A plan to cut the 45p top tax rate for high earners has been scrapped by Chancelllor Kwasi Kwarteng just 10 days after he announced it.
Kwarteng reversed the decision after a weekend of growing controversy surrounding the policy in which his prime minister, Liz Truss, appeared to try to throw him “under a bus”:
Note that she initially tried to defend the policy using the language of her bosses in right-wing think tanks like the Institute for Economic Affairs, saying it was an attempt to simplify the tax system and lower the tax burden.
But then, realising that interviewer Laura Kuenssberg was saying the policy was hugely unpopular with the public, she backtracked, saying that it was a policy devised by Kwarteng, which was not properly discussed in Cabinet.
And now, as Kwarteng prepares to give his speech to the Tory Party Conference, we have this:
Apparently there was a rebellion within the Conservative Parliamentary Party over the “toxicity” of cutting the top rate of tax amid a cost-of-living crisis for the vast majority of people in the UK.
And Truss was afraid that the rebellion would dominate the conference.
It’s a huge u-turn for a prime minister who had claimed she was “prepared to be unpopular”. It seems she wasn’t prepared for it after all.
The BBC has reported that Kwarteng said the proposal
had become “a massive distraction on what was a strong package”.
“We just talked to people, we listened to people, I get it,” he added.
Mr Kwarteng told BBC Breakfast the proposal was “drowning out a strong package”, including support for energy bills, and cuts to the basic rate of income tax and corporation tax.
Asked whether he owed people an apology, he said: “We’ve listened to people. And yeah, there is humility and contrition in that. And I’m happy to own it.”
On how the decision was made, he said: “The prime minister decided not to proceed with the abolition of the rate.”
However, pressed on whether it was her U-turn, Mr Kwarteng added: “No, we talked together, I said this is what I was minded to do and we decided together, we were in agreement that we wouldn’t proceed with the abolition of the rate.”
Asked if he had considered resigning, he said: “Not at all.”
He is on his way out, though.
Remember, we’ve been told that the 45p tax rate doesn’t actually bring much money back into the Treasury; it isn’t the cause of the economic upheavals we have seen over the last week.
It didn’t crash the Pound.
It didn’t crash the pension funds.
It hasn’t put the cost of imports up beyond the benefit to ordinary people of the other tax cuts.
We are heading for worse problems over an autumn and winter that Truss and Kwarteng have deliberately turned into a waking nightmare for millions of us.
What will these two con tricksters blame next?
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