Kwarteng insists no more mini-budget u-turns despite claims government ‘may raise corporation tax’
13 October 2022, 15:24
The government will not reverse any more policies from the mini-budget, Kwasi Kwarteng has insisted, despite claims that the corporation tax could go up next year.
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Speaking in Washington, chancellor Mr Kwarteng said: "My total focus... is on delivering on the mini-budget and making sure that we get growth back into our economy.
"That's the central prize, that's the main focus of my job," he said, in the middle of talks with the International Monetary Fund (IMF).
Shelagh reacts to Kwasi: 'It's excruciating!'
His comments echoed an earlier statement by the Prime Minister's spokesperson, who said that Liz Truss remained committed to the mini-budget.
Asked if the Prime Minister promised there would be no further reversals, the spokesperson said: "Yes, and obviously as you know the date for the medium-term fiscal plan has been brought forward."
The mini-budget led to a mass sell-off of the pound, leading to widespread criticism of the government and causing the Bank of England to raise interest rates, causing major worry for mortgage holders and threatening damage to the broader economy.
The government has since rowed back on a key pillar of the mini-budget - the plan to cut the 45p top rate of income tax - in the face of fierce criticism.
Top economic think tank the Institute for Fiscal Studies has told the government it needs to find £62 billion in spending cuts if it wants to balance the books following the mini-budget.
But Ms Truss said the government would not make any cuts to public spending in Prime Minister's questions on Wednesday.
But the government is considering pushing up the top rate of corporation tax next year in yet another u-turn on the mini-budget, according to reports.
Ms Truss' pledge to get rid of former chancellor Rishi Sunak's planned tax hike from 19% to 25% was a key part of her leadership campaign against Mr Sunak.
But the Sun reported this promise could be scrapped, although corporation tax would remain lower than 25%.
A source told the paper: "The PM wants to keep the mini budget plan intact but is of course committed to making sure the numbers add up on the 31st."
It came as opposition parties slammed Ms Truss and Mr Kwarteng's "kamikaze" mini budget on Thursday.
Labour's 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.
"Labour has said repeatedly that they need to reverse the kamikaze budget and restore confidence.
"This is now urgent as the Bank of England's intervention in the markets ends tomorrow. The Tories cannot allow the chaos caused by their mini-budget to continue any longer."
The Liberal Democrats went further than demanding a u-turn, calling for Mr Kwarteng to resign.
Leader Ed Davey said: "This U-turn would come too late for many struggling families facing mortgage misery.
"The only way to restore credibility is for Kwasi Kwarteng to resign or be sacked. This Chancellor has done enough damage and needs to go.
"His botched budget then needs to be scrapped altogether and replaced with a fair and responsible plan, including emergency support for mortgage borrowers bearing the brunt of this Conservative chaos.
Shelagh Fogarty slams Liz Truss' claims of helping the public
Speaking after her talks with Mr Kwarteng on Thursday, IMF chief Kristalina Georgieva said that policy should "be led by the evidence".
She said: "Our message to everybody, not just the UK, is that at this time, fiscal policy should not undermine monetary policy."
She said that "if it does, the task of monetary policy becomes only harder", as it can increase "rate-tightening conditions".
"Don't prolong the pain - make sure actions are coherent and consistent," she said.
"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."
Meanwhile, Ms Truss is as unpopular now as John Major was after Britain crashed out of the European Exchange Rate Mechanism, a crisis of the pound in 1992, according to pollster Sir John Curtice.
He told the BBC: "She's got two problems. One is she isn't really liked. Her personality is not one that warms to the general public.
"And, secondly, now she is regarded as incompetent."
