PM hints at prospect of concessions to tax rebels

Brown desperate to quell mounting revolt among Labour backbenchers in advance of the 1 May local elections. Jane Merrick reports

Gordon Brown embarked on a seven-day charm offensive yesterday to win over rebels opposed to his tax policy in an attempt to defeat the most serious threat to his leadership so far.

As MPs return to Westminster tomorrow, the Prime Minister will hold out the prospect of future concessions ahead of a Commons vote next week on the axing of the 10p income tax rate.

But rebellious Labour MPs, including several ministerial aides, will be told the policy cannot be fundamentally changed and will be reminded that the Government has lowered the basic rate from 22p to 20p.

Yvette Cooper, chief secretary to the Treasury, last night appeared to rule out any U-turn on the abolition of the 10p rate. "You have to remember of course that when you have a major package of changes like this it isn't possible to help everyone in any one Budget," she told Sky News.

"Those who don't benefit from this year's changes will have benefited over the past few years from previous changes. And of course we will also be looking in future Budgets and future pre-Budget reports at what we can do to help those on the lowest incomes."

There were doubts yesterday that a promise of long-term help would be enough to stave off a major rebellion next Monday. Frank Field, the widely respected former welfare minister, is planning to table an amendment to the Finance Bill calling for compensation for the 2.3 million people who lose money under the tax changes. As many as 70 MPs could rebel.

If the Government does not set out specific measures this week, Mr Field is understood to be preparing to go ahead with his amendment. Some MPs warned the 10p row could be academic because there could be "civil war" if Labour did badly in the 1 May local elections, which come three days after next Monday's vote. Another rebellion is looming on plans to extend detention without charge to 42 days, while there were reports yesterday of a possible third revolt on grammar schools.

Following the death of Gwyneth Dunwoody last week, Labour officials fear that they could lose the Crewe and Nantwich by-election, which could be held as early as 15 May, to the Conservatives.

There was irritation at Ed Balls's warning in an interview that MPs should stop their "indulgent nonsense", while Angela Smith, the ministerial aide who threatened to resign over the tax change, was described as "naive" by Downing Street sources.

In an attempt to end the crisis, Treasury ministers and government whips spent the weekend calling MPs to try to win them over. The Labour chairman, Harriet Harman, has been sent to the weekly meeting of the parliamentary party tomorrow evening to rally MPs.

Supporters of Mr Brown are dismayed that the row over the 10p rate has threatened to destabilise party unity ahead of local polls in 11 days. The issue overshadowed his trip to the US this week, which, after a difficult start, was seen in Downing Street as successful.

The sense of government disarray was underlined by apparent mixed signals from No 10 and the Treasury. Angela Eagle, the Treasury minister, said on Friday that people should "watch this space" to see if there were any concessions, while Downing Street made clear there would be no climbdown.

A backbencher who opposes the 10p change warned the real battle would come after the local polls. The MP said: "The party is like a pressure cooker. The election results will do one of two things, ease the pressure or explode it into a civil war."

Alastair Campbell told one newspaper this weekend: "Some of the MPs who have been causing difficulty for the leadership would be better placed devoting their energies to putting pressure on the Conservative Opposition, who are getting away with murder."

Charles Clarke, the former home secretary, and other disgruntled MPs are said to be holding their fire until after the local elections.

The shadow chief secretary to the Treasury, Philip Hammond, told BBC News 24: "Gordon Brown is in denial, refusing to acknowledge there is a problem. We are seeing his authority crumbling around him."

Once the May election results are known, Labour faces the by-election for Mrs Dunwoody's seat. Her daughter Tamsin is tipped as the party's best chance to inherit her constituency. A former Welsh Assembly member, Ms Dunwoody might be the only candidate who could prevent Labour's vote collapsing.