Abolition of the 10% starting rate

Protests are mounting over the abolition of the 10% rate. Even Government ministers and high-ranking Labour Party members are joining in the criticism of the Government.

Gordon Brown will probably calculate that it would be too embarrassing to do a U-turn and keep the 10% rate after all. Even so, he will probably feel he has to do something to give the impression that he cares about the lowest earners and pensioners who will be most affected by this measure. This is my prediction: the announcement of a benefits package "providing targeted help to the most vulnerable in society". Therefore, more tax credits. In other words, more form-filling, more bureaucracy, more complexity, more waste.

It would be easier simply to raise the tax-free allowance to, say, £10,000, thereby ensuring that the lowest earners get to keep most of their income. However, don't hold your breath.