Statement on 10p tax compensation

Chancellor Alistair Darling is to make a Commons statement on the proposed compensation package for people who lost out as a result of the scrapping of the 10p rate of tax, Downing Street has said.

The Prime Minister's spokesman said that Mr Darling's statement would set out his "latest thinking" on the compensation package.

However, he said that full details would be revealed in the pre-Budget report in the autumn.

Mr Darling briefed ministers on his plans at the weekly meeting of the Cabinet at Number 10 during an hour-long discussion on the state of the economy.

The Prime Minister's spokesman described the mood of the meeting as "focused, business-like and determined".

Mr Darling has been under pressure to bring forward his proposals ahead of next week's crucial Crewe and Nantwich by-election.

The scrapping of the 10p rate was widely blamed for Labour's catastrophic performance in the local Government elections earlier this month.

Labour MPs fear that the party's chances in Crewe - where it is defending a majority of just over 7,000 - could be damaged unless the Government can show that it is dealing with the issue.

Meanwhile, Ministers are to be questioned in the House of Lords about the effect the abolition of the 10p starting rate of income tax will have on the take-home pay of junior ranks of HM armed forces.

Labour peer Lord Morris of Manchester, who on Tuesday tabled questions for eventual written answer, said: "In all the debates about this issue, there has been no mention anywhere that a lot of service people are low-paid workers."

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