Chancellor does not rule out increasing corporation tax when asked about whether government will perform U-turn
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.”
Kwasi Kwarteng’s response was “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.”
The chancellor earlier said his “total focus is on delivering on the mini-budget” in response to speculation about a U-turn on the measures. Kwarteng said he is “not going anywhere”. Liz Truss is on the cusp of putting up corporation tax as part of a Downing Street plan to back down from the huge package of unfunded tax cuts in her mini-budget, sources claim.
Senior Conservatives are holding talks about replacing Liz Truss with a joint ticket of Rishi Sunak and Penny Mordaunt as part of a “coronation” by MPs, according to The Times. Party grandees are understood to be in talks about replacing Truss with a “unity candidate”
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. 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 told Sky News. “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.”
The former Conservative chancellor George Osborne has questioned why Liz Truss and Kwasi Kwarteng would wait till 31 October to perform an “inevitable U-turn” on their mini-budget. Osborne tweeted: “Given the pain being caused to the real economy by the financial turbulence, it’s not clear why it is in anyone’s interests to wait 18 more days before the inevitable u-turn on the mini budget.”
Labour MP Christina Rees has been stripped of the party whip after allegations of bullying her constituency staff, the Guardian can reveal. Rees, who was shadow Wales secretary during Jeremy Corbyn’s time as leader, will now sit as an independent in the House of Commons. It is understood that there will be an internal Labour party investigation into the allegations and Rees, the MP for Neath, will have her party membership suspended until the case is resolved.
Downing Street has refused to rule out the prospect that some government departments could face cuts to their budgets. Overall government spending will continue to rise in real terms, the PM’s official spokesperson said.
The latest YouGov/Times voting intention poll shows Labour maintaining the massive lead they opened up over the Conservatives last month. The figures show the Tories on 23% of the vote (up by one point from the previous poll) to Labour’s 51% (which is down one point).
Labour has pledged to ban fracking “once and for all” as it hit out at suggestions that the government could move to ban solar farms from much of England’s farmland.
The party intends to work with MPs who oppose fracking to force the government to maintain the ban, one of several issues to divide the Conservatives since Liz Truss became leader.
The new administration’s environmental commitments have come under severe scrutiny in recent weeks after lifting England’s fracking ban, in place since 2019 following a series of earth tremors, and giving the green light to the expansion of oil and gas operations in the North Sea.
Ed Miliband, Labour’s shadow climate secretary, will visit Bassetlaw on Friday to meet with the party’s candidate Jo White and local residents to listen to concerns about the potential for fracking in their area.
Labour is working to bring forward an opposition day motion to maintain the current ban, Miliband is expected to tell locals during his visit.
He said: “Labour will stand with communities in opposing the Conservatives’ dodgy plans to impose expensive, dirty, and dangerous fracking on the British people.
“Fracking would make no difference to energy prices, and could risk the health of local communities, nature, and water supplies.”
A senior Tory MP believes it is “premature” for the party to think about getting rid of Liz Truss, amid reports that some Conservatives are holding talks about replacing the prime minister with a joint ticket of former leadership contenders Rishi Sunak and Penny Mordaunt.
The MP told the PA news agency that it would be seen as “completely bonkers to have three prime ministers in one year”.
Anna Soubry, a former Conservative MP, has said it is time for Labour leader Sir Keir Starmer to be prime minister.
In response to a tweet asking “is it time for Rishi”, Soubry, a criminal lawyer, said: “It’s time for #KeirStarmer – he’d be a prime minister we could trust to deliver what we desperately need – stability, competence and honesty.”
It’s time for #KeirStarmer – he’d be a Prime Minister we could trust to deliver what we desperately need – stability, competence and honesty. https://t.co/jIKKtymL4J
Senior Conservatives are holding talks about replacing Liz Truss with a joint ticket of Rishi Sunak and Penny Mordaunt as part of a “coronation” by MPs, according to The Times.
Party grandees are understood to be in talks about replacing Truss with a “unity candidate”.
An MP told the newspaper: “Rishi’s people, Penny’s people and the sensible Truss supporters who realise she’s a disaster just need to sit down together and work out who the unity candidate is.
“It’s either Rishi as prime minister with Penny as his deputy and foreign secretary, or Penny as prime minister with Rishi as chancellor.
“They would promise to lead a government of all the talents and most MPs would fall in behind that.”
Here is a selection of some of Friday’s front pages.
FT UK: @trussliz ready to rip up tax-cut package in desperate bid to save Premiership #TomorrowsPapersToday pic.twitter.com/aiusxbQq4F
I: PM plans tax cut U-turn while @KwasiKwarteng is out of the country #TomorrowsPapersToday pic.twitter.com/5VFa9TzG8k
In the latest round of extraordinary polling, a survey by People Polling for the Daily Telegraph has found Labour’s lead has stretched to a huge 34 points, with Labour on 53% and the Conservatives at just 19%.
In worse news for Liz Truss, just 9% of the public have a favourable view of her.
Prof Matthew Goodwin, the pollster behind the research, told the newspaper [£]: “These numbers mean that Liz Truss is more unpopular than Boris Johnson and Jeremy Corbyn ever were – she is basically in what I would call Prince Andrew territory.”
Liz Truss has bowed to intense pressure from Conservative MPs and the markets by agreeing to redraw her mini-budget, paving the way for a major U-turn on her signature corporation tax cut.
In another serious blow to her authority as prime minister, government sources told the Guardian that a climbdown on the plan to scrap the rise in corporation tax was now “on the table”.
After weeks of defending the proposal, Downing Street officials and ministers are now trying to balance the books after announcing a huge package of unfunded tax cuts.
Read our full story of the day’s events here
The former minister Johnny Mercer has hit out at the government as he shared how his constituents have been impacted by rising interest rates after the mini-budget.
He described the impact on mortgage holders and people seeking to buy a home as “politically unsurvivable”.
He tweeted: “Dozens of these across Plymouth. I want you to know that I get it, that most of us get it, and that we will do all we can to change it.
“Heartbreaking. Unconscionable. Politically unsurvivable. I got into politics to help people like this. Will not stand and watch it burn.”
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 woke, 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.”