The British Treasury chief on Monday confirmed his U-turn on tax cuts for the rich, telling a Conservative Party conference: “What a day.”
“It has been tough but we need to focus on the job in hand,” Chancellor of the Exchequer Kwasi Kwarteng told the conference in Birmingham.
Earlier in the day, Kwarteng and Prime Minister Liz Truss announced: “We get it, and we have listened.”
Ten days ago Kwarteng’s mini-budget triggered a collapse in the pound and a surge in the cost of government borrowing. The package contained £45 billion ($50.7 billion) in tax cuts funded through borrowing, on top of a multibillion-pound energy bailout.
The most controversial of the tax cuts would have removed the 45 pence tax rate for those earning over £150,000, which is Britain’s top tax rate.
The proposal provoked public fury, and the anger then spread to inside the center-right Conservative Party itself. Both the chancellor and prime minister defended the measure as pro-growth, but a combination of the market sentiment, public anger, and restlessness among Tory MPs forced the top two figures in British politics into a humiliating U-turn.
Conceding that his mini-budget had caused “a little turbulence” – in itself a huge understatement – Kwarteng continued by telling the conference: “We need to move forward. No more distractions. We have a plan and we need to get on and deliver it. That is what the public expect from the government.”
Kwarteng said the course the country was on was “unsustainable” and that the “price of inaction would have been far greater than the cost of the scheme.”
He defended his plan, which he said was meant to boost growth, and said it “isn’t radical, isn’t irresponsible.”