Monday 3 October 2022 04:30 PM Kwasi Kwarteng tries to laugh off bombshell U-turn on abolishing top rate of tax trends now

Monday 3 October 2022 04:30 PM Kwasi Kwarteng tries to laugh off bombshell U-turn on abolishing top rate of tax trends now
Monday 3 October 2022 04:30 PM Kwasi Kwarteng tries to laugh off bombshell U-turn on abolishing top rate of tax trends now

Monday 3 October 2022 04:30 PM Kwasi Kwarteng tries to laugh off bombshell U-turn on abolishing top rate of tax trends now

Kwasi Kwarteng tried to laugh off the extraordinary climbdown on plans to scrap the top rate of tax as he delivered his Tory conference speech tonight.

The Chancellor quipped 'what a day' as he started his address to the party faithful in Birmingham - before appealing for them to 'move on' with 'no more distractions'.

Mr Kwarteng has had to tear up his text after the intense political drama overnight that saw him drop the commitment to axe the 45p rate for people earning more than £150,000 a year, after it became clear dozens of MPs would refuse to back the move in the Commons.   

The bombshell decision was apparently made in a late-night meeting between the pair in her hotel suite at the party conference in Birmingham - with the news swiftly leaking out. 

Official confirmation came at 7.25am, with Mr Kwarteng tweeting: 'We get it and we have listened.' 

But Mr Kwarteng swiftly went on the attack this evening as he swiped at the 'slow managed decline' under his predecessor Rishi Sunak.  

He immediately embarked on a bruising round of interviews, admitting the row had been 'drowning out' the details of a 'strong package'. 

Mr Kwarteng - who must now rewrite chunks of the conference speech he is due to deliver this afternoon - insisted he had not considered resigning and refused to use the word 'sorry', but said: 'There is humility and contrition... I am happy to own it.'  

He also dodged as he was pressed on whether there could be more rethinks about the mini-Budget plans, as MPs ramped up the pressure on the government. Rebel ringleader Michael Gove suggested he would still vote against any plan that involved a real-terms cut in benefits, while former Cabinet minister Stephen Crabb warned the volte face did not completely 'draw a line' under the row. Another senior Tory, Esther McVey, said it would be a 'huge mistake' not to increase benefits in line with inflation.

Downing Street said the PM had full confidence in the Chancellor. However, Ms Truss abruptly cancelled a joint visit they were meant to be doing in the Midlands. And Deputy PM Therese Coffey has pulled out of a health-related fringe event.

Mr Kwarteng is also engaged in a spat with Truss ally Gerard Lyons. After Mr Kwarteng told the BBC that he could not recall the economists warning him unfunded tax cuts could cause a market meltdown, he retorted: 'Well that's incorrect. I was very clear.' 

The Pound surged nearly a cent against the dollar to $1.12 on the news, although it drifted down again afterwards. That is close to the level it was before the mini-Budget was announced on September 23 - sending it to an all-time low of $1.03. 

The huge shift followed Mr Gove and Grant Shapps putting themselves at the head of the rebellion, warning the measure would be a 'massive distraction' and politically toxic with ordinary voters.

Only yesterday Ms Truss took to broadcast studios to defend the plan and deny there would be a rethink - although she was also accused of throwing Mr Kwarteng 'under the bus' by saying he had made the decision to go ahead. 

The critical day for Ms Truss's fledgling government came after:  

Mr Kwarteng admitted that 'with hindsight' he would not have attended a champagne reception with bankers on the night of the Budget; Tory MPs are already warning that other parts of the Budget might need to be rethought;  Former minister Nadine Dorries warned that Ms Truss must call an election and get her own mandate if she wants to ditch Boris Johnson's legacy;  

In a round of interviews this morning, Chancellor Kwasi Kwarteng said the row over axing the 45p rate had been 'drowning out' the details of a 'strong package'

Downing Street said the PM had full confidence in the Chancellor. However, Ms Truss abruptly cancelled a joint visit they were meant to be doing in the Midlands. And Deputy PM Therese Coffey has pulled out of a health-related fringe event.

Downing Street said the PM had full confidence in the Chancellor. However, Ms Truss abruptly cancelled a joint visit they were meant to be doing in the Midlands. And Deputy PM Therese Coffey has pulled out of a health-related fringe event.

