Truss expected to abandon plan to abolish 45% top rate of income tax – live

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Kwasi Kwarteng is addressing the Conservative party conference this afternoon, at 4.10pm. The Conservative party released extracts from it overnight, and it includes the line: “We must stay the course. I am confident our plan is the right one.”

Here is the full extract.

We must face up to the facts that for too long our economy has not grown enough.

The path ahead of us was one of slow, managed decline.

And I refuse to accept that it is somehow Britains destiny to fall into middle income status …

Or that the tax burden reaching a 70-year-high is somehow inevitable.

It isnt, and shouldnt be.

We needed a new approach, focused on raising economic growth.

That is the only real way to deliver higher wages, more jobs, and crucially, revenue to fund our precious public services…

… and it is the only way to achieve long-term fiscal sustainability.

We must stay the course. I am confident our plan is the right one.

Helena Horton

Liz Truss was defending tax cuts only last night. At a party hosted by the Conservative 1922 Committee, she told guests:

Frankly, we haven’t made enough Conservative arguments for the past few years. Take taxes.

Taxes are not something that the government owns. They’re something that individuals work hard to create that income and we take it from them, so we have to be very careful about making sure what we take from them is value for money.

Business is a good thing. making profit is a good thing. The City is a good thing and our financial services are a good thing. And we need to be prepared to make that argument because we all care desperately about levelling up.

There were fewer Tory MPs than usual at the event, and Truss received muted applause, rather than loud cheers.

Grant Shapps, the former transport secretary, wrote an article for today’s Times saying it was wrong to abolish the 45% top rate of tax. He said:

Suddenly, the approaching end of a typical two-year fixed-rate mortgage has become — like the freezing nights of January — a thing to be feared. Households that must count their budgets down to the last £20 are facing hikes in mortgage repayments potentially in the hundreds.

Yet, as all this is happening, the prime minister and her chancellor are pushing ahead with the abolition of the 45p income tax rate for those earning £150,000 or more. These are people, bankers and other professionals, who can shrug off almost anything the energy companies can throw at them. And now they are to be awarded annual windfalls of maybe £10,000.

As a Conservative, I believe passionately in lower taxes, and a vibrant, competitive City of London, but this is not the time to be making big giveaways to those who need them least. When pain is around, pain must be shared.

Shapps is now being interviewed on the Today programme and he welcomes the change, which he says was “inevitable”. The policy was wrong because it “jarred”, he says.

There was one suggestion yesterday that the vote on the measuse would be delayed until the spring, to give the government time to win round its MPs, he says. But that was not realistic, he claims

Q: Was it Truss’s decision to perform the U-turn or Kwasi Kwarteng’s?

Shapps says he does not know. But he thinks Kwarteng recognised that the policy had to change.

The Labour MP Ben Bradshaw claims the U-turn is turning the UK into a laughing stock.

So, less than 24 hours after Truss insisted she was sticking to unfunded tax cuts for the wealthiest 1%, the first screeching u-turn. Can we have a general election & a functional Government please? The Conservatives have reduced us to an international laughing stock.

— Ben Bradshaw (@BenPBradshaw) October 3, 2022

David Willetts, the former Tory universities minister who is now president of the advisory council for the Resolution Foundation thinktank, told the Today programme that he thought the 45% top rate of tax U-turn was inevitable. He explained:

I think [Kwasi Kwarteng, the chancellor] had to do it because the fact is you can’t say there are lots of tough decisions and people are going to have to take pain in order to raise the growth rate and at the same time offer this particular tax cut, helping the most affluent members of our society.

I think he could sense the pressure building and he’s done the right thing.

Willetts also said that, even if the government shelves plans to abolish the 45% top rate of income tax, Kwarteng might still have to make further public spending cuts to make the public finances add up, in the light of his other unfunded tax cuts. And Willetts said those cuts would also have to pass a fairness test.

How Liz Truss said she was absolutely committed to abolishing 45% top rate of tax yesterday

This is what Liz Truss said about the 45% top rate of income tax in her BBC interview with Laura Kuenssberg yesterday.

Kuenssberg asked: “Are you absolutely committed to abolishing the 45p tax rate for the wealthiest people in the country?”

And Truss replied:

Yes. And it is part, Laura, it is part of an overall package of making our tax system simpler and lower.

Liz Truss admits mistakes over mini-budget but stands by 45% top rate tax cut – video

Truss expected to abandon plan to abolish 45% top rate of income tax

Good morning, and we are starting early this morning because it is being reported that Kwasi Kwarteng, the chancellor, is about to announce a huge U-turn. Only yesterday Liz Truss told the BBC’s Laura Kuenssberg that she was committed to sticking to the plan, announced in the mini-budget, to abolish the 45% top rate of tax. Now the government is set to ditch it – after it became clear on the first day of the Conservative party conference that Truss would face a huge rebellion if she tried to force her MPs to vote for it.

The Sun’s political editor, Harry Cole, first broke the news of the U-turn last night. He is co-writting a biography of Truss, and is one of the journalists seen as being close to her administration.

🚨🚨🚨

NEW: Liz Truss preparing to ditch 45p rate TODAY after late crisis talks with Chancellor

Humiliating climb down plan comes after day of acrimony on Brum

Announcement expected in morn in body blow to new Government

No denial from No10 this eve https://t.co/He8qwMayou

— Harry Cole (@MrHarryCole) October 2, 2022

The BBC’s Nick Eardley has stood up Cole’s scoop.

This will be a colossal U-turn. One of the unofficials laws of journalism is that U-turns always have to be described as humiliating, and this one – coming at party conference, only 24 hours after Truss said the 45% top rate of tax was definitely going – is about as big as they come. It seems worse that Philip Hammond abandoning plans to increase national insurance contributions for the self-employed in 2017 – probably the last major U-turn on a budget measure. For a U-turn on this scale, you probably have to go back to Gordon Brown in 2008 finally admitting that the abolition of the 10p starting rate of tax penalised some poor workers and authorising a big spending package to compensate them.

On the plus side, although humiliating, U-turns can provide an opportunity for recovery. The only thing worse than abandoning an unpopular keynote policy is not abandoning it. Truss arrived at this conference with people in her party speculating that she might be gone by Christmas, and this offers her a way out.

On the other hand, the Gordon Brown comparision may be telling. The abolition of the 10p starting rate of tax turned out to be a political disaster for him – not least because, once the consequences became apparent, initially he reverted to denial mode – and even though he performed a U-turn, he never fully recovered from the damage it did to his authority.

Kwarteng is doing interviews this morning, and so we will hear from him directly soon.

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source: theguardian.com