Kwasi Kwarteng says ‘let’s see’ when asked about potential U-turn on corporation tax – UK politics live | Politics

[ad_1]

Kwasi Kwarteng says ‘let’s see’ when asked about potential U-turn on corporation tax

Kwasi Kwarteng’s response is “let’s see” when grilled about an imminent U-turn on his flagship cut to corporation tax.

The chancellor told the Telegraph that ensuring corporation tax stayed “competitive” remained a “great idea”, but did not rule out increasing the current 19% rate.

In response to a question about how markets “have improved today because they think you’re about to do a U-turn on corporation tax”, Kwarteng said: “Let’s see.”

Speaking in Washington, he also refused to rule out changing other elements of his £43bn package of tax cuts.

“I’m not going to play those games about what’s in or out or any of that. What I’m totally focused on is making sure that we get growth in the economy.”

Updated at 18.16 BSTE

Key events

Filters BETA

Key events (15)Liz Truss (35)Kwasi Kwarteng (21)James Cleverly (7)Rishi Sunak (4)Julian Smith (3)

Alicia Kearns, the new chairwoman of the Commons Foreign Affairs Committee, suggested the government’s tax cuts should be scrapped to calm the markets.

She was asked on LBC’s Tonight With Andrew Marr whether she would like to see the tax cuts reversed.

“Do I think we should be borrowing en masse where our children have to pay this back for decades to come? No, I don’t,” she said.

Pressed by Marr, she stressed that sometimes governments need to take “extraordinary steps”.

“But clearly, in the approach and the manner in which this has been done, that is the issue. Because the markets are not woken, the markets are not left.

“The fact they are not lefty, anti-government, the fact they have been spooked, is something that should be taken incredibly seriously. And often it is about the manner, and the fact is we govern only with the support of the people, and we are not bringing them with us currently.

“We all want Liz Truss to succeed in that the country needs her to succeed. And it is about recognising that actually, sometimes baby steps can result in more meaningful and embraced change than perhaps a bonfire.”

Giles Wilkes, a former special advisor to Theresa May, believes Liz Truss is facing “possibly the most difficult situation a prime minister has been in this side of the Second World War”.

Wilkes, a senior fellow at the Institute of Government, told Sky News: “I can’t think of somebody who’s put themselves into such a position where they’re forced to defend something that nobody else thinks is defensible, and forced to contemplate really tough measures like slashing benefits or slashing important government spending budgets in order to try to keep a policy that nobody else believes can go on the road.

“It’s an incredibly difficult position, but right now, she’s playing for survival stakes. She has to think, ‘what do I need to throw overboard in order to keep things going?’ And if it’s pretty much all the policies announced in the so-called mini budget, then that’s the only thing I can think she can do.”

Wilkes said it is difficult to see how the Conservative party could justify a change of leadership without a general election and a U-turn on the mini-budget “might be the only way the government can actually get out of this self-made disaster” .

The prime minister has been warned not to row back on key social care reforms as this would be to “abandon some of the most vulnerable people in our society”.

Sir Andrew Dilnot said pulling back on promised reforms would be “deeply regrettable”, and that he hopes Liz Truss is the PM who “finally” sees through substantial change for the sector.

Sir Andrew, who led a review into the future of funding social care under the coalition government and was the architect of the original plans for a care cap, said it is “absolutely essential” the current government’s planned reforms while “less generous” than those he set out, go ahead as scheduled.

A Department of Health and Social Care spokesperson said: “Reforming social care is a priority. That’s why we’re backing the sector with £5.4 billion over the next three years to support our planned reforms, bolster the workforce and protect people from unpredictable care costs.

“We are working with local authorities, our charging reform trailblazers, care providers and other stakeholders – including the Local Government Association – to implement the changes and make sure everyone can access the care they need, when they need it.”

Aubrey Allegretti

Liz Truss put adherence to principle at the heart of her bid for the leadership of the Conservative party, often using her support for cutting corporation tax to illustrate a wider for preference for letting people and businesses keep more of their own money.

However, now the policy has been mooted as one of those that could be chopped to help fill a £65bn black hole of unfunded revenue loss in the mini-budget.

These are the pledges Truss and some of her most senior supporters made during the course of her campaign and premiership so far:

Former home Priti Patel has also spoken about her time as a secretary, citing her personal experience of harassment.

She told Sky News: “I’ve had consistent levels of, I think, harassment and abuse.

“So harassment is just intimidation, unkind things that obviously are said to me.”

The BBC has found Gary Lineker in breach of the broadcaster’s own impartiality guidelines after he tweeted about the Conservative party taking money from Russian donors.

The Match of the Day presenter made the comment in February while responding to the then-foreign secretary, Liz Truss. She had said English football teams should not play in the Champions League final then to be held in Russia, due to the invasion of Ukraine.

Lineker quote-tweeted Truss’s demand with the observation: “And her party will hand back their donations from Russian donors?”

Philip Inman

Jim O’Neill, a crossbench peer who worked as a Treasury minister for George Osborne, said Kwarteng should abandon his mini budget and announce the reversal today.

