If the history of the 10 pence tax band is ever written it will not be an account that inspires those who read it. The new rate was introduced in the 1999 Budget by Gordon Brown. It came during a period when “stealth taxes” were rising rapidly yet by this one political gesture, the Chancellor could claim that he had “tax cutting” credentials. The measure concerned served to complicate the tax system and, as it applied only across a narrow band of income, it cannot be said that it helped much in reducing poverty. This is hardly surprising as politics, not policy, was the consideration. By rights, the Conservative Party should have campaigned against this move as it was at odds with the drive towards tax simplification headed by Nigel Lawson in the 1980s. But they had themselves strayed from that path under John Major and were not about to oppose a new tax “cut”.

After eight years, the political value of the 10 pence tax band had long since become marginal. The soon to be outgoing Chancellor, Mr Brown, was looking for a “big bang” package on taxation to act as his finale. He also wanted to be able to claim that he had cut the basic tax rate to its lowest level in 70 years, a boast that would do him some good as he entered 10 Downing Street and, furthermore, would badly embarrass the Tories. To make the numbers add up, though, he had to scrap the 10 pence band despite the fact that this would hurt some of those on low earnings. The parliamentary Labour Party cheered it heartily but a year later woke up to its implications and successfully demanded a commitment to an off-setting Pre-Budget Report in the Autumn. The Conservatives, who should have favoured being rid of the 10 pence band, aspire to preserve it.

There are three lessons which all sides should conclude from this distinctly dubious episode.

The first, and most important, is that gesture politics or pure partisan calculation rarely makes for sound public policy. Labour has, in the end, been more damaged by the creation and then the abolition of the 10 pence band than it would have been if it had never invented it. This is scarcely an isolated incident. One of the reasons why the Government did not extract itself from this mess earlier is that it wasted the Pre-Budget Report last year seeking to compete with the Tory plan to reduce inheritance tax, instigating a debilitating fight with non-domiciled taxpayers as it did.

The second is that tax reform and tax cuts are not different ways of expressing the same idea. Serious tax reform involves establishing a small number of tax bands (two is probably optimal) set at a low level along with minimal loopholes. Such a system is easy to understand and cheap to collect. A tax cut which comes accompanied by additional tax complexity does not have much to commend it. The electorate will, quite correctly, in time come to regard it as a sleight of hand.

The supreme challenge, finally, is how best to combine an extremely desirable simplification of the tax structure with the imperative to assist the working poor out of poverty. Tax credits, which Mr Brown has championed as Chancellor and Prime Minister, have their virtues (indeed Milton Friedman was one of their early advocates) but the formula which has been employed in this country is close to incomprehensible. It too has to be stripped back if it is to realise its objectives.

Mr Brown is now unlikely to lose a crucial vote in the House of Commons on Monday. This will prove a pyrrhic victory for him, and no example to his opponents, if the real lessons of this affair are not taken to heart across the party spectrum.