TAX ALLOWANCE 'MAY RISE TO £10,000'

John McFall, chairman of the influential Commons Treasury committee, said he knows the move - which would effectively exempt millions of low-paid workers from income tax - is "in the Prime Minister's mind".

Currently workers do not pay any tax on the first £6,035 they earn.

But Labour MP Mr McFall called for that figure to be raised significantly.

"We should put money into the pocket of those with the lowest incomes.

"These are the people who most need our support," he told a newspaper.

"This would also be a fiscal stimulus since this group is most likely to spend rather than save."

Upping the limit would also benefit those earning more, because they too would only start paying basic rate tax at £10,000, he added.