British Finance Minister Kwasi Kwarteng has abandoned his plan to axe the 45p tax rate for top-earners after a Tory revolt, in a humiliating U-turn at the Conservative conference.
Just 24 hours after British Prime Minister Liz Truss insisted the cut – for Britain’s richest people, earning more than £150,000 – would go ahead, the chancellor has backtracked under fierce pressure.
“We get it and we have listened,” Mr Kwarteng said.
He called the 45p rate cut “a distraction from our overriding mission to tackle the challenges facing the country”.
The U-turn comes after Conservative big-hitters Michael Gove and Grant Shapps spoke out against handing huge rewards to the rich while benefits are set to be cut in real terms.
There was a growing likelihood that the plan would be defeated in the Commons, as the Tory revolt grew – despite the vote being delayed until as late as next year.
The climbdown will raise fresh questions about Mr Kwarteng’s future, after Ms Truss told the BBC that the 45p rate cut was his idea alone.
Mr Kwarteng sent shockwaves through financial markets when he published a mini-budget on September 23, cutting taxes including the 45p highest rate of income tax, in a "growth plan" to be funded by vast government borrowing.
The government had stuck to the policy, even as the value of the pound and government bonds fell, but several senior lawmakers stepped up their opposition to it at the party's annual conference which began on Sunday.
On Sunday, former minister, Michael Gove, long at the heart of government, hinted he might vote against cutting taxes for the wealthy.
Kwarteng had planned to tell the conference on Monday that the government "must stay the course" and he was confident the plan was the right one, according to advance excerpts released by his team.
But this morning the BBC said the government was expected to drop the plan.