Kwarteng ready to defend tax cuts as Tory rebellion intensifies

Kwasi Kwarteng, who faces a growing Tory rebellion over plans to scrap the 45p top income tax rate, will tell Tory members on Monday he is “confident” the plan is “right”.

The chancellor’s tax-cut “mini” budget, which also includes a new wave of government borrowing, caused turbulence in markets last week, leaving him scrambling to prove he will rein in debt.

Prime Minister Liz Strath has been warned she will lose the House of Commons if she insists on scrapping the 45p tax, the most contentious element of a debt-financed £45bn tax cut plan.

Former cabinet minister Michael Gove put himself at the forefront of a Conservative rebellion on Sunday to cut taxes for the richest 1% of Britons, saying it was wrong at a time when “people are suffering”.

Former transport minister Grant Shapps also condemned the plan, saying it could not pass a parliamentary vote.

Another Conservative MP representing a working-class seat has been described as “crazy” at the idea of ​​cutting taxes for the wealthy while planning cuts to benefits and public services.

A retreat from the removal of the 45p tax band is inevitable, a minister said. “We can’t get through, so we might as well stop now. Everyone has to turn around sometimes.”

Truss insisted on Sunday that she would stick with the plan, but acknowledged that the 45p tax change had not been discussed in Cabinet: “It’s a decision made by the Prime Minister,” she told the BBC’s Sunday with Laura Kunsberg.

Conservative Party officials deny she tried to accuse Kwarteng. Treasury Secretary Chris Phelps has denied reporting to colleagues that he was the main driver of the policy.

Tensions have cast a shadow over the Conservative Party conference that begins in Birmingham on Sunday. Kwarteng will tell attendees on Monday: “We have to stay the course. I believe we have the right plan.”

He will also pledge “a firm commitment to fiscal discipline”.

“The path ahead of us is a slow, controlled decline. I refuse to accept that the fate of the UK is somehow unavoidable, or that the tax burden reaching its highest level in 70 years is somehow inevitable,” the finance minister said. Minister will say.

But Gove told the BBC that “funding tax cuts with borrowed money is not conservative” and that cutting tax on income over £150,000 and removing caps on bankers’ bonuses were “wrong values”.

“It’s going to be very, very, very difficult to say it’s right to cut benefits when we’re also cutting taxes for the richest,” he said later.

Gove also said Truss had no mandate to cut taxes for the wealthy, saying she did not mention the idea in the Conservative leadership race.

Gove is the highest-profile critic of Truss’s openly voiced new economic plan, but he’s not alone. Some Conservative MPs told the FT they could not support the plan and it would be rejected in the House of Commons unless the prime minister changed tack.

Truss conceded mistakes in the controversial “mini” Budget that roiled markets last week, but said she would not back away from her plan to deliver £45bn of unfunded tax cuts, insisting it would help deliver growth .

“We should have laid the groundwork better, and I’ve learned from that,” she said.

The prime minister has repeatedly refused to say whether she will cut public spending to make the sum total, saying she needs to work to win the “hearts and minds” of Conservative MPs to convince them that her plan is the right one.

Some Conservative MPs have begun to speculate that Truss could be replaced by her leadership rival Rishi Sunakwho is spending a conference week in his North Yorkshire constituency.

The plan sparked fears of rising inflation, sending the pound to a record low against the dollar and a sell-off in British government bonds. Lenders pulled out of thousands of mortgage products and the Bank of England launched a £65bn bond-buying programme to stabilize markets.

Opinion polls after the market plunge showed the Conservatives trailing the Labour opposition by as much as 33 percentage points.

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