Liz Truss has scrapped the controversial tax cut for the rich this morning in a huge U-turn after a Tory revolt.
The humiliated Prime Minister dropped her plans to axe the 45p top Income Tax rate just a day after saying she was "absolutely committed" to it on national TV.
One ex-Cabinet minister branded the PM a "dead woman walking" who would be gone by Christmas as reports emerged of the U-turn in the small hours, while multiple government sources refused to comment.
Miss Truss told the BBC yesterday: "It is part of an overall package of making our tax system simpler and lower."
And Chancellor Kwasi Kwarteng was expected to tell the Tory conference this evening: "We must stay the course. I am confident our plan is the right one."
But, as reported by the Mirror, Mr Kwarteng announced on Twitter today that the cut would not go ahead.
He tweeted: "It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing the 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."
The cut in tax from 45% to 40% on earnings over £150,000 costs £2bn a year and would hand a £10k-a-head average saving annually to 660,000 very wealthy people.
At the same time, Liz Truss is refusing to say benefits will be raised by inflation next April, with insiders instead looking at raising them by average earnings which are lower.
Tory MPs will still be unsettled because Ms Truss is still borrowing around £70bn next year alone to fund her plans.
The first signs of a crack yesterday came when the Prime Minister admitted "it was a decision the Chancellor made" that wasn't approved by the Cabinet.
Ex-minister Michael Gove toured fringe events at the Conservative Party conference in Birmingham to give his verdict on the plan, which he called "not Conservative".
He hinted he could vote against the measure in the Commons, breaking the whip for the first time, and said it would be "very, very, very" hard to justify cutting benefits at the same time.
Former transport secretary Grant Shapps used a Times column to say "this is not the time to be making big giveaways to those who need them least" because "when pain is around, pain must be shared".
"This bolt-from-the-blue abolition of the higher rate, compounded by the lack in communication that the PM acknowledges, is an unforced error that is harming the Government's economic credibility," he said.
Damian Green, a former deputy prime minister, warned the Tories would lose the next election if "we end up painting ourselves as the party of the rich".
Tory ex-chancellor George Osborne said it was "touch and go whether the Chancellor can survive" the fallout, telling the Andrew Neil Show it would be "curtains" for Mr Kwarteng if his speech after 4pm today went badly.
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