The first phase of Liz Truss’s reign is over – is there any way back from the 45p tax cut U-turn? | Beth Rigby
It took 10 days for the most eye-catching and controversial element of Kwasi Kwarteng’s mini-budget to unravel.
The abolition of the top 45p of rate next April is not going ahead.
And it matters not so much because of the impact the decision has on the economic plan – the tax cut was £2bn in a £45bn package of cuts – but because what it tells us about Liz Truss and her government.
The first phase of her reign is over already.
For, as little as 24 hours ago, the prime minister insisted that she was not going to change course.
On Sunday night two Truss-backing newspapers, the Express and the Mail, had it plastered across their front pages that the chancellor was going to “stay the course”.
All evening, cabinet ministers and other government figures I bumped into at the Tory conference insisted there would be no change of policy.
What a cabinet minister told me would happen instead, was that the government would delay the finance bill – the piece of legislation required to pass Mr Kwarteng’s mini-budget – until the spring of next year to try to avoid a confrontation.
Overnight that resolve unravelled as the PM and chancellor, battered by a growing opposition led by former cabinet ministers Michael Gove and Grant Shapps, decided the policy had to go.
The cabinet were told the next morning, even as some – like Sky News – were reporting the expected U-turn.
“I think it was the cumulative effect of pressure within and without the cabinet,” said one cabinet minister.
“It was best to get this out of the way ahead of his big speech and the PM’s on Wednesday.”
But lancing the boil on the matter of the top rate of tax does not cure the malady that has beset the Truss administration.
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‘We have a plan and we need to deliver it’
This was a prime minister who built her image with the public and the party as a leader who was not for turning, and who was prepared to be unpopular in pursuit of her goals.
She has now shown her opponents that the lady is for turning and the immovable is movable.
One cabinet minister, who privately didn’t much like the policy, told me the PM should have stuck to it in order to try and maintain credibility and protect her brand.
Floodgates are open
In reversing the policy, the PM has opened the floodgates and backbenchers will try to move her on lots of other policies too.
Already in their sight is the PM’s refusal to commit to Boris Johnson’s promise to uprate benefits by inflation rather than earnings in order to make sure four million low-income families and workers don’t have to take a real-terms benefits cut.
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What do young Tories think of Truss?
Ms Truss and her allies say the decision was the recognition of the political reality they faced with a party and a country opposed to the plan.
Attempt to calm the choppy waters
Her allies admit that the groundwork in selling the original package has been wanting in the rush to introduce the first batch of economic reforms – the tax cuts – to try to push for that 2.5% economic growth target in time for the next election.
Their hope is that the supply side reforms, coupled with the independent Office of Budget Responsibility (OBR) forecasts, and medium-term fiscal plan will calm choppy waters and buy Ms Truss time.
But the political miscalculation to announce a cut to the top rate of tax in the midst of the worst cost of living crisis since the 1970s, only to then have to U-turn, is no doubt a deep body blow for this PM.
She wasn’t initially the first choice for leader amongst her MPs and already had a battle on her hands to stamp her authority on the party. A massive U-turn designed to build bridges with a divided parliamentary party and a deeply unconvinced public.
But some MPs here are quietly asking, is there any way back?
The UK will “set out a plan” to lift defence spending to 2.5% of national income in the spring, the prime minister has said, finally offering a timeframe for an announcement on the long-awaited hike after mounting criticism.
Sir Keir Starmer gave the date during a phone call with Mark Rutte, the secretary general of NATO, in the wake of threats by Moscow to target UK and US military facilities following a decision by London and Washington to let Ukraine fire their missiles inside Russia.
There was no clarity though on when the 2.5% level will be achieved. The UK says it currently spends around 2.3% of GDP on defence.
Ukraine leader Volodymyr Zelenskyy, Sir Keir Starmer and NATO boss Mark Rutte in October. Pic: PA
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A spokeswoman for Downing Street said that the two men “began by discussing the situation in Ukraine and reiterated the importance of putting the country in the strongest possible position going into the winter”.
They also talked about the deployment of thousands of North Korean soldiers to fight alongside Russia.
“The prime minister underscored the need for all NATO countries to step up in support of our collective defence and updated on the government’s progress on the strategic defence review,” the spokeswoman said.
“His government would set out the path to 2.5% in the spring.”
The defence review will also be published in the spring.
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While a date for an announcement on 2.5% will be welcomed by the Ministry of Defence, analysts have long warned that such an increase is still well below the amount that is needed to rebuild the armed forces after decades of decline to meet growing global threats from Russia, an increasingly assertive China, North Korea and Iran.
