Chancellor unveils £2.7 billion aid for 10p tax rate victims » Bill payments » 24dash.com

Chancellor Alistair Darling today announced a £2.7 billion cash injection to help low paid workers hit by the scrapping of the 10p tax rate.

The Chancellor told the Commons that he was raising the individual personal tax allowances for this year by £600.

Under the measure, to be included in the Finance Bill currently going through Parliament, he said that 22 million people on low and middle incomes would gain £120.

He told MPs it represented the "fairest and most effective way" to help those who had lost out due to the abolition of the 10p starting rate announced by Gordon Brown last year in his final Budget as Chancellor.

Mr Darling said that the one-off measure would see personal tax allowances raised to £6,035 backdated to the start of the tax year on April 6, benefiting all basic rate taxpayers under 65.

Of the 5.3 million households which had lost out, 4.2 million would receive at least as much as they had originally lost while the remaining 1.1 million would have their losses at least halved, he said.

From September, all basic rate taxpayers would get a one-off increase of £60, followed by a monthly increase of £10 for the rest of the year.

Mr Darling said that he was financing the measure through borrowing so as not to take money out of the economy while it was slowing.

"The change that I am announcing today represents the fairest and most effective way to help all those affected as a result of the changes proposed last year," he said.

"In addition, this family tax cut provides support this year for those on middle incomes at a time where they face increased bills, so supporting the economy."

Paul Kenny, general secretary of the GMB, said: "This is a very welcome move. It is very reassuring that the Government has dealt with this issue of fairness in the tax system.

"The Prime Minister and Chancellor are to be congratulated for listening to the public and changing tack on this."

Dave Prentis, general secretary of Unison, said: "This is a very welcome move. It shows that the Prime Minister is listening to the concerns of low paid workers who have lost out by the abolition of the 10p rate.

"It will provide great help to workers who are faced with rising food, fuel and housing costs."

Tony Woodley, joint leader of Unite, added: "This shows that the Government has listened to the concerns of core Labour voters and has done the right thing to help some of the poorest in our society.

"Reconnecting with Labour's social conscience in this way is a major step towards reconnecting with voters generally."