Chancellor Kwasi Kwarteng said the UK government has a plan to “get Britain moving” in a speech to Conservatives on Monday aimed at restoring his authority, hours after backtracking on a key proposal to cut taxes for the country's highest earners.
Addressing the audience in Birmingham, he acknowledged it had been a “tough” day but promised there would be no more distractions.
Downing Street said Prime Minister Liz Truss — who was in the audience for the speech — continues to have confidence in Mr Kwarteng, despite him admitting there was “humiliation” in the change of policy. The reversal was widely considered a desperate bid to avert a Tory rebellion over the strategy.
Mr Kwarteng told activists: “What a day. It has been tough but we need to focus on the job in hand.
“We need to move forward, no more distractions, we have a plan and we need to get on and deliver it.”
He added: “I know the plan has caused a little turbulence,” then repeated a phrase he used when first announcing the about face: “I get it. We’ve listened.”
Mr Kwarteng was delivering a speech that could define his political career, trying to win over the Tory faithful after his catastrophic first step as chancellor sent the pound plummeting and rattled the FTSE, handed the opposition Labour party a 33-point poll lead, outraged voters and MPs, and led one senior Tory to suggest Ms Truss should call a general election.
The pound had surged higher in overnight trading into Monday as reports surfaced that the government would drop the decision, and then remained steady throughout the day.
Sterling hit $1.13, matching levels before the mini-budget.
The market turmoil following Mr Kwarteng’s mini-budget had pushed the pound to an record low of $1.03.
The blue-chip FTSE 100 and the FTSE 250 mid-cap indexes rose 0.2 per cent and 0.7 per cent, respectively, on Monday.
Early on Monday, he performed a screeching about face by shelving the plan to abolish the top rate of tax.
Mr Kwarteng acknowledged that the desire to scrap the 45 per cent tax rate on earnings of more than £150,000 ($168,014) in a move to be paid for by borrowing had become “a distraction” and a source of widespread criticism.
Hours later, Mr Kwarteng used his speech to defend the government’s plan to cut taxes in the search for economic growth.
The chancellor is still committed to taking 1p off the basic rate of income tax, reversing April’s increase in national insurance and scrapping the planned increase in corporation tax.
He told the conference: “While we all believe in growth, we as Conservatives also believe that it is an important principle that people should keep more of the money they earn.
“I don’t need to tell you that. That isn’t radical, that isn’t irresponsible. It is a deeply held belief that we all share as Conservatives.”
The about-turn came fewer than 24 hours after Ms Truss said in a television interview that she resolved to stick to the policy, but acknowledged it could have been communicated better. She also said she had not discussed the plan with the rest of her Cabinet.
The government had resisted backing down in the face of criticism from the International Monetary Fund and a £65 billion emergency intervention by the Bank of England to restore order.
However, the prime minister and chancellor had been under growing pressure, including from senior Tory MPs, to back down.
As the Conservative Party conference began in Birmingham on Sunday, some Tories publicly voiced their concerns.
Former Cabinet members Michael Gove and Grant Shapps, who had supported Rishi Sunak in the recent leadership race, expressed their opposition to the cut, calling it “tin-eared” as it benefited the richest at time when lower earners were facing increased bills.
They said Ms Truss would struggle to get the policy through Parliament.
On Monday morning, Mr Kwarteng tweeted: “From supporting British business to lowering the tax burden for the lowest paid, our growth plan sets out a new approach to build a more prosperous economy. However, it is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country.
“As a result, I'm announcing we are not proceeding with the abolition of the 45p tax rate. We get it and we have listened.
“This will allow us to focus on delivering the major parts of our growth package.”
Ms Truss retweeted the chancellor’s message, reiterating that they had heard people’s concerns and were determined to focus on building a high-growth economy.
On Monday, Mr Shapps said the decision to abandon the plan was sensible and inevitable.
He was on air on BBC Breakfast when Mr Kwarteng confirmed the decision and on hearing the statement said: “Those are exactly the right words. I actually saw him last night. I encouraged him to say, ‘look we understand, we get this, sometimes you just get things wrong’.
“This was a mini-budget which was done incredibly quickly … I’m very pleased to see him acknowledging that they understood it was the wrong move and fixing that problem.”
Mr Shapps tweeted that he “strongly welcomed” the scrapping of the plan, calling the decision “sensible and pragmatic”.
“Conservatives want lower tax, but let's show our energy price cap and other policies are on [the]side of consumers rather than borrowing to cut high earner taxes first,” he said in a tweet.
Former Cabinet minister Nadine Dorries went as far as to suggest a general election should be called amid Tory party infighting.
Ms Dorries, a staunch ally of Boris Johnson, said there was “widespread dismay” at Ms Truss for ditching key parts of her predecessor’s administration’s agenda, saying three years of work “has effectively been put on hold”.
“No one asked for this,” she tweeted. “C4 [Channel 4] sale, online safety, BBC licence fee review, all signed off by Cabinet all ready to go, all stopped.
“If Liz wants a whole new mandate, she must take to the country.”