GORDON Brown is battling to subdue a Labour rebellion over tax changes coming into force this week that will leave more than 600,000 low-paid Scots out of pocket.
The Prime Minister was talking to his advisers this weekend to try to reassert his authority after loyalist MPs warned of a public backlash over the abolition of the 10p tax band.
A Treasury source insisted last night that there was no prospect of
a U-turn on the 10p band but did suggest that the Government was looking at other ways of compensating people who will lose out as a result of the change.
"No specific promises have been made (to critical MPs] but everyone in government knows that it's our intention to help people on low incomes and I'm sure that we will continue to look at what can be done."
Tax experts say that people earning between £5,931 and £15,075 a year will be worse off by up to £446 when the 10p band is scrapped, pushing them on to the new basic rate of 20p in the pound.
Figures from the 2007 Annual Survey of Hours and Earning, show that around 608,000 Scottish workers – just over a quarter of all employees – could be hit by the tax change.
People not in work, including under-65s who receive a pension, could also be badly affected.
Most people earning more than £15,075 will be better off as a result of changes to income tax and National Insurance.
Brown announced the changes in his last Budget as Chancellor, but backbenchers say the rising cost of living and looming recession have provoked more and more constituents to express their anger. And, once people see their wage slips, MPs expect an even greater reaction.
Some of the 26 MPs who signed a parliamentary motion opposing the change were seen as the "usual suspects", but the danger for Brown is that previously loyal MPs are beginning to question his judgment.
Shadow Chancellor George Osborne said: "Families are already struggling with rising food prices, higher council tax bills and more expensive mortgages – and now Gordon Brown is hitting them with extra taxes.
On top of his tax rises on a pint of beer and family cars, this month he is putting up taxes on low-paid workers, on employee share-ownership and on small companies.
"Instead of helping with the rising cost of living for families Labour's economic incompetence is adding to it."
Vince Cable, the Liberal Democrats' Treasury spokesman, said: "Labour MPs are finally waking up to Gordon Brown's con-trick of hitting some of the poorest members of society in their pockets just so that he could get some cheap headlines.
"If there had been an election last year he might have got away with it, but as the credit crunch starts to bite people will find this kind of short-term political manoeuvring hard to forgive."
Stewart Hosie, the SNP's Treasury spokesman, said: "Gordon Brown seems to have abandoned Labour's core supporters – and it seems that his MPs are prepared to abandon him.
"The Prime Minister is looking increasingly out of touch and out of time."
Energy firms to be forced to help poorEnergy companies will be obliged by law to introduce low-rate gas and electricity tariffs for poorer households under plans due to be unveiled by ministers this week.
Up to a third of Scottish households, including families on low incomes, pensioners and claimants, could benefit from compulsory "social tariffs".
Although Chancellor Alistair Darling threatened in last month's Budget to use legislation if the big energy companies failed to increase their spending on voluntary social tariffs, ministers had planned to give them time to act of their own accord. The Government has been forced to act sooner than it wished because the Energy Bill is progressing rapidly through Parliament.
Graeme Kerr of consumer watchdog Energywatch said: "It is welcome news – it shows a shift of emphasis by the Government."
The full article contains 675 words and appears in Scotland On Sunday newspaper.
