The Government has turned a corner,” said Frank Field yesterday, And so it had. There was a hollow clanging sound as the Chancellor reversed away from a wall of derision and promised to compensate some of those made worse off by the Prime Minister's decision to abolish the 10p tax band. He had to. Having robbed 5.3 million of the lowest earners to fund a tax cut for those on middling incomes, Gordon Brown was about as popular in marginal constituencies as the Sheriff of Nottingham was in Sherwood Forest.

Mr Brown has rescued his Finance Bill. But this arcane-sounding row has lost him something more profound. He has been exposed as putting political advantage before principle even on the issue that he is supposed to care most about - poverty. He only introduced the 10p band in the first place to wrong-foot the Opposition. He abolished it for the same reason. It has been, from start to finish, a brazen political fiddle.

The 10p tax rate was brought in solely for the purpose of trumping the 20p rate brought in by the Tories. That was a childish game that successive chancellors had played. Mr Brown was under no illusions about the real merits of the policy when he introduced it in 1999. Andrew Dilnot, then head of the Institute for Fiscal Studies, was so infuriated that he branded it a gimmick. The Chancellor claimed that the new rate would make the tax system fairer, but he knew perfectly well that it would have been fairer to raise personal allowances. He claimed that it would help the worst-off. But again, experts called his bluff. The poorest third of adults didn't pay income tax at all, they pointed out, so stood to gain nothing. It would have been better to cut a tax they did pay, like VAT. But that wouldn't have provided such a slam-dunk headline.

After years of talking up a policy whose advantages were actually modest, Mr Brown then found it expedient to abolish it in last year's Budget. The reason was similar. He had decided to cut the basic rate of income tax from 22p to 20p, a wholly unexpected policy he brandished in the last line of his Budget speech to maximise David Cameron's difficulties at the dispatch box. It must have seemed like a brilliant wheeze, a direct hit on Tory attempts to portray him as a big, clunking tax-grabber. Labour MPs crowed about it for weeks. But to fund the tax cut, he abolished the 10p band - picking five million pockets to buy a few weeks of Tory discomfort. Clunk. The bearings just fell out of the moral compass.

These dismal shenanigans fit a pattern. We have not begun yet to glimpse the true scale of the damage that will be caused by the decisions to tax non-doms and alter capital gains tax. These reforms were rushed through to fund inheritance tax changes because Mr Brown was more desperate to wipe the smile off the face of that infernal George Osborne than to think through the impact on the nation. The political fallout was limited, but the economic consequences could be considerable.

We all know that politics is a con some of the time. But it's beginning to feel like politics is a con almost all of the time. And the politicians still don't seem to realise that we see through them. Why did only seven Labour MPs support Frank Field's original amendment to the proposal to abolish the 10p tax band last year, when it really mattered? Where were the 45 rebels who on Monday pushed the Government to the brink? Were they asleep? Or were some of them vaguely, in the backs of their minds, hoping to get a job in a Brown Cabinet? Why did only 19 Labour MPs vote against the Bill to close post offices, when 90 have since campaigned in their local constituencies to save them? Do they think we don't notice?

The hypocrisy is shameless. It is simply not credible to double the rate of tax and maintain, as Mr Brown did last week, that “no one will lose out”. True, the labyrinthine system of tax credits and other benefits meant that the calculation was not straightforward: not everyone was facing a bigger bill. But his claim yesterday that “we are determined to take action, because we are the party of fairness”, was surreal. Yes, this Government has funnelled considerable benefits to working families with children. The Institute of Fiscal Studies has found that incentives to work improved generally between 1979 and 2000. But it also says that they have weakened since. The Treasury's own figures at the last Budget, in a section hilariously entitled Fairness and Opportunity, predicted that the current policies would double the number of low-paid people facing high marginal rates of tax. Almost two million people earning about £6,500 a year, it calculated, would face average marginal tax rates of 70 per cent. Why should you slog to earn that extra pound if you can keep only 30p of it? How does that square with the mantra of making work pay?

One result of yesterday's U-turn is likely to be a rash of costly adverts urging some of the people who lost out to claim fiendishly complex tax credits. No doubt these will trumpet the “helping hand” offered by a “caring” State. But the language has been despoiled. The cavalier manner in which this Government decided to hit the poor, then tried to deny there was a problem, has been a last straw for many Labour sympathisers. There is a certain Schadenfreude among some Blairite MPs, that Gordon Brown had been paid back for having encouraged disloyalty in the past. But they know that the fallout could be dire. The Government set out to score political points, dressed it up in sanctimonious language, and was caught out. Things can only get bitter.

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