“As tough as it is politically, the quicker they reverse the better. To carry on down this path is not far off insanity,” he told Radio 4.

The problem is that it gets worse by the day,” he said. “Even if the markets are becalmed by the Bank of England’s intervention.”

The former chief economist of Goldman Sachs Asset Management, who is the review of business taxes for the business party, said investors and were suspicious of the government’s sincerity after ministers denied the mini budget had triggered chaos in financial markets.

“They have awaken any (investors) who has exposure to UK interest rates or the pound anywhere in the world. It is not just a bunch of nasty people. It is people who have to deal with commercial realities,” said.

Three options were open to Kwarteng: to reverse all the measures in the mini budget, or to announce benefits cuts and other savings to close the £60bn shortfall in the government’s finances

“Or hope for the best and “wing it”, he said. Which is sort of vaguely what they are trying to do. But the markets could cause chaos and it is slightly frightening that they don’t seem to be aware of that.”

The prime minister’s economics guru Prof Patrick Minford says it would be “insane” to rip up the mini-budget.

He told BBC Radio 4’s PM programme: “It’s really important we don’t do something really stupid at this point.

“Liz Truss’s policies for growth are absolutely right and to be thrown off them by a bit of market turbulence is insane.”

He argued against U-turns, saying the Bank of England “needs to be much more active in its policies of intervention in the gilts market”.

Asked if he had predicted the market turmoil triggered by the mini-budget, the economist said: “Obviously, at the moment, the markets are facing enormous turbulence because of worldwide tightening of money, and so there’s a great deal of nervousness about.

“But I think the way to handle that is to deal with market turbulence in our gilts market directly through QE (quantitative easing) and then to keep the policies going.”

Updated at 18.27 BSTE

Kwasi Kwarteng says ‘let’s see’ when asked about potential U-turn on corporation tax

Kwasi Kwarteng’s response is “let’s see” when grilled about an imminent U-turn on his flagship cut to corporation tax.

The chancellor told the Telegraph that ensuring corporation tax stayed “competitive” remained a “great idea”, but did not rule out increasing the current 19% rate.

In response to a question about how markets “have improved today because they think you’re about to do a U-turn on corporation tax”, Kwarteng said: “Let’s see.”

Speaking in Washington, he also refused to rule out changing other elements of his £43bn package of tax cuts.

“I’m not going to play those games about what’s in or out or any of that. What I’m totally focused on is making sure that we get growth in the economy.”

Updated at 18.16 BSTE

Priti Patel: Market forces could make mini-budget U-turn unavoidable

Former home secretary Priti Patel has become the latest high-profile Tory MP to suggest the government could be forced into a further U-turn over the mini-budget.

In an interview with Sky News, due to be aired in full later, Patel was asked if Liz Truss’s commitment not to raise corporation tax should be reversed to calm the markets.

“There is an irony to this,” Patel said.

“In that market forces will probably dictate some of these changes now.

“The market is going to dictate this, primarily because we want to see stability. Stability is absolutely crucial, for everyone to carry on their lives, for the institutions to function, but actually for the British people to have the stability that they need in their lives as well.

“And by that, as well, I mean mortgages, interest rates and all those crucial, crucial levers.”

Updated at 18.17 BSTE

UK government bonds and the pound rallied amid speculation that Liz Truss’s government could be forced to U-turn on its unfunded tax cut plans.

Pressure on gilts – UK government bonds – also eased as the Bank of England sought to steady market sentiment by increasing its bond-buying activity ahead of a Friday deadline.

According to reports, No 10 and the Treasury are holding talks over whether to abandon more of the Government’s £43 billion tax-cutting plan which could include reversing the decision to cancel planned rises in tax.

Foreign Secretary James Cleverly earlier declined to rule out further U-turns, but insisted the government will “absolutely stick” to its tax-cutting principles.

The prime minister’s official spokesman made clear there will be no further changes.

Julia Kollewe

The number of mortgage defaults are expected to rise in the coming months, according to Bank of England data released on Thursday, while the number of new loans will continue to fall amid warnings that the “golden era” of cheap deals is ending.

The UK central bank’s latest quarterly credit conditions survey paints a gloomy picture, with the number of mortgage deals already falling before the chancellor’s mini-budget on 23 September.

Kwasi Kwarteng’s package of unfunded tax cuts led to chaos for homebuyers, with hundreds of fixed-rate deals withdrawn over the space of a few days, before lenders returned with significantly more expensive deals.

Shadow chancellor Rachel Reeves said that while there were “global factors at play” in the economic crisis it was vital that “in that environment, don’t fan the flames”.

The government are behaving like pyromaniacs, setting ablaze the UK economy,” she told the PA news agency.

“It is ordinary working people who are paying the price for that.”

Asked if chancellor Kwasi Kwarteng was on borrowed time, she said: “The Prime Minister and Chancellor introduced this package of measures together.

“The Prime Minister has been in office for just one month and has already caused so much damage.

“The public are sick and tired of it, they want the Government to think again and to U-turn, and if the Government aren’t capable of providing the leadership the country needs, Labor absolutely is.”

[ad_2]