Truss and Kwarteng U-turn on plan for 45p tax rate for highest earners
Chancellor Kwasi Kwarteng has confirmed that the government is axing plans to give the wealthiest 1% a tax cut following a bitter backlash from Tory MPs.
Mr Kwarteng said in a tweet that the measure had become a “distraction” from his objective to grow the economy.
He said: “We get it, we have listened.”
Politics live: Major U-turn after prominent Tories speak out
The plan to scrap the 45p rate, which is paid by people who earn over £150,000 a year, was criticised as unfair amid the cost of living crisis.
It was announced in the tax-slashing mini-budget, last Friday, but would have had to go to a vote before it could be approved.
Former cabinet minister Grant Shapps, one of the big hitters in the Conservative Party who had publicly criticised the policy, told Sky News that it would not have got through parliament.
“There is no mathematical way MPs would go and vote for this,” he said.
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Tax cut ‘not my idea’ says minister
The tax cut was one of a series of proposals that prompted turmoil in the markets over the past week, with the pound reaching record lows against the dollar.
The chancellor and Ms Truss spent much of the past 10 days doubling down on their plans, even in the face of criticism from the International Monetary Fund and a £65bn emergency intervention by the Bank of England.
Ms Truss was expected to delay the vote on the 45p rate tax cut to buy herself time, after Conservative MPs were told they would lose the whip (meaning they would be suspended from the party) if they voted against it.
But the rebellion grew overnight as Mr Shapps joined his former cabinet minister colleague Michael Gove in publicly criticising the plans.
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45p rate tax cut ‘didn’t make sense’
Kwarteng ‘not at all’ considering resigning
Mr Kwarteng abandoned the policy hours before he was due to tell the Conservative Party conference in Birmingham that the government “must stay the course”.
The chancellor told BBC Breakfast: “I have been in parliament for 12 years, there have been lots of policies which, when government listens to people, they have decided to change their minds.”
Despite the blow to his authority, he said he had “not at all” considered resigning.
And he declined to apologise directly to the nation, instead telling BBC Radio 4’s Today programme: “There’s humiliation and contrition, and I’m happy to own it.”
Moments after Mr Kwarteng confirmed the U-turn, Ms Truss tweeted the same message.
‘They have destroyed their economic credibility’
The pound surged higher in overnight trading on Monday as reports emerged that the government would abandon the decision to axe the 45p tax rate.
Labour pressed for Ms Truss and Mr Kwarteng to back down on the rest of their tax-cutting mini-budget.
Shadow chancellor Rachel Reeves said the reversal “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,” she said. “Their kamikaze budget needs reversing now.”
The Lib Dems echoed those calls, with leader Sir Ed Davey calling for the Tories to cancel their party conference and recall parliament to “sort this mess out”.
He said: “Every day it becomes clearer this Conservative government has no plan, no clue and is completely out of touch.”
Business
iPhones sold in US will no longer come from China – as Apple reveals impact of Trump’s tariffs
Apple says devices sold in the US will no longer come from China, as the tech giant tries to mitigate the impact of Donald Trump’s tariffs.
Most iPhones will be sourced from India instead, with iPads coming from Vietnam, to prevent dramatic price rises for American consumers.
Unveiling financial results from January to March, the company said the US president’s escalating trade war has had a limited impact on its performance so far.
However, Apple CEO Tim Cook believes the tariffs will add £677m in costs during the current quarter – assuming Trump’s policies don’t change.
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How Trump 2.0 changed the world
Revenue for the first three months of the year stood at £71.8bn, with earnings of £18.6bn also beating analyst expectations.
High demand for iPhones during this period may have been driven by US shoppers rushing to make purchases before the new tariffs came into force.
But the full impact of any panic buying will only emerge when Apple reports its results from April to June later in the year.
Apple’s reliance on Chinese factories to manufacture its iPhones meant the company was far more exposed to the impact of Trump’s trade war than others.
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Trump: Tariffs making US ‘rich’
After the president unveiled plans to impose reciprocal tariffs on dozens of countries – now largely paused for 90 days – Apple’s stock plunged by 23%, wiping out £582bn of value.
While its share price has recovered slightly, it remains 5% lower than before “Liberation Day”.
Growing tensions between Washington and Beijing are also having an impact on Apple’s sales in China, which fell 2.3% between January and March.
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Is your iPhone data less secure?
Addressing the planned changes to manufacturing, Mr Cook added: “We have a complex supply chain. There’s always risk in the supply chain. What we learned some time ago was that having everything in one location had too much risk with it.”
Devices sold outside of the US will continue to be made in China.
Tesla’s board members have reportedly started a search for someone to replace Elon Musk as CEO.
Several executive search firms were approached to find a successor around a month ago, the Wall Street Journal reported.
But it added that the current status of the succession planning for the electric car-maker was not known.
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Musk jokes about attacks on Tesla cars
Tesla’s chair, Robyn Denholm, later reacted to the report by insisting that any suggestion of an active search was “absolutely false”.
She added that the board was highly confident in Musk’s ability to continue “executing on the exciting growth plan ahead”.
Musk’s net worth has plunged and Tesla stocks have fallen sharply amid a public backlash over his role in Donald Trump’s government. He owns just under 13% of Tesla stock and is the largest shareholder.
The world’s richest man has been leading the Department of Government Efficiency (DOGE), where he has overseen the firing of tens of thousands of government employees.
He has also supported far-right parties in Europe, which has led to protests against Musk and Tesla, which have seen its showrooms and charging stations vandalised across the US and Europe.
President Trump has labelled the vandals “terrorists”.
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Musk pulls back from DOGE role
It comes after Musk said the time he spends with DOGE would “drop significantly” from May and he will dedicate more time to running his companies, such as Tesla, SpaceX and X.
The board members met with Musk and asked him to announce publicly he would spend more time at Tesla, the report said.
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It was unclear if Musk, who is a member of the board, was aware of any attempts to identify a successor, or if his pledge to spend more time at Tesla had affected succession planning, it added.
On Wednesday, Mr Trump said Musk could be part of his administration for as long as he wants.
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“You’re invited to stay as long as you want,” Mr Trump said.
He said Musk had been “treated unfairly” for his role in helping Mr Trump slash the size of the federal government, adding: “You really have sacrificed a lot.”
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