Truss and Kwarteng U-turn on scrapping 45p tax rate
Chancellor said the controversial proposal had become a ‘massive distraction’
The government is ditching much-criticised plans to scrap the 45p top rate of income tax, the chancellor has announced.
In what the BBC described as a “humiliating climbdown”, Kwasi Kwarteng told the broadcaster that the proposal, announced ten days ago in his mini budget, had become “a massive distraction on what was a strong package”.
“We just talked to people, we listened to people, I get it,” he said.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
At least 14 Tory MPs had come out publicly against the plan, The Times reported yesterday, including former ministers Michael Gove and Grant Shapps.
The latter had predicted this morning that Liz Truss would lose a Commons vote on cutting the top tax rate. “I don’t think the House is in a place where it’s likely to support that,” Shapps told the BBC.
The Sun described the tax U-turn as a “body blow to the new government”. The Financial Times said the “retreat” would “add to Tory concerns” that Kwarteng and Truss have “lost a grip” on the economy.
The pound hit a record low against the dollar after Kwarteng announced the tax cuts, but sterling “edged higher” this morning, rising 0.3% against the dollar to just under $1.12 in trading in Europe, the paper reported.
News of the U-turn came hours before Kwarteng addresses the Conservative conference in Birmingham. Overnight briefings of his speech showed that the chancellor had been planning to hold firm on the 45p tax measure, saying: “We must stay the course. I am confident our plan is the right one.”
But now, Truss’ “first budget is in tatters with its central policy about to be ditched, her first party conference as prime minister is descending into chaos, and her position is considerably weaker”, said Politico’s London Playbook.
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Chas Newkey-Burden has been part of The Week Digital team for more than a decade and a journalist for 25 years, starting out on the irreverent football weekly 90 Minutes, before moving to lifestyle magazines Loaded and Attitude. He was a columnist for The Big Issue and landed a world exclusive with David Beckham that became the weekly magazine’s bestselling issue. He now writes regularly for The Guardian, The Telegraph, The Independent, Metro, FourFourTwo and the i new site. He is also the author of a number of non-fiction books.
-
Shardlake: a 'tightly plotted, gorgeously atmospheric piece of television'
The Week Recommends Arthur Hughes captivates in this 'eminently watchable' Tudor murder mystery
By Irenie Forshaw, The Week UK Published
-
Major League Baseball is facing an epidemic of pitcher's injuries
Under the Radar Many insiders are blaming the pitch clock for the rise in injuries — but the league is not so sure
By Justin Klawans, The Week US Published
-
8 movie musicals that prove the screen can share the stage
The Week Recommends The singing and dancing, bigger than life itself
By Scott Hocker, The Week US Published
-
Liz Truss to save the West: is a political comeback really on the cards?
Talking Point The former prime minister is back with a new tell-all memoir
By Richard Windsor, The Week UK Published
-
Will Aukus pact survive a second Trump presidency?
Today's Big Question US, UK and Australia seek to expand 'game-changer' defence partnership ahead of Republican's possible return to White House
By Sorcha Bradley, The Week UK Published
-
Liz Truss and her bid to woo the American far-right
Why Everyone's Talking About Former PM pitching herself as 'bridge in transatlantic conservative movement'
By The Week UK Published
-
It's the economy, Sunak: has 'Rishession' halted Tory fightback?
Today's Big Question PM's pledge to deliver economic growth is 'in tatters' as stagnation and falling living standards threaten Tory election wipeout
By Harriet Marsden, The Week UK Published
-
'A ridiculous amount of money pledged to someone who already was absurdly rich'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
Why your local council may be going bust
The Explainer Across England, local councils are suffering from grave financial problems
By The Week UK Published
-
Rishi Sunak and the right-wing press: heading for divorce?
Talking Point The Telegraph launches 'assault' on PM just as many Tory MPs are contemplating losing their seats
By Keumars Afifi-Sabet, The Week UK Published
-
'Mixing new technology and new laws is always a fraught business'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published