Alistair Darling on Tuesday attempted to borrow his way out of the government’s 10p tax nightmare, as he announced a £2.7bn cash handout to poorer and middle-income households.

The UK chancellor faced criticism for pushing up borrowing when he is close to breaking his self-imposed debt limits. His initiative still leaves 1.1m poorer households worse off as a result of the abolition of the 10p starter tax band.