Kwasi Kwarteng says he feels ‘humility and contrition’ after U-turn on plan to cut 45p income tax rate – live | Politics

Kwarteng claims he feels ‘humility and contrition’ over 45% top rate of tax U-turn

Q: Do you owe an apology to MPs who were threatened with the prospect of having the whip removed if they refused to vote for abolishing the 45% top rate of tax?

Kwarteng says this is not just about MPs. The government has listened to people in the country too.

Q: You can apologise to them too?

Kwarteng does not apologise. But he says the government is not going ahead with the move. And he goes on:

There is humility and contrition in that, and I’m happy to own it.

And that’s it. The Today interview is over.

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A protester outside the Conservative Party conference in Birmingham.
A protester outside the Conservative Party conference in Birmingham. Photograph: Rui Vieira/AP

Former culture secretary Nadine Dorries says Truss should call election if she wants mandate for new agenda

Generally it is the opposition parties who have been saying that the replacement of Boris Johnson as PM by Liz Truss should have been followed by a general election. But Nadine Dorries, the former culture secretary, has come close to calling for one too. Dorries thought Johnson should have stayed in office, and she is unhappy that some of the decisions she took as culture secretary are being reviewed.

Widespread dismay at the fact that 3 years of work has effectively been put on hold. No one asked for this.
C4 sale, online safety, BBC licence feee review – all signed off by cabinet all ready to go, all stopped. If Liz wants a whole new mandate, she must take to the country.

— Nadine Dorries (@NadineDorries) October 3, 2022

Truss claims she is implementing what people voted for in 2019.

Tory mayor Ben Houchen says U-turn on 45% tax rate does not wholly solve problem because ‘damage is already done’

Aubrey Allegretti

Kwasi Kwarteng’s decision to cut income tax for the richest and subsequent U-turn has been given short shrift by senior Tory Ben Houchen, who has also called for the cap on bankers’ bonuses to be reinstated.

At a fringe event, the Tees Valley mayor said the chancellor had been “naive” and that while scrapping the top tax rate would generate more revenue for the exchequer, it was going down poorly with voters.

“Irrespective of the economics, it’s a little bit naive,” Houchen said. He claimed the row that has overshadowed the Conservatives’ conference was “so avoidable”. And he went on:

Even though we’ve rowed back the damage is already done – you’ve got all of the downsides of announcing that policy without actually implementing that policy.

He said despite the U-turn, the initial announcement would frame the public’s first impressions of the new government, adding it would be a “quite difficult” few weeks.

Houchen also urged Kwarteng to perform a second U-turn. Asked if the scrapping of the cap on bankers’ bonuses should be reversed, he said:

Yes I would. It’s just unnecessary, it doesn’t raise much money, it doesn’t save much money.

The economic argument is understandably a sound one but it’s the wrong time, in the wrong position given where most of the country currently sits. So, clear answer: yes I would.

Ben Houchen speaking on the Tory conference stage yesterday.
Ben Houchen speaking on the Tory conference stage yesterday. Photograph: Jacob King/PA

Mark Littlewood, the head of the Institute for Economic Affairs thinktank (which called for the 45% top rate of income tax to be abolished before the mini-budget – see 10.28am) told the Today programme this morning that the tax U-turn would make it harder for people to trust the government to stick to its decisions in future. He said:

As a matter of principle I would have liked to have got rid of this rate, I think it’s a complication in the tax code, I think it raises virtually no money.

It’s even conceivable by scrapping it you might have raised more money.

But this has become a political hot potato, they have decided this is not the hill they’re going to die on, a tax that raises £2bn or so.

And they are going to hope this calms the markets.

Of course, it 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?

Paul Johnson, director of the Institute for Fiscal Studies thinktank, has put out a longer statement with reaction to the tax U-turn, fleshing out a point he made on Twitter earlier. (See 11.11am.) He said:

The direct impact of the government’s U-turn on the abolition of the additional 45p rate of income tax is of limited fiscal significance. At a medium-run cost of around £2bn a year, it represented only a small fraction of the chancellor’s mini-Budget announcements. His £45bn package of tax cuts has now become a £43bn package – a rounding error in the context of the public finances.

