Liz Truss and Kwasi Kwarteng drop plan to axe 45p top rate of tax
Pound wipes out gains after tax backtrack - live updates
Kwarteng: Cutting taxes is 'sound, credible, will increase growth'
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Analysis: Tax time bomb blows up in PM's face
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Kwasi Kwarteng said he has not considered resigning over the Government's U-turn on scrapping the top rate of income tax as he insisted it was a "very simple" decision to drop the policy because it had become a "huge distraction".
The Chancellor stunned Conservative Party conference in Birmingham this morning as he announced the Government is not going ahead with its plans to abolish the 45p additional rate for top earners.
The dramatic change in policy inevitably prompted questions about the Chancellor's future but he told BBC Breakfast that he has not considered his position.
He said: "Not at all. What I am looking at is the growth plan and delivering what is a radical plan to drive growth in this country, to reduce taxes, to put more money that people earn in their pockets."
Mr Kwarteng said the Government had changed course because it had seen and heard the level of opposition to the move, amid a growing rebellion by some Tory MPs.
He told the BBC Radio 4 Today programme: "On the 45p rate. It's very simple. We talked to lots and lots of people up and down the country, we talked to lots of not only colleagues, MP colleagues, but also people, our voters, constituents, crucially people in the country, and I felt that the 45p rate was a huge distraction on what was a very strong set of measures."
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Pictured: Liz Truss arrives at conference this morning
Think tank boss expresses concerns over U-turn
Mark Littlewood, the director general of the Institute of Economic Affairs, a free market think tank, expressed concerns about the U-turn.
He told the BBC: "You always worry about that when you see a U-turn… I've known Liz Truss for many years and I can't think of another time where she's changed her mind on anything, anything at all."
He said the decision to drop the policy will "raise the question that the next time Kwasi Kwarteng makes an announcement that Grant Shapps and Michael Gove don't like, does that announcement stick?"
'What a mess'
One veteran Tory sums up the feelings of many Conservative MPs and activists here in Birmingham this morning.
"What a mess," they said.
'A political cock-up beyond compare'
While many Tories in Birmingham are now in misery over Liz Truss's U-turn on the 45p tax rate, no one is happier than the Labour Party.
"Liz Truss promised one thing - to steer the economy with a clear sense of direction," said one senior party source with glee this morning.
"Within a month she has crashed it and now she's trying to reverse out of the wreckage. It's a political cock-up beyond compare."
SNP: U-turn was 'inevitable'
Alison Thewliss, the SNP's shadow chancellor, said the Government's U-turn on the 45p rate was "inevitable" and people will "not forget" that Liz Truss and Kwasi Kwarteng "wanted to rob the poor to pay the rich".
She said: "The Tory budget has been a disaster. It was inevitable this morally repugnant and hugely expensive policy would have to be reversed - after doing so much damage to people's mortgages, pensions and the UK economy.
"People in Scotland will not forget that Liz Truss and Kwasi Kwarteng wanted to rob the poor to pay the rich - and this U-turn will not distract from the fact they are still planning to impose a new wave of devastating Tory austerity cuts, which will hurt the poorest and threaten our NHS."
Ex-minister: U-turn 'pretty final' for Liz Truss as PM
One former minister said the 45p rate U-turn was "pretty final" for Liz Truss and that backbenchers were openly calling for her to leave Downing Street.
"The one thing about her was that she was determined. But now, like every other PM, she is just beholden to parliamentary numbers," they told The Telegraph.
"This is the consequence of everything that has happened up to this point. If you do a reshuffle that p--- off two thirds of the parliamentary party followed by a budget no one likes, that will come back to bite you. There are MPs saying explicitly she has to go, but they also know that would look insane.
"This [mini Budget] is so distant from what we promised in the manifesto. So there are MPs sitting there thinking 'well, if I don't like it, I don't have to vote for it' and no one respects the Chief Whip. That's pretty final."
Ex-Cabinet minister: Truss 'isn't the right person to take us into next election'
Safe to say there are a lot of worried Tory MPs this morning.
A former Cabinet minister told The Telegraph: "The damage to the Conservative Party over this entirely self-inflicted mess is too big to just go away by this U-turn.
"First impressions matter and I don't think this will convince ordinary wavering Tory voters who were lukewarm in their support for us anyway. She isn't the right person to take us into the next election."
'The rest of it is staying'
Kwasi Kwarteng refused to rule out further mini-Budget U-turns this morning (see the post below at 08.21) but his Treasury colleague Chris Philp has now effectively done so.
