DARLING UNVEILS HIS £2.7BN TAX GIMMICK

The Chancellor’s announcement in the Commons gives 22 million low and middle income earners £120 each in cashback this year.

But only a quarter of those lost money after Mr Brown scrapped the 10p tax rate.

It also means that state borrowing rises once again – and other stealth taxes will be needed to reclaim the lost revenue.

Tory shadow Chancellor George Osborne welcomed the help for poor families but said: “This divided, dithering and disintegrating Government are panicking in the face of the Crewe and Nantwich by-election.

“You are treating people like fools. This is a one-off,  one year only payment which could be reversed by a tax increase next year.”

He added: “They are not doing this because they feel guilty or are about the low paid, they are doing this to save their skins – and the poorest will still lose out.’’

Mr Darling said about 4.2 million of the 5.3 million people hit by axeing the 10p rate will get back as much or more than they lost.

But experts said one million people earning between about £6,635 and £13,355 a year would still be up to £112 out of pocket.

Mr Darling also said that everyone’s personal tax-free allowance will rise this year by £600. That will help 17 million people who were not affected by the 10p change to the tune of £120 each.

The £2.7billion package will be funded by borrowing – taking Labour’s debt this year up towards £46billion which is 50 per cent higher than forecasts a year ago.

Economists warned that raising Government borrowing could make interest rate cuts less likely.

Lib Dem Treasury spokesman Vince Cable said: “We can have no confidence in either a Prime Minister or a Chancellor who continue to make tax policy on the hoof, while still leaving the poorest out in the cold.’’