The PM and Chancellor will no longer axe the 45p rate for people earning more than £150,000 a year after it became clear dozens of MPs would refuse to back the move in the Commons. 'We get it and we have listened,' Mr Kwarteng posted on Twitter.

The PM and Chancellor will no longer axe the 45p rate for people earning more than £150,000 a year after it became clear dozens of MPs would refuse to back the move in the Commons. 'We get it and we have listened,' Mr Kwarteng posted on Twitter.

Ms Truss tweeted to confirm the U-turn, less than 24 hours after she said she was completely committed to the policy

Ms Truss tweeted to confirm the U-turn, less than 24 hours after she said she was completely committed to the policy

Liz Truss and Kwasi Kwarteng will today drop their proposal to scrap the 45p tax rate

The Pound surged nearly a cent against the dollar to $1.12 on the news, although it drifted down again afterwards. That is close to the level it was before the mini-Budget was announced on September 23 - sending it to an all-time low of $1.03

The Pound surged nearly a cent against the dollar to $1.12 on the news, although it drifted down again afterwards. That is close to the level it was before the mini-Budget was announced on September 23 - sending it to an all-time low of $1.03

The huge shift followed Mr Gove and Grant Shapps putting themselves at the head of the rebellion, warning the measure would be a 'massive distraction' and politically toxic with ordinary voters.

The huge shift followed Mr Gove and Grant Shapps putting themselves at the head of the rebellion, warning the measure would be a 'massive distraction' and politically toxic with ordinary voters.

Kwarteng admits he should not have gone to reception with bankers 

Kwasi Kwarteng today admitted that 'with hindsight' he probably should not have joined a 'Champagne reception' for City traders in the immediate aftermath of his Emergency Budget.

The Chancellor spent the evening of September 23 at a Tory networking event - also attended by party chair Jake Berry.

The gathering happened as the Pound was hammered on the markets amid alarm over unfunded tax cuts and the lack of scrutiny from the independent OBR.

The Treasury has denied that there was anything inappropriate about the event. But Mr Kwarteng conceded this morning that it did not look good.

'With hindsight it probably wasn't the best day to go,' he told LBC during a round of interviews. 

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Chief Secretary Chris Philp was among the other ministers who had spoken enthusiastically about the tax proposal, insisting he would give the Budget '9.5 out of 10' despite ensuing chaos on the markets.

But he claimed today that it was 'not my idea'.  

Mr Shapps had lambasted the idea as 'politically tin-eared' while sources claimed Ms Truss 'could be gone by Christmas' unless she backed down to 'livid' MPs.

Ms Truss tweeted this morning: 'The abolition of the 45pc rate had become a distraction from our mission to get Britain moving.

'Our focus now is on building a high growth economy that funds world-class public services, boosts wages, and creates opportunities across the country.'

Mr Shapps said cutting the 45p tax rate 'could never have worked'. 'I sensed that things were moving very rapidly last night. Frankly, it was inevitable,' he told BBC Radio 4's Today programme.

'And I think you know the idea that you could whip everybody into line or delay this until next spring and change the outcomes, which was one of the suggestions, a couple of the suggestions yesterday, completely untrue. This could never have worked.'

Mr Kwarteng now faces the indignity of rewriting his first conference speech as Chancellor, having briefed journalists that he would vow to 'stay the course' with his plans.

He was due to say that years of economic policy consensus have left Britain in a state of 'slow, managed decline' that must be reversed.

Paul Johnson, the director of the Institute for Fiscal Studies think-tank, said the reversal of the policy that would have cost £2billion a year was only a 'rounding error in the context of public finances'.

With around £43billion of unfunded tax cuts remaining, Mr Johnson warned: 'The Chancellor still has a lot of work to do if he is to display a credible commitment to fiscal sustainability.

'Unless he also U-turns on some of his other, much larger tax announcements, he will have no option but to consider cuts to public spending: to social security, investment projects, or public services.' 

The decision over benefit levels looks set to be the next battleground for Ms Truss and Mr Kwarteng.

Mr Gove told Times Radio that he would 'need a lot of persuading' to support a Government that abandoned the commitment to uprate benefits in line with inflation.

And in a sign of wider anger in the party, former culture secretary Nadine Dorries suggested Ms Truss would need to call an election if she deviated from plans set out by Boris Johnson's government.

