One million still losing out despite Chancellor's by-election budget

10.00.47pm BST (GMT +0100) Tue 13th May 2008

Lib-Dem Shadow Chancellor, Vince Cable

Commenting on the Chancellor's plans to compensate low paid workers who lost out when the 10p income tax rate was abolished, Liberal Democrat Shadow Chancellor, Vince Cable said:

"This Government's tax policy has descended into a complete farce.

"The abolition of the 10p rate was designed to help Labour win the election that never was. Now this by-election budget is designed to help them cling on to Crewe in next week's vote.

"The Chancellor is desperately trying to backtrack from the disastrous decisions of the Prime Minister but has still hasn't managed to get it right. This u-turn leaves 1.1 million of the lowest paid workers losing up to £100 each.

Even after today's announcement, 1.1 million people earning between just over £6,500 and £12,800 will still lose out under Labour's doubling of the 10p rate. Of the 1.1 million people losing under Labour's current plans, some will still lose up to £100 per year. Of the £2.7bn spent on increasing the personal allowance, only around £630m - less than a quarter - will actually go to the 5.3 million people who lost out under the 10p rate, making it an extremely poorly targeted policy.