London Daily

Focus on the big picture.
Thursday, Aug 06, 2026

Truss and Kwarteng U-turn on plan for 45p tax rate for highest earners

Truss and Kwarteng U-turn on plan for 45p tax rate for highest earners

The tax cut was one of a series of proposals that prompted turmoil in the markets over the past week, with the pound reaching record lows against the dollar.

Chancellor Kwasi Kwarteng has confirmed that the government is axing plans to give the wealthiest 1% a tax cut following a bitter backlash from Tory MPs.

Mr Kwarteng said in a tweet that the measure had become a "distraction" from his objective to grow the economy.

He said: "We get it, we have listened."

The plan to scrap the 45p rate, which is paid by people who earn over £150,000 a year, was criticised as unfair amid the cost of living crisis.

It was announced in the tax-slashing mini-budget, last Friday, but would have had to go to a vote before it could be approved.

Former cabinet minister Grant Shapps, one of the big hitters in the Conservative Party who had publicly criticised the policy, told Sky News that it would not have got through parliament.

"There is no mathematical way MPs would go and vote for this," he said.

The tax cut was one of a series of proposals that prompted turmoil in the markets over the past week, with the pound reaching record lows against the dollar.

The chancellor and Ms Truss spent much of the past 10 days doubling down on their plans, even in the face of criticism from the International Monetary Fund and a £65bn emergency intervention by the Bank of England.

Ms Truss was expected to delay the vote on the 45p rate tax cut to buy herself time, after Conservative MPs were told they would lose the whip (meaning they would be suspended from the party) if they voted against it.

But the rebellion grew overnight as Mr Shapps joined his former cabinet minister colleague Michael Gove in publicly criticising the plans.

Kwarteng 'not at all' considering resigning


Mr Kwarteng abandoned the policy hours before he was due to tell the Conservative Party conference in Birmingham that the government "must stay the course".

The chancellor told BBC Breakfast: "I have been in parliament for 12 years, there have been lots of policies which, when government listens to people, they have decided to change their minds."

Despite the blow to his authority, he said he had "not at all" considered resigning.

And he declined to apologise directly to the nation, instead telling BBC Radio 4's Today programme: "There's humiliation and contrition, and I'm happy to own it."

Moments after Mr Kwarteng confirmed the U-turn, Ms Truss tweeted the same message.


'They have destroyed their economic credibility'


The pound surged higher in overnight trading on Monday as reports emerged that the government would abandon the decision to axe the 45p tax rate.

Labour pressed for Ms Truss and Mr Kwarteng to back down on the rest of their tax-cutting mini-budget.

Shadow chancellor Rachel Reeves said the reversal "comes too late for the families who will pay higher mortgages and higher prices for years to come".

"The Tories have destroyed their economic credibility and damaged trust in the British economy," she said. "Their kamikaze budget needs reversing now."

The Lib Dems echoed those calls, with leader Sir Ed Davey calling for the Tories to cancel their party conference and recall parliament to "sort this mess out".

He said: "Every day it becomes clearer this Conservative government has no plan, no clue and is completely out of touch."

Newsletter

Related Articles

0:00
0:00
Close
New Zealand Draws Wealthy Americans With Revamped Investor Visa
Senate Panel Votes to Hold Anthony Fauci in Contempt After Fifth Amendment Testimony
Cambridge Professor Jason Arday Resigns as University Opens Inquiry Into His Credentials
Reform UK and Greens Unite Against Vast Solar Plans for Kent Marshland
UK Artificial Intelligence Regulation and Public Infrastructure Investment Remain Key Policy Focus Areas
Kemi Badenoch Faces Criticism Over Appointment of Former Neo-Nazi Linked Figure to Advisory Role
AG Barr Reports £10 Million Sales Loss After Supply Chain and Planning Failures
UK Government Fast-Tracks Specialist Care Pathways for Motor Neurone Disease Patients
UK Government Connects More Than 60,000 Rural Homes and Businesses to Gigabit Broadband
Next Raises Full-Year Profit Forecast After Strong Summer Sales
Metropolitan Police Arrest Woman After Four Men Stabbed in Central London’s Covent Garden Area
UK Procurement Reform and Infrastructure Spending Signal New Focus on Regional Economic Growth
UK Government Expands Global Talent Visa Access for International Researchers and Innovators
NHS Launches £343 Million Expansion of Community Mental Health Centres Across England
UK Treasury Explores Higher Borrowing Capacity for Infrastructure and Housing Investment
UK Cabinet Office Reforms Procurement Rules to Direct £90 Billion of Public Spending Toward Jobs and Skills
UK Government Considers Public Inquiry Into Jeffrey Epstein’s Activities and Possible Institutional Failures
Britain’s AI Safety Institute Finds Advanced Models Creating Fake Identities and Malicious Code During Tests
Lightning Strike Kills Yala FC Player During Match in Southern Thailand
Senate Scrutinises AI-Driven Personalised Pricing
Spain Seeks Mainland Transfers for 1,100 Children Stranded in Ceuta
UK Government Pushes New Procurement, Skills and Technology Policies Amid Economic Pressure
UK Charity Commission Investigates Donations Linked to Israeli Settlement Groups
UK Government Faces Pressure Over Possible Windfall Tax on Bank Profits
South East Water Provides Emergency Support After Kent Supply Disruptions
UK Defence Supports US Operation to Seize Russian-Flagged Oil Tanker in North Atlantic
Green Party Wins First Westminster By-Election Seat in Historic Gorton and Denton Victory
UK Farmers Face Rising Bluetongue Disease Cases Among Sheep Flocks
UK Government Warns Retailers and Fuel Suppliers Against Exploiting Price Pressures
Apple, AI Deepfakes and New UK Rules Highlight Growing Digital Regulation Challenges
UK Education Department Expands Fully Funded Apprenticeships for Under-25s
National Crime Agency and Spanish Police Arrest Scotland’s Most Wanted Fugitive in Madrid
UK Labour Government’s Devolution Plans Renew Debate Over Written Constitution
EY UK Forecasts Weak Growth in 2026 as Energy Risks Continue to Pressure Households
Apple Challenges UK Government Demand for Access to Encrypted iCloud Data
UK Government Considers Public Inquiry Into Jeffrey Epstein Network and Institutional Links
Cabinet Office Reforms UK Government Procurement Rules to Prioritize Local Jobs and Skills
UK Energy Security Faces Pressure From Middle East Conflict and Red Sea Disruptions
UK Government Expands Employment Discrimination Review Amid Labour Market Changes
UK Campaigners Call for Ban on Toxic Flea Treatments Linked to Water Pollution
MI6 Ranked Europe’s Leading Foreign Intelligence Service in Independent Review
Houthi Missile Attack on Saudi Oil Tanker Raises Further Red Sea Shipping Concerns
Palantir Faces UK Tax Criticism After Paying Two Million Pounds in Corporation Tax
Advanced AI Models Show Unexpected Behaviour During UK Cybersecurity Testing
Bank of England Introduces Tougher Artificial Intelligence Testing Rules for Financial Firms
Next Raises Annual Profit Forecast to One Point Two Four Billion Pounds After Strong Summer Sales
New UK Visa Rules Tighten Skilled Worker, Student and Family Migration Routes
UK Government Proposes New Equal Pay Enforcement Powers for Employers
UK High Court Blocks Home Office Deportation Policy for Alleged Trafficking Victims
UK Health Secretary Yvette Cooper Announces Major Reform of NHS Maternity Services
×