Kwasi Kwarteng has made a screeching U-turn on the Government’s controversial plans to slash the top rate of tax for Britain’s highest earners.
Yesterday the prime minister declared herself ‘absolutely committed’ to slashing the rate from 45% to 40%, after it was slated by opposition parties and her own MPs.
Now her Chancellor has been forced into an astonishing climb down despite the pair repeatedly reiterating their support for the measure.
This morning he said ‘it is clear that the abolition of the 45p tax
rate has become a distraction from our overriding mission to tackle the
challenges facing our country’.
In a tweet, he added of the criticism: ‘We get it, and we have listened’.
Less than 24 hours earlier, appearing on BBC’s Sunday Morning, Ms Truss had claimed that the original plan was made by her under-fire Chancellor, rather than a move discussed with her cabinet.
She was then promptly accused of throwing Mr Kwarteng ‘under a bus’ by former minister Nadine Dorries.
The Chancellor, meanwhile, had been briefing that he would say in his Tory party conference speech today: ‘We must stay the course. I am confident our plan is the right one.’
Now his predecessor, former Conservative chancellor George Osborne, said it was ‘touch and go whether the Chancellor can survive’ the fallout.
He told the Andrew Neil Show it would be ‘curtains’ for Mr Kwarteng if his speech went badly.
The dramatic change of course follows a disastrous mini-budget, which sent the pound plummeting, saw the rate of interest on Government borrowing soar and left financial markets in meltdown.
Ms Truss and Mr Kwarteng had even resisted backing down in the face of criticism from the International Monetary Fund and amid a £65 billion emergency intervention by the Bank of England to restore order to the jittery City.
But it was the plan to give millionaires a huge tax cut amid the cost-of-living crisis – particularly when coupled with a plan to bin a cap on bankers’ bonuses – that has fuelled much of the outrage.
There had been warnings that the £2 billion a year plan would not get through Parliament, with senior Conservatives Michael Gove and Grant Shapps among those publicly voicing their opposition.
Last night The Sun suggested that the climb down was being planned after crisis talks between Mr Kwarteng and Ms Truss.
The U-turn will be seen as a massive blow to their authority and credibility, coming a little over a week after they being announced and just a month into Ms Truss’ premiership.
The pair had been under pressure, including from senior Tory MPs, to back down on the measure announced in the mini-budget on September 23.
Ex-transport secretary Mr Shapps had joined a growing Tory backlash against Ms Truss’ tax plans, branding her decision to scrap the 45p top rate ‘politically tin-eared’.
Meanwhile, fellow former minister Michael Gove took aim at Ms Truss’ plans yesterday and threatened not to vote for them in Parliament.
He suggested paying for vast tax cuts with increased borrowing was ‘not Conservative’ and declared himself ‘profoundly’ concerned about the £45 billion of tax cuts, particularly the abolition of the top income tax rate.
Damian Green, a former deputy prime minister, warned that the Tories will lose the next election if ‘we end up painting ourselves as the party of the rich’.
Former minister Maria Caulfield said: ‘I can’t support the 45p tax removal when nurses are struggling to pay their bills.’
Labour called the rest of the tax-cutting mini-budget to be scrapped.
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Shadow chancellor Rachel Reeves said the reversal ‘comes too late for the families who will pay higher mortgages and higher prices for years to come’.
She said: ‘The Tories have destroyed their economic credibility and damaged trust in the British economy.
‘This is not over – it’s not just some distraction.
‘The Tories need to reverse their whole economic, discredited trickle down strategy.
‘Their kamikaze Budget needs reversing now. As the party of fiscal responsibility and social justice, it will come to the Labour Party to repair the damage this Tory government has done.’
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