Prime Minister Liz Truss dropped a plan to cut taxes for the UK’s highest earners just 10 days after announcing it, in a humiliating reversal designed to fend off a mounting rebellion within her own Conservative Party. The decision came as a tweet on early Monday morning by the Chancellor of the Exchequer Kwasi Kwarteng, “we get it, and we have listened”. He said the decision to scrap the 45 per cent rate of income tax had become a “distraction”.
The U-turn is a major embarrassment for Truss and Kwarteng. They have spent days defending the chancellor’s Sep 23 fiscal statement, with Truss saying on Sunday that she was committed to the package. The announcement also marked the first major policy U-turn under British Prime Minister Liz Truss, who took office less than one month ago.
Other Conservatives, including Tobias Ellwood and Andrew Bowie, took to Twitter to welcome the reversal.
Kwarteng’s package, dubbed the government’s “growth plan”, had sparked a market rout, sending the pound to an all-time low against the dollar, and forcing the Bank of England into making a dramatic intervention to stave off a crash in the gilt market.
The pound erased losses to trade 0.8% higher against the dollar.