A Labour backbench revolt over the abolition of the 10p tax rate was comfortably seen off by the Government yesterday as it defeated an amendment that would have forced ministers to compensate those hit by the policy.

Gordon Brown saw his Government’s majority cut to 43 in its defeat of an amendment to the Finance Bill that many thought would be jeopardised by the rebellion.

The Treasury had sought to dissaude dissenters by warning that the amendment would invalidate rules governing the collection of income tax, but many Labour backbenchers insisted that the party needed to stand up for those on low incomes.

Opposition from the Conservative and Liberal Democrats looked to have been bolstered by 30 Labour MPs who were backing Labour MP Frank Field’s amendment to offer compensation to more than just those hit worst by the abolition of the 10 pence tax band.

The Government avoided a humiliating defeat, however, after a number of prominent rebels including Greg Pope and Sally Keeble said that they would no longer be supporting the motion in a debate yesterday.

The margin of victory was also enhanced thanks to the support of the Democratic Unionist Party MPs —whose leader, Peter Robinson, met the Prime Minister at No 10 last night.

Mr Field welcomed the action taken so far by the Government to compensate those who had lost out under the new tax system, but said that it needed to apply to more than just the worst hit. He said that half a million of the poorest households were still losing out to the tune by around £2-3 a week and deserved to be helped.

He said: “The golden thread that knits us all together is that we came into this place not only to protect but to advance the interests of those who get the least from life.

“The 10p is 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.”

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