister yesterday said the government “didn’t cover as well as we should have” losses to low earners without children and pensioners aged 60 to 64. He also said he was “listening” and “learning” as prime minister, adding that “hundreds of things pass your desk every week”.

“We made two mistakes, I will be honest about it. We didn’t cover as well as we should that group of low-paid workers who don’t get the working tax credits and we weren’t able to help the 60- to 64-year-olds who didn’t get the pensioner’s tax allowance.”

He told the BBC’s Today programme that the government had tried to rectify these failings in the 2007 pre-budget report and in the 2008 budget.

At the time of the 2007 budget ministers insisted there would no losers, and the prime minister’s spokesman yesterday said it would have been very difficult to calculate how many people might be adversely affected by the complex changes made in the 2007 budget.

In a separate development, Sunder Katwala, general secretary of the Fabian Society, the left-of-centre thinktank, accused the government of “neurotic under-confidence”.

Strong and radical leadership was needed because Labour was “badly stuck” over how to win the next general election, he said.

His attack led to sharp criticism from a senior executive member and MP who wrote to him last night saying: “Sometimes it has been hard for the activists who have been out on the door knocker at a time when voters are angry about 10p tax etc.

“They have taken it on the chin, and by doing that have left people feeling that it is still worth voting Labour because we engage with them and are prepared to argue our case.

“It has been hard, and the headlines your piece will garner on the day they are going out to knock up thousands more will dishearten them and make it harder. Frankly the internal debate could have remained stuck for a further 22 hours until the polls close, without in any way harming your case.”

On the eve of polling in the local elections David Cameron told the Guardian that the race for the London mayor was not his only focus.

The Conservative leader said: “The rest of the country is important, because it is how you rebuild your organisation. In the north-west we genuinely did make a breakthrough last year.

“We really did suddenly [go] from a situation where we had patchy representation to having more councils than Labour and taking outright control of some places. The organisation is bigger and better. I put a lot of effort into the local elections, because it is actually about how you build the Conservative party across the country.”

He added that he was prepared for a downturn in his fortunes, saying: “Anyone who has followed American politics recently will see that anything is possible. Yes, of course I had a difficult time last summer over byelections and grammar schools and what have you.

“In a way, it is how you come through the difficult times that shows whether your party is sorting itself out. I think the Conservative party really rose to the challenge last year.”

Cameron said Boris Johnson deserved to win in London and freely admitted that a loss would be “bad”.