U-turn like no other - but Chancellor convinced he's on right road

Kwasi Kwarteng has ditched plans to scrap the top rate of tax.

Colin Mackay: I’ve never seen a U-turn like Kwasi Kwarteng’s at Conservative conference Flickr

I’ve been to more than a few party conferences over the years, but I’ve never seen a U-turn like today.

Ten days ago, the rabbit out of the Chancellor’s hat, in his not-so-mini budget, was scrapping the additional tax rate for those earning over £150,000.

The markets crashed, with the pound hitting a record low; mortgages vanished while mortgage rates and repayments soared.

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This morning, Chancellor Kwasi Kwarteng ditched his plans to scrap the top rate of tax after it became clear at the Conservative conference in Birmingham that enough backbenchers would rebel to stop it getting through a Commons vote.

So, in his Conference speech this afternoon, the Chancellor admitted he’d had a “tough day” and his plans had caused a “little turbulence”, but he said the government had listened and was listening.

Twice he talked of economic discipline; language aimed at reassuring the markets, although it is still a largely unfunded package of tax cuts. There was no talk of spending cuts or not raising benefits in line with inflation, but they’ve still not been ruled out.

There was still lots of talk of growth, that is the be all and end all for this Conservative government. Kwasi Kwarteng really, really wants economic growth, although his first attempt seems to have the opposite effect. He is convinced that the rest of his plans will deliver.

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And the Prime Minister Liz Truss will be hoping he is right because his opening effort has not only hit the economy and home ownership, it has also hit the Conservative Party in the polls.

Black Wednesday in 1992 destroyed the economic credibility of John Major’s government. It never recovered and led to Tony Blair’s landslide Labour victory in 1997. The polls point to a similar scenario at the next general election. That could still be two years away, but the Chancellor probably has less than two months to turn this round when he delivers his next Budget address to MPs in November.

Today’s speech, at least, gave him a chance of lasting that long in the job.