The Chief Secretary to the Treasury Told Times Radio: "The rest of it is all staying."
Mr Philp argued there was a "strong economic case" for getting rid of the 45p top rate of income tax but "it is very clear that public opinion doesn't support it, it's clear that parliamentary opinion doesn't either".
'It's not about parliamentary games'
The decision to change course on the 45p tax rate was "not about parliamentary games or votes in the House of Commons" but about "getting people behind the measure", Kwasi Kwarteng has said.
Asked on BBC Radio 4's Today programme if the policy was still the right thing to do or whether he had scrapped it because he would be unable to get it through the House of Commons, the Chancellor said: "It's not a question of getting it through, it's a question of actually getting people behind the measure. It's not about parliamentary games or votes in the House of Commons.
"It's about listening to people, listening to constituents, who have expressed very strong views about this, and on balance I thought it was the right thing not to proceed."
Analysis: Government's woes entirely self-inflicted
Not all government U-turns are created equal and today's is the biggest in recent political memory. It is hard to over-emphasise just how significant it is.
Reversing the decision to scrap the 45p top rate of income tax will have huge ramifications for Liz Truss's premiership and will significantly undermine the Government's credibility. All of No 10's efforts will now be focused on trying to steady the ship and stabilise things.
Many Tory MPs will be thrilled that the policy has been dropped but they will also be angry that they have been put in the position of having to defend the cut only for it to then be ditched.
The Government will now need to repair relations with those MPs who publicly criticised the initial policy after warning them they would lose the whip if they voted against the mini-Budget.
Downing Street has put itself in a disastrous position and the worst thing about it for Tory MPs is that it has been entirely self-inflicted.
No apology from Chancellor
Kwasi Kwarteng declined to apologise directly to the nation and to Conservative MPs who had been warned over their possible rebellion on the Government's tax plans.
Instead he told BBC Radio 4's Today programme: "There's humiliation and contrition and I'm happy to own it."
Chancellor declines to repeat 'more to come' comment
Kwasi Kwarteng declined to repeat his pledge made two days after the mini-Budget that there is "more to come" on tax cuts.
He told BBC Radio 4's Today programme: "There will be no tax cuts ahead of a Budget."
He also did not rule out a new era of austerity to pay for the Government's other tax cuts.
He said: "You will see what our spending plans are in the medium-term fiscal plan but I'm not going to be drawn into that."
Kwasi Kwarteng: Decision was 'simple'
Kwasi Kwarteng said the decision to scrap the top rate of income tax had become a "huge distraction" as he suggested it had actually been a "simple" decision to drop the policy.
Speaking to BBC Radio 4's Today programme, Mr Kwarteng said: "On the 45p rate. It's very simple. We talked to lots and lots of people up and down the country, we talked to lots of not only colleagues, MP colleagues, but also people, our voters, constituents, crucially people in the country, and I felt that the 45p rate was a huge distraction on what was a very strong set of measures."
Tory MPs welcome 'sensible' U-turn
Some more reaction from Tory MPs:
Damian Green, the Tory former first secretary of state, welcomed the U-turn, tweeting: "This is very sensible. Thank you for listening."
Steve Double, the Tory MP for St Austell and Newquay, echoed a similar sentiment as he said: "Very welcome news and the right decision. Now we can move on together."
Cabinet ministers kept in the dark over U-turn
The decision to scrap the 45p tax rate abolition was taken late at night in a meeting in Liz Truss's conference hotel suite, writes Ben Riley-Smith, The Telegraph's political editor.
Kwasi Kwarteng, the Chancellor, met the Prime Minister at the end of a long day of speeches and events defending the measure.
"It wasn't worth the pain of keeping it", a Number 10 source familiar with that discussion in the Hyatt at Birmingham said. "It had become a distraction from the brilliant stuff in the growth plan."
Some Cabinet ministers who were never consulted before the initial move was taken were again in the dark about the decision to remove it. One Cabinet minister told The Telegraph they were only informed by a call around 7am this morning, just moments before Mr Kwarteng announced the change in public.
'With hindsight it probably wasn't the best day to go'
Kwasi Kwarteng was asked about his decision to attend a party with hedge fund managers after delivering the mini-Budget and he said with hindsight "it probably wasn't the best day to go".
Asked why he had attended the party, Mr Kwarteng told LBC Radio: "I spent I think quarter of an hour there, maybe a bit longer, and it was a party event. We have party events all the time, a Conservative Party event, which had been booked in for a few weeks actually.
"As you remember, it was a very difficult time because we had Her Majesty's passing, we had the funeral, there were dates moving around and the date of that seemed to coincide with the mini-Budget."
Asked if with the benefit of hindsight it was a good decision to attend, he said: "I think it was a difficult call and I totally get how it looks and I just feel that it was something that I was signed up to do and I had to do."
Asked again if it was a smart move, he said: "With hindsight it probably wasn't the best day to go."
Kwasi Kwarteng unable to rule out further U-turns
Kwasi Kwarteng, the Chancellor, was asked three times to rule out further mini-Budget U-turns but he refused to do so.
Asked if there will be more U-turns, potentially on the decision to lift the cap on bankers' bonuses, Mr Kwarteng told LBC Radio's Nick Ferrari: "I have said what I have said about the 45p rate and I am totally focused on delivering the growth plan."
Asked for a second time, Mr Kwarteng said: "We are totally focused on delivering the growth plan."
Asked for a third time, the Chancellor said: "We are totally focused on the growth plan."
Nicola Sturgeon accuses UK Government of 'utter ineptitude'
Some Tory anger over U-turn
Some Tory MPs are clearly angry with Kwasi Kwarteng and Liz Truss after more than a week spent defending the 45p tax cut policy.
Asked for their reaction, one veteran backbencher said: "Much I'd like to say, but as my late mother used to say - if you've got nothing good to say, best to say nothing."
Kwasi Kwarteng: 'These things happen in politics'
Kwasi Kwarteng said "these things happen in politics" as he defended the Government's decision to perform a U-turn on dropping the 45p top rate of income tax.
Asked how embarrassed he was by the U-turn, the Chancellor told LBC Radio: "Look, you know politics and we have had lots of reversals, Marcus Rashford's campaign, all sorts of things. These things happen in politics.
"Actually what is big and what we should be focused on is actually listening to people because it is very easy to stick our heads in the sand as politicians and say we are just going to carry on regardless."
'I don't think that is the case at all'
Kwasi Kwarteng was told during an interview with LBC Radio that if he had made a "mistake" of the same magnitude in other industries he would likely have lost his job.
The Chancellor said: "I don't think that is the case at all. I think people actually have the maturity to learn from things that haven't gone right and also in politics, absolutely in politics, you have to listen to people, you have to understand you are not going to get 100 per cent of things right all of the time.
"When you listen you do have, in the spirit of humility, to take on board what people are saying and I figured that this 45p rate was a huge distraction on a good plan and we decided not to proceed with the abolition."
'You need to take people with you'
Brendan Clarke-Smith, one of the most strident low-tax Tories on the backbenches, said Kwasi Kwarteng had "probably" made the right decision this morning by dropping the plans to axe the 45p top rate of income tax.
"It's not a bad policy, but you need to take people with you," he said.
"And about 95 per cent of everything else is in place."
Business chiefs welcome tax U-turn
Tony Danker, the director general of the Confederation of British Industry, has welcomed the Chancellor's decision to U-turn on cutting the 45p tax rate.
He told BBC Radio 4's Today programme: "Here was a package with some really strong economic reforms that businesses have been waiting for for years in fact and clearly, politically the 45p had become a distraction, and probably more importantly businesses up and down the country want the markets to stabilise, that is an absolute pre-condition to investment and growth.
"And it's a pre-condition to getting on to these very good reforms, so yes I think it's a good development this morning."
PM accused of having 'political tin ear'
Tory MPs are now starting to respond to the U-turn.
Michael Fabricant accused Liz Truss and Kwasi Kwarteng of having a "political tin ear" over the 45p tax cut policy.
The MP for Lichfield said: "The mistake should not have happened in the first place. The 45p tax cut did make economic sense, but showed a political tin ear."
Ben Bradley, the MP for Mansfield, added: "Any U-turn is frustrating because of course we all get asked to defend a policy just to then defend not doing it.
"In principle I'm all for low taxes, but it's fair to say this has all run away with itself in the last week and everyone is talking about this rather the massive £60bn welfare intervention on the cost of living or about growth. It's definitely been a distraction. Whether it's the right decision, time will tell."
Grant Shapps: 45p was 'crowding out' other policies
Grant Shapps, the former transport secretary, said the 45p tax issue was "crowding out" other Government policies.
Speaking to BBC Breakfast just before the Government announcement, Mr Shapps said: "I'd spoken to the Chancellor and I'd spoken to the Prime Minister over the weekend and said that actually you know, knocking on doors, it was very, very clear that this 45p issue was actually clouding out, crowding out, all the other good stuff, like that massive energy cap, which is designed to help millions of people."
