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.
Please use Chrome browser for a more accessible video player
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.
Read more:
Truss’s U-turn on 45p tax rate will embolden her many critics
Toxic impression created that Truss and Kwarteng not getting on
Truss sticks by plan but admits mistakes
Kwarteng faces calls for inquiry after party with hedge fund managers
Please use Chrome browser for a more accessible video player
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.”
World
Trump criticises Putin after potentially ‘historic’ meeting with Zelenskyy before Pope’s funeral
Donald Trump has criticised Vladimir Putin and suggested a shift in his stance towards the Russian president after a meeting with Volodymyr Zelenskyy before the Pope’s funeral.
The Ukrainian president said the one-on-one talks could prove to be “historic” after pictures showed him sitting opposite Mr Trump, around two feet apart, in the large marble hall inside St Peter’s Basilica.
The US president said he doubted his Russian counterpart’s willingness to end the war after leaving Rome after the funeral of Pope Francis at the Vatican.
Follow live updates: 200,000 mourn at Vatican
In a post on his Truth Social platform, he said “there was no reason” for the Russian president “to be shooting missiles into civilian areas, cities and towns, over the last few days”.
The two leaders held talks before attending the Pope’s funeral
He added: “It makes me think that maybe he doesn’t want to stop the war, he’s just tapping me along, and has to be dealt with differently, through ‘Banking’ or ‘Secondary Sanctions?’ Too many people are dying!!!”
The meeting between the US and Ukrainian leaders was their first face-to-face encounter since a very public row in the Oval Office in February.
Mr Zelenskyy said he had a good meeting with Mr Trump in which they talked about the defence of the Ukrainian people, a full and unconditional ceasefire, and a durable and lasting peace that would prevent the war restarting.
Other images released by the Ukrainian president’s office show Sir Keir Starmer and French President Emmanuel Macron were present for part of the talks, which were described as “positive” by the French presidency.
Mr Zelenskyy‘s spokesman said the meeting lasted for around 15 minutes and he and Mr Trump had agreed to hold further discussions later on Saturday.
The world leaders shared a moment before the service
Donald Trump and Volodymyr Zelenskyy meet in the Basilica
But the US president left Rome for Washington on Air Force One soon after the funeral without any other talks having taken place.
The Ukrainian president’s office said there was no second meeting in Rome because of the tight schedule of both leaders, although he had separate discussions with Mr Starmer and Mr Macron.
The French president said in a post on X “Ukraine is ready for an unconditional ceasefire” and that a so-called coalition of the willing, led by the UK and France, would continue working to achieve a lasting peace.
There was applause from some of the other world leaders in attendance at the Vatican when Mr Zelenskyy walked out of St Peter’s Basilica after stopping in front of the pontiff’s coffin to pay his respects.
Donald Trump and the Ukrainian president met for the first time since their Oval Office row. Pic: Reuters
Sir Tony Brenton, the former British ambassador to Russia, said the event presents diplomatic opportunities, including the “biggest possible meeting” between Mr Trump and the Ukrainian leader.
He told Sky News it could mark “an important step” in starting the peace process between Russia and Ukraine.
Professor Father Francesco Giordano told Sky News the meeting is being called “Pope Francis’s miracle” by members of the clergy, adding: “There’s so many things that happened today – it was just overwhelming.”
The bilateral meeting comes after Mr Trump’s peace negotiator Steve Witkoff held talks with Mr Putin at the Kremlin.
They discussed “the possibility of resuming direct negotiations between Russia and Ukraine”, Kremlin aide Yuri Ushakov said.
👉 Listen to Sky News Daily on your podcast app 👈
Russia and Ukraine have not held direct talks since the early weeks of the war, which began in February 2022.
Mr Trump has claimed a deal to end the war is “very close” and has urged Mr Zelenskyy to “get it done” in a post on his Truth Social platform.
He has previously warned both sides his administration would walk away from its efforts to achieve a peace if the two sides do not agree a deal soon.
Meanwhile, the Polish armed forces said a Russian military helicopter violated its airspace over the Baltic Sea on Friday evening.
“The nature of the incident indicates that Russia is testing the readiness of our air defence systems,” they said in a post on X.
On an extraordinary day, remarkable pictures on the margins that capture what may be a turning point for the world.
In a corner of St Peter’s Basilica before the funeral of Pope Francis, the leaders of America and Ukraine sit facing each other in two solitary chairs.
They look like confessor and sinner except we cannot tell which one is which.
Leaning forward hands together in their laps, Donald Trump and Volodymyr Zelenskyy stare at each other in one photo.
In another, the Ukrainian president seems to be remonstrating with the US president. This is their first encounter since their infamous bust-up in the Oval Office.
The two leaders held talks before attending the Pope’s funeral
Other pictures show the moment their French and British counterparts introduced the two men. There is a palpable sense of nervousness in the way the leaders engage.
We do not know what the two presidents said in their brief meeting.
But in the mind of the Ukrainian leader will be the knowledge President Trump has this week said America will reward Russia for its unprovoked brutal invasion of his country, under any peace deal.
Mr Trump has presented Ukraine and Russia with a proposal and ultimatum so one-sided it could have been written in the Kremlin.
Kyiv must surrender the land Russia has taken by force, Crimea forever, the rest at least for now. And it must submit to an act of extortion, a proposed deal that would hand over half its mineral wealth effectively to America.
The world leaders shared a moment before the service
Afterwards, Zelenskyy said it had been a good meeting that could turn out to be historic “if we reach results together”.
They had talked, he said, about the defence of Ukraine, a full and unconditional ceasefire and a durable and lasting peace that will prevent a war restarting.
The Trump peace proposal includes only unspecified security guarantees for Ukraine from countries that do not include the US. It rules out any membership of Ukraine.
Ukraine’s allies are watching closely to see if Mr Trump will apply any pressure on Vladimir Putin, let alone punish him for recent bloody attacks on Ukraine.
Or will he simply walk away if the proposal fails, blaming Ukrainian intransigence, however outrageously, before moving onto a rapprochement with Moscow.
If he does, America’s role as guarantor of international security will be seen effectively as over.
This could be the week we see the world order as we have known it since the end of the Second World War buried, as well as a pope.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway