Brown braced for Labour losses after admitting to 'mistakes' over 10p tax

Gordon Brown is prepared for losses by the Labour Party across England in the local elections today after admitting he made a mistake over the decision to increase the tax on the low paid.

He told the BBC that the Government "didn't cover as well as we should have" losses to low earners without children and pensioners aged 60 to 64 after the abolition of the 10p lower rate of tax.

Mr Brown said he was "listening" and "learning" as Prime Minister. But the Conservative leader, David Cameron, said in clashes in the Commons that Mr Brown should admit "the biggest mistake – he puts political calculation and self interest ahead of the ... national interest".

Mr Brown admitted he made "mistakes" over the abolition of the lower rate of tax at 10p in the pound, and Labour MPs privately said Mr Brown was facing the threat of challenges to his authority if the Tories' Boris Johnson wins the contest to become Mayor of London against the Labour Mayor, Ken Livingstone.

Speaking at a conference of the Institute of Directors, Mr Brown refused to offer any more compensation to the low paid and tried to compete with Mr Cameron's appeal to business leaders by promising to make further cuts in corporation tax. He defended the higher taxes on non-domiciled businessmen and plugging loopholes in capital gains tax which has led to threats by some firms to move abroad.

Mr Cameron promised to cut the rate of corporation tax from 28 per cent to 25 per cent if the Tories won power. But the Tory leader strongly criticised Mr Brown for increasing taxes on the poor. He said a single mother whose pay rose from £100 to £200 a week would take home only £7 extra because of deductions.

Earlier, Mr Brown was attacked by Mr Cameron on the issue of his refusal to back down over the proposal to hold terrrorist suspects for up to 42 days without charge.

Mr Brown stuck by the policy despite the prospect of suffering his first Commons defeat at the hands of his own backbenchers.

The Prime Minister also faced criticism from one ally, the Fabian Society general secretary, Sunder Katwala, who accused Labour of "neurotic under-confidence" and urged the Prime Minister to "cancel No 10's subscription to PR Week".

But Mr Brown came out fighting after he was challenged by David Cameron during Prime Minister's Question Time, bluntly telling opposition parties that they should back the extension of the current 28-day limit on holding suspects without charge as a precaution against future terror attacks.

Downing Street made it clear that Mr Brown would not back down on the issue. Mr Brown's official spokesman said: "The Prime Minister was pretty clear at PMQs. He was pretty clear last week."

Conservatives and Liberal Democrats are already pledged to vote against the planned 42-day limit, meaning a rebellion of 50 Labour backbenchers could easily overwhelm the Government's majority of 66.

As Mr Brown and Mr Cameron clashed for the last time before today's local and London mayoral elections, the Tory leader said: "Can I offer you an opportunity today to retract what you said last week and admit you are going to have to make major concessions on your proposals to extend detention without charge to 42 days?"

Mr Brown shot back: "No. We are going ahead with our proposal and we will put it to the House of Commons... the opposition parties agree with us in principle that there will be cases of terrorism where we will need more than 28 days to interview witnesses."

Mr Cameron asked: "So how far are you prepared to take this battle with your party. Will this vote be an issue of confidence for your Government?"

Mr Brown said: "We will put our proposal before the House and the proposal will be one that I believe Conservative MPs and Liberal MPs should think very carefully about."

In a further challenge to Mr Brown's authority, 33 Labour MPs defied the whips and voted against the Government over demands for tougher action to encourage renewable energy.