Cameron aims to rally Labour rebels over the loss of 10p tax band

Tory leader David Cameron said the change – which came into force yesterday – would "clobber" pensioners, single workers on less than 18,500 and families earning less than 8,000.

Mr Cameron said: "We will be stepping up our campaign to get the government to think again on abolition of the 10p tax rate. Now is absolutely not the time to be hitting 5.3 million people with an extra tax burden.

"The government is kicking people when they are down. We are looking carefully at what we can do in the Commons to get the government to think again."

The call came as Labour dissent grew over the scrapping of the band, with former social security minister Frank Field calling for cash payments of several hundred pounds for the worst hit.

Mr Field will table an amendment to the Budget asking the government to "review" the decision to scrap the 10p rate, which effectively doubles the tax rate to 20 per cent on the first 2,230 of income people pay above their 5,435 tax-free allowance.

Labour MP Tony Lloyd, who chairs the Parliamentary Labour Party, said protests were "real and deeply felt" and urged the Prime Minister not to brush aside back-bench concerns.

"The government has to recognise the concerns that Labour MPs have raised on behalf of our constituents because those concerns are real and deeply felt," he said.

Ken Livingstone, the Labour candidate for Mayor of London, also opposed scrapping the 10p rate. He said: "If I was a Member of Parliament, I would be joining the rebels."

The measures – which were proposed in Gordon Brown's final Budget last year and rubber-stamped in Alistair Darling's first Budget last month – also involve reducing the 22p basic income tax rate to 20p and increasing National Insurance to 11 per cent on salaries between around 35,000 to 40,000.

Yesterday, a report from the Treasury select committee said the removal of the 10p band was "unreasonable" as low earners who would lose out "seem an unreasonable target".

Mr Cameron, addressing his monthly press conference, said that his party would look to use two Commons debates on the Budget later this month to attempt to force a government retreat.

The Budget will receive its second reading in the Commons on 21 April – the day MPs return from the Easter recess – with a debate taking place before the whole House on 28 April.

"We will be appealing to MPs of all parties to join with us," Mr Cameron said.

He said Tory support was likely for Mr Field's amendment. But he repeatedly refused to explain how the Tories would balance the books and find the 8 billion it would cost to reintroduce the 10p rate.

He said providing an answer would "muddy the debate". Voters would have to wait until a general election was called before the Tories published detailed spending plans, he said.

Ed Miliband, the Cabinet office minister, said the changes benefited the poorest 30 per cent of society.

He said: "It's a matter of regret that some people lose, but overall more people gain than lose as a result of this Budget. The biggest gains go to the poorest people in society, particularly people with children."

Mr Brown said the increase in child benefit, child tax credit and the winter fuel allowance meant, overall, people would be better off.

The Liberal Democrats, meanwhile, released figures claiming that up to one-third of the UK's armed forces – some 66,000 personnel – would also be worse off. Vince Cable, the party's treasury spokesman, said: "This is a shabby deal from ministers, who appear to care little about those who put their lives on the line for Britain."

WILL LOSERS OUTNUMBER WINNERS?

WHEN Gordon Brown last year used the final paragraph of his final Budget speech to announce a cut in the basic rate of income tax from 22p to 20p, Labour backbenchers cheered him to the rafters.

But it soon emerged that the "lowest basic rate for 75 years", as he dubbed it, was not all good news – especially for those on low incomes.

Now the changes Mr Brown announced last year, which came into effect yesterday, have caused widespread concern, particularly with the economy in bad shape and Labour facing a tough set of local council elections in England.

The problem is that the cut from 22p to 20p was accompanied by the scrapping of the 10p starting rate. This does not mean taxpayers pay no tax on the band of their income previously charged at 10 per cent – but that it is taxed at 20 per cent instead.

Under the new rules, the tax-free allowance has been increased to 5,435. But all earnings between 5,436 and 41,436 are now taxed at 20 per cent.

According to calculations by the Treasury and the Institute for Fiscal Studies (IFS), around 800,000 single earners with an income under 18,500 will lose 75 a year. This is because they lose out as a result of the removal of the 10p starting rate – and do not earn enough to benefit from the new lower 20p main rate.

A further disadvantage is the increase in the rate of National Insurance contributions from 1 per cent to 11 per cent on income between 34,840 and 40,040. The IFS said 5.3 million people would be worse off.