Liz Truss and Kwasi Kwarteng have abandoned a plan to abolish the top rate of income tax for the highest earners in an astonishing U-turn.
The Chancellor acknowledged that their desire to axe the 45% rate on earnings over £150,000 in a move to be paid for by borrowing had become a “distraction” amid widespread criticism.
He issued a statement, hours before he had been due to defend the plans at the Conservative Party conference, saying: “We are not proceeding with the abolition of the 45% tax rate.”
“We get it, and we have listened,” he added.
British Prime Minister Liz Truss tweeted: “We get it and we have listened.
“The abolition of the 45pc rate had become a distraction from our mission to get Britain moving.
“Our focus now is on building a high growth economy that funds world-class public services, boosts wages, and creates opportunities across the country.”
Mr Kwarteng said the abolition of the 45% tax rate had become a distraction as he announced the U-turn.
In a statement posted on his Twitter account, he said: “From supporting British business to lowering the tax burden for the lowest paid, our Growth Plan sets out a new approach to build a more prosperous economy.
“However, it is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country.
“As a result, I’m announcing we are not proceeding with the abolition of the 45p tax rate. We get it, and we have listened. This will allow us to focus on delivering the major parts of our growth package.
“First, our Energy Price Guarantee, which will support households and businesses with their energy bills. Second, cutting taxes to put money back in the pockets of 30 million hard-working people and grow our economy. Third, driving supply side reforms – including accelerating major infrastructure projects – to get Britain moving.”
Asked where the U-turn had left his credibility, Mr Kwarteng said: “We are 100% focused on the growth plan.” 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.”
Asked if it had considered resigning, 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.” Pressed on whether the 45% abolition had been a mistake, he said: “What I admit was it was a massive distraction on what was a strong package.”