He said that people on the doorstep had told him that the money the Government is borrowing "is one of reasons why these mortgage rates are going up".
Labour: Tax cut U-turn 'too late for families'
Rachel Reeves, the shadow chancellor, said the Government's U-turn on the top rate of income tax has come "too late" for families who are already facing higher mortgage repayments.
She said: "The Prime Minister has been forced to abandon her unfunded tax cut for the richest one per cent - but it comes too late for the families who will pay higher mortgages and higher prices for years to come.
"The Tories have destroyed their economic credibility and damaged trust in the British economy. There's no plan to clear up the mess of 12 years of Tory government. They're making it up as they go along. This is not over - it's not just some distraction. They need to reverse their whole economic, discredited trickle down strategy.
"Their kamikaze Budget needs reversing now. As the party of fiscal responsibility and social justice, it will come to the Labour Party to repair the damage this Tory government has done."
Liz Truss: 'We get it and we have listened'
Lib Dems: U-turn is 'humiliating'
Sir Ed Davey, the leader of the Liberal Democrats, has described the U-turn on scrapping the top rate of income tax as "humiliating".
He said: "This humiliating U-turn comes too late for the millions seeing their mortgage rates soar because of this botched budget.
"The Conservatives must now cancel their conference and recall Parliament, to sort out this mess for the sake of the country."
Kwasi Kwarteng refuses to say tax plan was a 'mistake'
Kwasi Kwarteng would not describe the initial decision to scrap the 45p tax rate as a "mistake" despite this morning's U-turn.
Asked if he was willing to admit it was a mistake, the Chancellor told BBC Breakfast: "What I admit is that it was a massive distraction on what was a strong package."
Asked again if the policy was a mistake, Mr Kwarteng would not be drawn as he repeated his line that the policy had become a "huge distraction".
Kwasi Kwarteng 'has not considered resigning'
Kwasi Kwarteng said he has not considered his position in the wake of the income tax U-turn.
He told BBC Breakfast: "Not at all. What I am looking at is the growth plan and delivering what is a radical plan to drive growth in this country, to reduce taxes, to put more money that people earn in their pockets."
Chancellor: Dropping tax cut 'best course of action'
Told that the decision to drop the 45p cut represented the biggest U-turn by a government in recent history, Kwasi Kwarteng said he is "100 per cent focused on the growth plan".
He also argued that in his 12 years as an MP in Parliament many governments have changed their minds about policies and dropped them.
He said he and Liz Truss had agreed that dropping the plans was the "best course of action".
Asked when he had spoken to the Prime Minister about dropping the tax cut, the Chancellor said they "talk constantly" about the Government's plans for the economy.
Kwasi Kwarteng: 45p row was 'drowning out' rest of growth plan
Kwasi Kwarteng, the Chancellor, said it was "clear" from talking to voters and MPs that the 45p income tax cut was becoming a "huge distraction on what was a very strong plan".
He said it was "simply a distraction from what was a good set of policies".
Told that Liz Truss only yesterday had said she was fully committed to the policy nd asked why the Government had decided to perform a U-turn now, Mr Kwarteng told BBC Breakfast: "We just talked to people, we listened to people, I get it."
He said the row over the 45p additional rate was "drowning out" the rest of the package.
Kwasi Kwarteng announces U-turn on dropping 45p top rate
What Liz Truss said yesterday about the 45p tax decision
Liz Truss insisted only yesterday that she was committed to proceeding with her decision to scrap the 45p additional rate of income tax.
Asked during an interview with the BBC's Laura Kuenssberg if she was "absolutely committed to abolishing the 45p tax rate for the wealthiest people in this country", Ms Truss said the following:
Grant Shapps 'strongly welcomes' income tax 'reversal'
Grant Shapps, the former Transport Secretary, has said he "strongly welcomes" the Government's reported U-turn on scrapping the 45p additional rate.
He wrote in The Times overnight that he believed getting rid of the top rate of income tax at this time was the "wrong priority".
A major story is emerging in Birmingham this morning, with reports that the Government is set to scrap its plans to get rid of the 45p top rate of income tax.
It would make sense given the scale of the Tory rebellion against the move which was unveiled as part of the mini-Budget.
However, if confirmed, it would represent a massive U-turn which will inevitably do huge damage to Liz Truss's premiership.
I will guide you through the developments as they happen.