The Chancellor has just announced £2.7 billion of compensation to help those who were worse off as a result of the abolition of the ten pence rate of tax.

As I had previously stated, I was concerned that a small minority of people in Warwick and Leamington would be worse off as a result of these tax changes. I passed on these concerns to my ministerial colleagues at the Treasury, and received an assurance that there would be compensation measures. I have just been in the chamber of the House of Commons to hear the Chancellor's announcement and am pleased that he has now taken steps to help those affected.

The Chancellor has announced that individual personal tax allowances will be increased by £600 for this financial year. This will mean that 22 million people on low and middle incomes will gain an additional £120 this year, backdated to April.

In September, a one-off payment of £60 will be added to payslips with £10 per month following thereafter.

4.2 million households wil receive as much or more than they originally lost as a result of the abolition of the ten pence rate. This new announcement will mean that an additional 600,000 people on low incomes will be taken out of income tax altogether.

Although the changes have been made to personal allowances, the new measure is targetted to help only those on low and middle incomes. Because the Chancellor has changed the threshold for paying the higher rate of tax, high earners will be unaffected by this announcement.

You can click here to read about some of the other measures in the 2008 Budget which are now helping millions of people on low incomes across the country.

I fully support this move and the rest of the Budget measures. Today's announcement is a further step in ensuring that low income earners are protected under a Labour government.