UK's Brown offers olive branch to tax rebels

Prime Minister Gordon Brown held out an olive branch on Monday to rebels in his Labour Party angered by tax rises for the poorest in Britain, but failed to quell the biggest parliamentary revolt of his premiership.

Brown faced dissident Labour lawmakers at a party meeting in parliament, telling them the government was sympathetic to their concerns but without promising an immediate fix.

The row comes as Brown struggles to assert his authority over his party just 10 months after replacing Tony Blair as prime minister.

Brown's popularity rating has plunged and the government is trailing the opposition Conservatives in opinion polls.

The government said it would try to help those worst hit by the tax move, which came into force this month, by including them in an inquiry into tackling child poverty in time for the government's next budget announcement, due in the autumn.

The offer fell well short of the swift compensation sought by dissenting Labour lawmakers for the millions affected, which financial experts say would cost the government 6 billion pounds ($12 billion).

"We are not in the business of making poor people poorer," Labour lawmaker Gordon Prentice told BBC TV after the meeting with Brown.

"(The prime minister) said he recognises the issue, it's going to be addressed, he's in listening mode and that's good. But I want action earlier rather than later."

The government announced plans to abolish the lowest 10 percent tax band in its 2007 budget, Brown's last as finance minister. It was balanced by changes in other allowances and tax credits targeted at the elderly and families with children.

It is only recently that Labour legislators have become alarmed at how unpopular the move is proving among lower-paid voters. They fear it will hit Labour in May 1 local elections, when the party faces a mauling.

Brown's government is resisting rolling back the change, saying it has no room for financial manoeuvre at a time when it faces many other demands because of the global credit crunch.

The issue threatens to come to a head next week when parliament debates legislation authorising the tax move.

Dissident Labour legislators say they will introduce an amendment to the Finance Bill forcing compensation for all those affected, unless the government comes up with an acceptable solution.