Reading West MP, Martin Salter, has steamed into the row over the 10p tax rate cut with a demand that the Chancellor announces a compensation package for low income people within the groups most affected by the tax changes.

In his letter to the Chancellor Martin Salter said:

“I am deeply unhappy with the affect on some of my less well-off constituents and whilst I understand the need to simplify the tax system, there are some serious unintended consequences of this decision. However, while I welcome the extension of the review of the 10p rate, announced by Yvette Cooper this week, it is clear that we cannot wait for this process to take its course. I therefore call on you to produce, as soon as possible, a comprehensive compensation plan targeted specifically at the three groups of people who have lost out under the abolition of the 10p rate.

The three groups are primarily:

• Early retirees on low company pensions who do not qualify for increased pensioner tax allowances or the enhanced pensioners’ credit by virtue of them not being classed as pensioners.
• Young single people in low paid employment
• Part-time workers with no children who do not qualify for tax credits.”

He added:

“This is a core issue for Labour and it cannot be right that the people who rely on a Labour government to protect their interests are at risk of losing out. Since 1997 we have a fantastic track record on fighting poverty. I am particularly proud of the minimum wage, child tax credits, and the winter fuel allowance. However, we are in great danger of sacrificing all this good work. I would urge you once again to announce a compensation package for those on low incomes within the categories I have outlined. The review can work out the mechanics but the package must be retrospective and offer hard cash within a few months. The longer term adjustments can be made in the 2009 budget but this is not an issue that will wait until then.”