10p and all that

It appears that today's announcement by Yvette Cooper that the government will expand the remit of an existing enquiry to include helping families without children will not be enough to satisfy rebel Labour MPs.

Unfortunately, the Chancellor does not have any money to give back to the British people. Reinstating the 10 pence tax band as it existed before would cost £7bn. Frank Field's proposals to increase the personal tax allowance (the amount of untaxed income allowed, currently £5,435 for those under 65) would cost £700m and compensate many of those who lost out in Brown's last budget.

It is a real possibility that the government may lose the vote. If they fail to make any more concessions, I have no doubt they will lose. It is difficult to see what further options there are for the Chancellor - Labour MPs want changes now but Darling simply cannot provide any without borrowing recklessly or cutting funds elsewhere. In the same way that Brown had 'no good option' last year when he failed to call a general election, his current dilemma poses a similar, but potentially much more damaging option. If he loses the vote, there will be havoc in the Labour Party - especially if it is seen as a vote of no confidence in the government. That may trigger an actual vote of no confidence, or a leadership challenge. If he wins, he may face several junior resignations.

Either way, this mess was entirely avoidable and is the definitive example of Labour's obsession with grabbing headlines whenever they can. This time, they may pay a very grave price indeed.