Kwasi Kwarteng did not commit to nor rule out a U-turn on corporation tax, despite growing pressure to abandon even more parts of the recent mini-budget which caused market turmoil.
The Chancellor previously said he was "totally focused" on delivering his announced tax-cutting plans, aimed at increasing UK economic growth, but in comments to the Telegraph newspaper, he was less definitive on his plans. When asked about the expectation from financial markets that the Government could ditch the plan not to increase corporation tax in order to demonstrate a commitment to balancing the books, he reportedly said: “Let’s see.”
Earlier reports suggested talks were under way between No 10 and the Treasury on abandoning elements of the £43 billion tax-cutting plan, including the commitment to axe the planned increase in corporation tax. Downing Street said “work is ongoing between the Chancellor and the Prime Minister, as you’d expect, ahead of the medium-term fiscal plan” but a spokeswoman refused to be drawn on the nature of the discussions or the possible scrapping of the corporation tax commitment.
Mr Kwarteng, who was in Washington for the International Monetary Fund’s annual meeting, was repeatedly asked by broadcasters about the prospect of a U-turn and did not explicitly rule it out. He insisted “our position hasn’t changed”, adding: “I will come up with the medium-term fiscal plan on October 31, as I said earlier in the week, and there will be more detail then.”
Asked if a corporation tax U-turn was on the cards, he said: “What I’m totally focused on is delivering on the mini-budget.” With talks on ditching his plans rumoured to be taking place in London while he was on the other side of the Atlantic, Mr Kwarteng insisted his position was safe.
Asked if both he and Prime Minister Liz Truss would still be in office in a month, Mr Kwarteng said: “Absolutely 100%. I am not going anywhere.” He told broadcasters: “I speak to No 10, I speak to the Prime Minister all the time. We are totally focused on delivering the growth plan.”
Mr Kwarteng acknowledged the UK suffered some “turbulence” following his mini-budget but said the economy was facing the same problems as other countries around the world. “What I am going to acknowledge is the fact that it is a very dicey situation globally,” he said.
But the managing director of the International Monetary Fund (IMF) hinted that Mr Kwarteng might need to change course. Speaking at a press conference in Washington, Kristalina Georgieva said: “Our message to everybody, not just the UK, is that at this time, fiscal policy should not undermine monetary policy.”
She added that “it is correct to be led by the evidence, so if the evidence is that there has to be a recalibration, it’s right for governments to do so”. Former chancellor George Osborne suggested Mr Kwarteng should not delay until his October 31 statement before making the “inevitable” U-turn on his plans while former home secretary Priti Patel became the latest Tory MP to suggest that the Government could be forced into a reversal.
In response to speculation about a possible U-turn on corporation tax, the Liberal Democrats called for Mr Kwarteng to resign. Lib Dem leader Sir Ed Davey said: “This U-turn would come too late for many struggling families facing mortgage misery.” For Labour, shadow chancellor Rachel Reeves said: “Today’s mess shows the utter chaos this Government is in. This is a crisis made in Downing Street and working people are paying the price.”
Read more of today's top stories here
READ NEXT:
