Liz Truss has made a screeching U-turn on her controversial plan to slash the top rate of tax for Britain’s highest earners.
Yesterday the prime minister agreed that she was ‘absolutely committed’ to slashing the rate from 45% to 40%, after it was slated by opposition parties and her own MPs.
Now she has been forced into an astonishing climb down after repeatedly reiterating her support for the measure.
Appearing on BBC’s Sunday Morning yesterday, Ms Truss had also claimed that it was the decision of her under-fire Chancellor, Kwasi Kwarteng, rather than a move discussed with her cabinet.
She was then promptly accused of throwing him ‘under a bus’ by former minister Nadine Dorries.
This morning Mr Kwarteng 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 this morning, he added of the criticism: ‘We get it, and we have listened’.
But the Chancellor 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.’
It comes after a disastrous mini-budget, which sent the pound plummeting, saw the rate of interest on Government borrowing soaring 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 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 rate amid the cost-of-living crisis – particularly when coupled with a plan to bin a cap on bankers’ bonuses – that has drawn much of the fury.
There have been warnings that the plan would not get through Parliament, with senior Conservatives Michael Gove and Grant Shapps voicing their opposition to it.
Last night The Sun suggested that the climb down was being planned after crisis talks between Mr Kwarteng and Ms Truss.
Great answer by @trussliz to @bbclaurak on the 45p rate. We should do whatâs right to grow the economy and have the simplest, most competitive tax code we can. Rather obsess over the âopticsâ, letâs focus on policies which strengthen the country.
— Simon Clarke MP (@SimonClarkeMP) October 2, 2022
The U-turn will be seen as a massive blow to their authority and credibility, coming a little over a week after they were announced and just a month into Ms Truss’ premiership.
Mr Kwarteng and Ms Truss 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 Grant 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.
More to follow.
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MORE : Liz Truss confirms tax cuts for the rich were ‘Kwarteng’s decision’
