At the Conservative Party conference on Monday afternoon in Birmingham, UK Chancellor Kwasi Kwarteng went on stage to admit that he had “a tough day.”
The new face of the British economy had to make an embarrassing U-turn on his plans to cut the tax for the wealthiest earners. No UK Chancellor had ever had to abandon a brand-new tax cut plan hours before he was supposed to present his vision for the UK economy at the Conservative Party conference.
“We have to listen to voters and the people in the country. It is a tough thing to do, to put your hand up and say, ‘this isn’t the right thing to do,” said Kwarteng after reaching an agreement with Liz Truss last night to make a U-turn.
Only yesterday, in an interview with BBC, the Prime Minister and the newly elected leader of the Conservative Party continued to say she was sticking to tax cuts.
“I do stand by the package we announced, and I stand by the fact that we announced it quickly, because we had to act. I do accept we should have laid the ground better, I do accept that,” said Truss. The Prime Minister also took an opportunity to reveal that axing the 45p tax rate for the highest earners was “a decision the Chancellor made” without discussion with the Cabinet.
What a difference 24 hours makes in politics. The growing numbers of Conservatives were vocally opposing the tax cut plan, including Michael Gove and Grant Shapps, forcing the Chancellor and Prime Minister Liz Truss to make a U-turn. Gove, who has never been a fan of Liz Truss, was concerned that Truss would bring forth a policy that wasn’t in standing with conservative values.
The Prime Minister and Chancellor have successfully binned the tax cut that they’ve realized was impossible to pass in the House of Commons, but more difficult days on other not-so-popular policies are in front of them.
Kwasi Kwarteng is determined to deliver other significant parts of his growth package. “For too long, our economy has not grown enough. But I refuse to accept that it is somehow Britain’s destiny to fall back into middle league status. Or a tax burden reaching a 70 year high is somehow inevitable. We will review, replace, or repeal retained EU law holding our country back,” pleged Kwasi Kwarteng in Birmingham.
The pound rebounded after the announcement, but whether or not today’s dramatic U-turn will improve Liz Truss’s economic credibility is yet to be seen. The Chancellor and Prime Minister have been politically wounded just weeks into their new roles. Can Liz Truss recover from this?
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