The chancellor still has a lot of work to do if he is to display a credible commitment to fiscal sustainability. Unless he also U-turns on some of his other, much larger tax announcements, he will have no option but to consider cuts to public spending: to social security, investment projects, or public services. On the latter, the chancellor has indicated that departments’ cash spending plans that run to 2024-25 will be left unchanged [see 8.28am], which amounts to a real-terms cut in their generosity in the face of higher inflation. This will squeeze public services, but will not be enough to plug the fiscal hole the chancellor has created for himself.

A sign left by a protester outside the Tory conference today.
A sign left by a protester outside the Tory conference today. Photograph: Jeff J Mitchell/Getty Images

No 10 says Truss still has confidence in chancellor

Downing Street has said that Liz Truss still has confidence in the chancellor, Kwasi Kwarteng. At the lobby briefing in London, asked if Truss has confidence in her chancellor, the prime minister’s spokesperson told reporters: “Yes.”

Yesterday Liz Truss conducted a series of interviews with ITV’s regional stations. They were recorded for broadcast tonight, but the 45p tax rate U-turn means some of the material is now very out-of-date, as this clip from Emma Hutchinson at ITV Anglia reveals.

Ben Quinn

Ben Quinn

The government’s 45p tax U-turn overshadowed attempts today by the Scottish Tory leader, Douglas Ross, to promote the Scottish Conservatives as “the real alternative to the SNP”.

Ross, whose leadership has been been questioned and who had been defending abolishing the 45p tax rate in recent days, told a fringe event at the Tory conference in Birmingham:

This morning, the chancellor has confirmed a change to the budget that was presented 10 days ago. I think he has made the right decision. The best parts of the government’s growth plans remain and the area that caused the most concern has gone.

Politicians have to listen and respond – and that’s exactly what the chancellor has done

Asked about claims that his leadership was now under threat, Ross said that he was “getting on with the job of holding the SNP to account”. He went on:

I read the stories, but if I get to Hogmanay and I am still leader then clearly I will have outlived the expectations of the Scottish media.

Douglas Ross at a fringe meeting this morning.
Douglas Ross at a fringe meeting this morning. Photograph: Jacob King/PA

Attendees at the Conservative party conference today.
Attendees at the Conservative party conference today. Photograph: Jacob King/PA

Gove says he’s now willing to vote for mini-budget – but still unhappy about prospect of benefits not rising with inflation

Yesterday Michael Gove, the former levelling up secretary, refused to commit to voting for the mini-budget. He was particularly critical of the plan to abolish the 45% top rate of income tax, but he also said it was wrong to go ahead with unfunded tax cuts on this scale, which he said was “fundamentally not Conservative”.

Today he has told Times Radio he would now be willing to vote for the mini-budget. Unfunded tax cuts are not a deal-breaker for him, he implies.

Asked if he would vote for the tax measures, he said:

Yeah, I think so, on the basis of everything that I know …

There were lots of good things [in the mini-budget] and some potentially interesting things … The debate over the 45p tax increase obscured that. So I naturally – I’m still a Conservative MP, last time I checked and I’ll check in with the chief whip later – and therefore I will want to support and I think, on the basis of everything I’ve heard, there’s lots that can be enthusiastically supported.

But Gove also said he would need “a lot of persuading” to approve not uprating benefits in line with inflation.

I wouldn’t want to prejudge an argument that was put in front of me before the argument was made. Because in crises, you sometimes have to do things and embrace policies that would in other circumstances be deeply unattractive. But my basic position, my starting position is, yes, Boris was right [to promise to uprate benefits in line with inflation for the 2023-24 financial year].

Michael Gove at the Tory conference this morning.
Michael Gove at the Tory conference this morning. Photograph: Hannah McKay/Reuters

An attendee at the Tory conferene carrying a bag from the Taxpayers’ Alliance at the Tory conference.
An attendee at the Tory conferene carrying a bag from the Taxpayers’ Alliance at the Tory conference.
Photograph: Oli Scarff/AFP/Getty Images

Fracking ‘not going to happen’ because communities don’t support it, says Damian Green

Helen Pidd

Helen Pidd

At the fringe event on the blue and red walls, Damian Green said fracking wouldn’t happen in the UK.

Noting that the government said the proposal would only be explored in communities who support it, Green went on:

The chance of any local community indicating consent for fracking is as close to zero as it can be. It’s not going to happen. It’s the wrong solution to the energy crisis.

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