Je regrette beaucoup

By Jonathan Walker on Apr 20, 08 10:33 PM in Politics

The Chancellor insisted today: "What I can't do is to rewrite the budget."

He sounded almost regretful. Hearing Alistair Darling speak, it didn't sound as if he believed the changes had been entirely for the best. The impression was strengthened when he pledged to "return" to the issue in future financial statements.

He was referring, of course, to the decision to scrap the starting 10p rate of income tax - so that people pay the higher, basic rate instead - to pay for a cut in the basic rate from 22p to 20p.

The effect is to increase taxes for people on lower salaries. The Chancellor and Gordon Brown, who announced the change back when he was Chancellor in 2007, would point out that most of those affected will enjoy the benefits of higher tax credits to make up for it. But an estimated five million are still worse off.

In fact, I wonder if the Government hasn't placed too much faith in this tax credit stuff. If you increase someone's taxes but make up for it in some other way, I suspect that what they remember is that you increased their taxes.

In an interview with The Birmingham Post earlier this month, Conservative Chair Caroline Spelman, MP for Meriden, predicted that the Government might be defeated when the Commons votes on the tax changes next week. The chances of her prediction coming true have grown since it emerged Labour MP Frank Field is to propose an amendment calling for a rethink.

Mr Field upset some Labour colleagues when he campaigned for a referendum on the Lisbon EU Treaty, alongside Edgbaston MP Gisela Stuart. But from the point of view of the Labour benches, at least he's not a Tory. His colleagues will find it far easier to vote against the Government if it is one of their own proposing the amendment, and not George Osborne, the Shadow Chancellor.

But Mr Darling was right - he can't rewrite the budget now. The financial year has already begun, but apart from that, the money isn't there. The cash raised by increasing taxes for some has been spent on cutting taxes for others who are slightly more wealthy. The question on everyone's minds as the Commons returns from recess this week will be whether the Labour rebels are willing to follow through on their words and give the Government a bloody nose when it comes to a vote.

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