There is 'widespread dismay at the fact that three years of work has effectively been put on hold', she said.

'If Liz wants a whole new mandate, she must take to the country.'

The chances of a Commons revolt diminished, with former Cabinet minister Michael Gove suggesting he could now support the package and fellow potential rebel Grant Shapps welcoming the U-turn.

Asked if he would now vote for the rest of the package, Mr Gove told Times Radio: 'Well yeah I think so on the basis of everything that I know.'

Mr Shapps, a former transport secretary and a renowned strategist, told BBC Breakfast: 'I'm very pleased to see him acknowledging that they understood it was the wrong move and fixing that problem.'

Speculation spread like wildfire in Birmingham last night about the U-turn – the price of shoring up Tory support for the rest of the mini-Budget measures.

As many as 70 Tory MPs were considering voting against the policy and are now pushing Ms Truss to delay scrapping the 45p rate for a year, one insider alleged. 

There was no reason for the government to hold a vote on the 45p rate before the fiscal statement due on November 23, as the abolition was not set to happen until April. 

Cabinet ministers told MailOnline they expected the key clash on the Finance Bill to happen in December or even January. 

The parliamentary process means that a resolution must be passed within 10 sitting days, but it does not need to cover all the tax measures in a package. The Finance Bill then has to received its second reading from MPs - the crunch vote - within 30 days. 

However, Labour could have forced a vote on an Opposition Day motion, which the government might have struggled to ignore. Tory rebels had been considering siding with Labour.

Chief Secretary to the Treasury Chris Philp squirmed as he was grilled on the U-turn in interviews this morning, amid rumours No10 want to make him the scapegoat for coming up with the idea in the first place.

Challenged on whether he came up with the plan, Mr Philp said: 'I wouldn't describe it as my idea, no.' 

Mr Philp insisted there was a 'strong economic case' for axing the 45 per cent tax rate, even after the Chancellor's U-turn.

He told Sky News it would help the UK's 'international competitiveness', but added: 'It has become very clear over the last few days that the public and parliamentary opinion don't like the idea for a variety of reasons and so we have responded to that because we are a Government that listens and I think that is a good thing.'

He later told Times Radio there would be no more changes to the economic plans set out by Mr Kwarteng last Friday.

'The rest of it is all staying... I've said yes to all of it,' he told the broadcaster.

But the former pensions secretary Stephen Crabb told LBC the U-turn 'probably doesn't draw a full line under the mini-budget'.

In a pre-emptive strike yesterday, Mr Gove said it was 'not Conservative' to use 'borrowed money' to fund scrapping the 45p income tax rate. And Mr Shapps echoed his comments, saying the Government should not be handing 'big giveaways to those who need them least'.

Mr Gove's intervention has sparked disputed claims that he is acting as an outrider for Rishi Sunak, who he backed against Miss Truss in the Tory leadership race.

Pound surges after 45p tax rate U-turn 

The Pound bounced back to levels seen before the Government's mini-Budget as the Chancellor performed a U-turn on the decision to axe the 45p tax rate.

Sterling surged to $1.13 at one stage, recovering ground lost in the market turmoil sparked by Kwasi Kwarteng's infamous mini-budget, though it pared back some of the gains in early morning trading to stand at 1.12.

The chaos in financial markets following Mr Kwarteng's fiscal event saw the pound fall to an all-time low of $1.03 amid fears over the Government's unfunded tax cuts and wider economic policies.

The decision to renege on the unpopular move to scrap the highest band of income tax also helped ease pressure on UK government bonds.

The Bank of England was forced to step in last week with an emergency gilt-buying programme to halt a sell-off in the government bond market that had left some pension funds on the brink of collapse as gilt yields soared higher.

But the FTSE 100 Index remained under pressure, falling nearly 1 per cent soon after opening.

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A string of other Sunak-supporting MPs spoke out against the Government's plan to axe the top tax rate after Mr Gove described it as 'a display of the wrong values'.

Writing in The Times today, Mr Shapps, who also backed Mr Sunak, said: 'This politically tin-eared cut, not even a huge revenue raiser and hardly a priority on the prime ministerial to-do list, has managed to alienate almost everyone, from a large section of the Tory

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