More U-turns as Tories try to calm nervous markets

The British government will rush through plans to balance the books later this month to try to calm the markets.

Chancellor of the Exchequer Kwasi Kwarteng at the Conservative Party conference on Monday. Picture: Getty Images

The British government will rush through plans to balance the books later this month to try to calm the markets after its Chancellor had to abandon the government’s abolition of the top rate of income tax.

In a second change of heart in 24 hours, Kwasi Kwarteng brought forward the date of his medium-term fiscal plan, which will be accompanied by an independent assessment from the Office for Budget Responsibility (OBR). The announcement was originally scheduled for November 23 but Mr Kwarteng will now publish it this month amid pressure for the government to demonstrate fiscal responsibility.

The Chancellor delivered a defiant speech to the Conservative Party conference in Birmingham on Monday hours after a U-turn over the 45 per cent tax rate in the face of opposition from Conservative MPs. He promised that there would be “no more distractions” as he jokingly acknowledged the chaotic fallout from his mini-budget in a speech received with limited ­enthusiasm from party members. “What a day,” he said.

He defended the underlying economic theory behind the mini-budget. “It is an important principle that people should keep more of the money they earn,” he said. “I don’t need to tell you that. That isn’t radical. That isn’t irresponsible.”

Mr Kwarteng also vowed to cut public spending as he dismissed the turmoil on the markets as a “little turbulence”.

The government’s economic approach would be “backed by an iron-clad commitment to fiscal discipline”. “We will have a strong fiscal anchor with debt falling as a proportion of GDP over the medium term,” he said.

As recently as Friday, Kwarteng dismissed Tory MPs ­demanding that his fiscal plans be brought forward, with allies insisting that he would not allow the OBR to release “half a forecast”. Ministers argued that the watchdog had to take account of the effect of the government’s supply-side reforms to boost growth, with announcements planned for deregulation of planning, childcare and environmental laws.

After his speech Mr Kwarteng attended a fringe event hosted by the Policy Exchange think tank, where he was unapologetic about his handling of the economy. “Beyond the hullabaloo about the statement, many businesses came to me and said you’re doing the right thing,” he said. “I’m a pro-business Conservative and I’m totally unashamed about that.”

A spokesman for Prime Minister Liz Truss said the Chancellor retained the full confidence of his leader.

Business Secretary Jacob Rees-Mogg said: “Of course he shouldn’t resign,” insisting the change in policy was not a “handbrake turn”.

The Times