Prime Minister Liz Truss (Photo: Sophia Sleigh)
Just hours before the government’s screeching U-turn on the 45p rate, Liz Truss was defending their tax cuts at a party.
Kwasi Kwarteng made a dramatic announcement at 7.25am on Monday that they were abandoning the plan to abolish tax cuts for the highest earners
In an embarrassing reversal, on the second day of Conservative Party conference, the chancellor said they had “listened” to the public.
However, just hours before this dramatic U-turn the prime minister had been defending the government’s tax cuts.
We get it, and we have listened. pic.twitter.com/lOfwHTUo76
— Kwasi Kwarteng (@KwasiKwarteng) October 3, 2022
At a busy 1922 Committee & ConservativeHome reception in Birmingham, Truss told the crowd at around 10.30pm: “We’ve also announced a package of tax cuts and supply side reforms to turbocharge our economy because the fact is - now we face this global economic crisis - we need to do more to make the UK competitive and successful.”
The prime minister went on to accuse her predecessors of not making enough “Conservative arguments” over the past few years.
“Taxes are not something that the government owns,” she said.
“They’re something that individuals work hard to create that income and we take from them so we have to be very careful about making sure what we take from them is value for money.
“This is a good thing, making profit is a good thing. The city is a good thing and our financial services are a good thing.”
Earlier in the day Truss had insisted that 45p tax rate - which is paid by those earning more than £150,000 a year - would be abolished.
However, she appeared to distance herself from the controversial policy by stressing that it had been Kwarteng’s decision.
The chancellor was forced to perform the U-turn following a major backlash by Tory MPs.
Kwarteng had been due to tell the conference that the government must “stay the course” on its economic growth plan later today.
However, his speech will now be undergoing a rewrite following the major announcement.
In a statement Kwarteng said: “It’s clear the abolition of the 45p tax rate has become a distraction from our over-riding mission to tackle the challenges facing our country.
“As a result I’ve announced we are not proceeding with the abolition of the 45p tax rate. We get it and we have listened. This will allow us to focus on delivering the major parts of our growth package.”
The tax cut was the centrepiece of Kwarteng’s mini-budget, which he delivered just 10 days ago.
He also announced he was scrapping the rise in national insurance, cutting stamp duty, and cancelling a planned rise in corporation tax in a £45 billion giveaway paid for by adding £70 billion to the national debt.
However, the statement sparked economic chaos, with the value of the pound plummeting and the cost of government borrowing soaring.
More than a dozen Tory MPs had gone public with their opposition to the tax cut for the richest, which comes in the middle of a cost of living crisis and with the prospect of fresh cuts to public spending.
Former cabinet minister Michael Gove had threatened to vote against it if it had come to parliament, despite warnings from party chairman Jake Berry that any MP doing so would lose the Tory whip.
This article originally appeared on HuffPost UK and has been updated.