They say the UK needs to be aiming to hit at least 3% – probably higher.
With Donald Trump returning to the White House, there will be significantly more pressure on the UK and other European NATO allies to accelerate increases in defence spending.
Snow, rain and strong winds are expected to disrupt travel plans and potentially cause flooding as Storm Bert hits the UK.
Several weather warnings are in place, while 16 flood alerts have been issued – warning flooding is possible – in England and Scotland.
Most of the UK is affected by yellow warnings for either wind, rain or snow, with a slightly more severe amber warning covering parts of northern England and central Scotland.
Two areas of Ireland have been issued a rare red warning for heavy rain until 10am.
Check out the forecast in your area
London, East Anglia, Birmingham, Manchester, Liverpool, Hull and swathes of the Midlands are the only parts with no current warnings in place.
The warnings in place. Pic: Met Office
Met Office meteorologist Aidan McGivern described a “multiple hazard event” going into Saturday morning.
“We’ll see two to four hours of heavy snow across parts of northern England and Scotland during Saturday morning,” he said.
“This snow will accumulate thick and fast, with five to 10cm at lower levels and as much as 20 to 40cm over hills accompanied by strong winds.
“You can expect blizzards over hills across northern England and Scotland, atrocious conditions for travelling and going over the hills and also the risk of power interruptions because of snow build up on power lines.
“So all in all, a multiple hazard event as we go into Saturday morning.”
Temperatures will rise quickly as the storm brings milder air from the Atlantic, he said, resulting in a “rapid thaw” by the afternoon.
What the weather warnings mean
• Yellow – people are advised to check the details of the forecast and consider extra steps to minimise any impact, while disruption is likely, particularly for travel;
• Amber – disruption is more likely and more widespread and people are advised to change plans impacted by weather;
• Red – reserved for very dangerous weather that can pose a danger to life and cause substantial travel disruption.
Travel disruption
While airports are not expecting disruption, rail companies have announced service changes over the weekend.
In Scotland, there will be speed restrictions on the West Highland Line, Highland Mainline, Stranraer Line, Glasgow South Western Line, Far North Line, and West Coast Mainline between Carstairs and the border.
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ScotRail has also withdrawn services from Inverness to Elgin, Aberdeen to Inverurie, and Glasgow Queen Street to Oban.
The TransPennine Express, meanwhile, “strongly” urged customers not to travel north of Carlisle on Saturday and Avanti West Coast advised against travel north of Preston.
UK
Gatwick Airport: Police release two people who were detained amid security incident as South Terminal reopens
Two people detained during a security incident at Gatwick Airport have been allowed to continue their journeys after a suspect package saw a “large part” of the South Terminal evacuated.
The terminal was closed for hours after the discovery of a “suspected prohibited item” in a passenger’s luggage sparked an emergency response. It reopened at around 3.45pm.
Officers from the EOD (Explosive Ordnance Disposal) team “made the package safe” before handing the airport back to its operator, Sussex Police said.
Read more:
Latest updates from Gatwick Airport
What are your rights if your flight is affected?
Passengers at Gatwick Airport after flights were cancelled. Pic: PA
Their statement continued: “Two people who were detained while enquiries were ongoing have subsequently been allowed to continue their journeys.
“There will remain an increased police presence in the area to assist with passengers accessing the South Terminal for onward travel.”
The force also thanked the public and airport staff for their patience while the incident was ongoing.
Earlier the airport, which is the UK’s second busiest, said the terminal was evacuated after a “security incident”.
“The earlier security alert has now been resolved and cleared by police,” it later said in a statement on Friday afternoon.
“The South Terminal is reopening to staff and will be open to passengers shortly.”
Gatwick said some flights were cancelled while others were delayed.
It said passengers should contact their airlines for any updates on flights.
Footage on social media taken outside the airport showed crowds of travellers heading away from the terminal building.
“Arrived at London Gatwick for routine connection. Got through customs to find out they’re evacuating the entire airport,” one passenger said.
“Even people through security are being taken outside. Trains shut down,” another passenger added, who said “thousands” of people were forced to leave.
Another passenger said people near the gates were being told to stay there and not go back to the departure lounge.
People outside the airport were handed blankets and water, passengers told Sky News.
The airport said its North Terminal was still operating normally.
Gatwick Express said its trains did not call at Gatwick Airport during the police response, but the airport said trains would start calling there again once the terminal was fully reopened.
More than 600 flights were due to take off or land at Gatwick on Friday, amounting to more than 121,000 passenger seats, according to aviation analytics firm Cirium.
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