UK Chancellor Kwarteng vows to deliver on government's economic strategy

UK Chancellor Kwarteng vows to deliver on government's economic strategy

The plan to cut taxes for top earners was announced by the UK Chancellor of Exchequer Kwasi Kwarteng, who pledged to deliver on the government's economic strategy just hours after making a humiliating U-turn on a plan to cut taxes for top earners.

He told the Conservative party conference in Birmingham on Monday that there was no more distractions. Kwarteng spoke to the Tory faithful after he backtracked on a plan to scrap the 45% income tax in order to keep pace with the growing threat of a party rebellion. He began the speech remarking: What a day. It has been tough, but we need to focus on the job in hand. The policy reversal just 10 days after first announcing the measure is a major embarrassment for Kwarteng and Prime Minister Liz Truss. The abolition of the top rate was part of their plan for growth, as they unveiled the biggest set of unfunded tax cuts in half a century in a dramatic fiscal statement on Sept. 23.

The Bank of England went into a dramatic intervention to stave off a gilt market crash after the package sent the pound to an all-time low against the dollar.

Kwarteng said that the plan from 10 days ago has caused a little turbulence. We are listening and have listened, and now I want to focus on delivering major parts of our growth package. Kwarteng plans to push ahead with other aspects of his fiscal strategy, including a 1 percentage point cut in the basic rate of income tax, and cancelling Sunak's plan to raise corporation tax to 25% from 19% earlier this year.

He said that this government will always be on the side of those who need help the most.

It was an attempt to get over the damage done by the original plan on the 45% tax rate, which had triggered dismay among some Conservative MPs over the unfairness of a tax cut for the rich while poorer Britons struggled during a cost-of-living crisis.

At the same time, the government ministers have been laying the ground for more public spending cuts, including welfare payments. Sunak said earlier in the year that benefits would increase in line with inflation later in the year, but on Monday, Work and Pensions Secretary Chloe Smith told Bloomberg TV that no decision had yet been taken.

That caused concern among some ex-ministers who warned they could not support any real-term cuts in welfare payments. Esther McVey, a former holder of Smith's post, told a side event that it would be a huge mistake not to give a cost of living increase in benefits. Michael Gove, a former minister who has become an unofficial recruiting sergeant for unhappy Tories, told Times Radio he would need a lot of persuading to back benefits not being uprated in line with inflation.

Gove said that he would support the government's tax measures now that the top tax rate has been shelved.

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