Kwasi Kwarteng has confirmed that the government will NOT scrap the top rate of income tax in a major U-turn for the new Chancellor.
Mr Kwarteng has come under fire for this decision to abolish the 45p rate of tax for people who earn more than £150,000 per year. His decision was part of a raft of measures to boost ‘growth’, he said, and were announced in the mini-budget on September 23 .
However, that budget has led to economic turmoil for the country in the days since. There has been a run on the pound, and reports suggest that more than four in ten mortgage rates have been suspended by lenders , after a rise in interest rates.
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There has also been a warning from the International Monetary Fund (IMF), saying it ‘does not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy’. They also said they believed the Chancellor’s package would ‘increase inequality’ across the country.
This week sees the party convene in Birmingham for its annual conference — which has already led to one farce as a senior young Tory called the city a ‘dump’ and was told to leave by the region’s Mayor. Amid fears of an all-out electoral wipeout , Mr Kwarteng has rowed back on one of the headline policies announced in the mini-budget.
When asked if rumours were true that the 45p rate was going on BBC Breakfast this morning (October 3), the Chancellor said: “Absolutely. What was clear, talking to a lot of people up and down the country, was that the 45p was becoming a huge distraction from what was a very strong plan.
“We have got an energy intervention which is preventing bills going up to £6,500 per year. We have reversed the national insurance increase to save the average person £330 per year. We have also brought forward the basic rate [of income tax] cut of 1p.”
Mr Kwarteng also said that he and his boss, Prime Minister Liz Truss, has ‘talked constantly’ about the economic measures announced. Yesterday, the PM said that the 45p rate cut was a decision made by the Chancellor alone.
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