It has been verified by Chancellor Kwasi Kwarteng that the decision to abandon the plans to eliminate the 45p rate of income tax was made.
He stated in a statement that the ideas, which had been introduced only ten days earlier in the mini-budget, had “become a distraction.”
The U-turn, which represents a humiliating climbdown for Liz Truss, comes after many Tory MPs stated their objection to the idea. The climbdown comes after several Tory MPs voiced their opposition to the plan.
A vote on the idea in the House of Commons will result in defeat for the prime minister, according to an ex-cabinet minister named Grant Shapps.
In light of recent increases in the cost of living, the proposal to eliminate the 45p rate, which is paid by those with annual incomes of more over £150,000, has been criticized as being unjust.
The Prime Minister said on Sunday that she was fully committed to it as part of a package to make the tax system “simpler” and encourage economic development. She made this statement to the BBC.
However, the idea has been met with significant resistance from financial markets, political parties in opposition, and a rising number of Conservative members of parliament.
It became more and more likely that Ms. Truss did not have the necessary support to get it through.
This is a huge about-face on your part. The Prime Minister reaffirmed on Sunday that the government was moving through with its contentious proposal to eliminate the 45 pence tax rate. This morning, it has been declared dead.
There are two aspects that have undergone a transformation.
First, an increasing number of Conservative Members of Parliament were expressing their disagreement with the approach in a public forum.
Second, an increasing number of members of the House of Commons were of the opinion that the proposal would be defeated when it was brought before the body for a vote.
Liz Truss is going to hold out hope that if they make this choice now, it will minimize the amount of harm that is done.
However, this is without a doubt an extremely challenging and maybe detrimental time for her reign. Ms. Truss has previously said that she would be ready to make choices that were not easy. As it turned out, this was a challenging choice that went too far.
“I don’t feel that’s appropriate,” a prominent member of the Conservative Party named Michael Gove said on Sunday, implying that he would not support the idea if it were brought before Parliament.
The choice made by the Prime Minister, according to the former Cabinet minister, was “a manifestation of the incorrect ideals.”
Additionally, Mr. Shapps asked Ms. Truss to do a U-turn and cautioned her against having a “tin ear” to the worries that people had on the growing cost of living.
During an interview on Sunday with the BBC, he said, “I don’t believe the House is in a situation where it’s likely to support that.”
The U-turn was announced on the second day of the Conservative conference in Birmingham, where Mr. Kwarteng was scheduled to speak later on Monday. The Sun was the first publication to report on any rumors on the U-turn.
Following the release of the news, the value of one pound rose against the dollar by more than one cent, reaching $1.1263.
The instability caused on the markets by Mr. Kwarteng’s mini-budget, which included around £45 billion of unfunded tax cuts, led to the currency to a new record low the previous week.