Anatomy of the Truss-Kwarteng U-turn
October 3, 2022 - British prime minister Liz Truss has executed a significant U-turn by scrapping plans to axe the 45p top rate of tax after facing a growing revolt from Tory MPs led by former cabinet ministers.
After insisting on the BBC on Sunday that the controversial plan would go ahead, Truss concluded after talks with her senior team that the programme stood no chance of getting through the House of Commons.
On Monday morning (October 3), Kwasi Kwarteng, her chancellor, confirmed he was abandoning the plan laid out in his “mini” Budget 10 days ago to cut the taxes of Britain’s richest one per cent; the 45p rate applies to earnings of more than £150,000. In a statement, he said: “We get it, and we have listened.”
The chancellor added: “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.”
The pound edged higher on Monday, rising 0.3 per cent against the dollar to just under $1.12 in morning trading in Europe.
The pound hit a record low of $1.035 three days after Kwarteng announced the debt-funded £45 billion package of tax cuts on September 23.