‘Let’s See’: Kwarteng Sounds Resigned To Raising Corporation Tax After All

The chancellor appears poised for a second major U-turn.
Kwasi Kwarteng's job could soon be untenable.
Kwasi Kwarteng's job could soon be untenable.
Aaron Chown via PA Wire/PA Images

Kwasi Kwarteng appeared tantalisingly close to a second major U-turn as chancellor as he sounded resigned to having to hike corporation tax.

Following the market turmoil caused by his mini-budget, Kwarteng was asked by the Telegraph newspaper about the expectation from financial markets that the government could ditch the plan not to increase corporation tax in order to demonstrate a commitment to balancing the books.

“Let’s see,” he reportedly said.

Earlier, the chancellor said he was “totally focused” on delivering the tax-cutting plans, which are aimed at increasing UK economic growth.

Reports have suggested talks are under way between No 10 and the Treasury on abandoning elements of the £43 billion tax-cutting plan, including the commitment to axe the planned increase in corporation tax.

Kwarteng has already performed a humiliating reversal on his plan to abolish the 45p tax rate for the highest earners, and a second volte-face would make his job increasingly untenable.

Downing Street said “work is ongoing between the chancellor and the prime minister, as you’d expect, ahead of the medium-term fiscal plan” but a spokesperson refused to be drawn on the nature of the discussions or the possible scrapping of the corporation tax commitment.

Kwarteng, in Washington for the International Monetary Fund’s annual meeting, was repeatedly asked by broadcasters about the prospect of a U-turn and did not explicitly rule it out.

He insisted “our position hasn’t changed”, adding: “I will come up with the medium-term fiscal plan on October 31, as I said earlier in the week, and there will be more detail then.”

Asked if a corporation tax U-turn was on the cards, he said: “What I’m totally focused on is delivering on the mini-budget.”

With talks on ditching his plans rumoured to be taking place in London while he was on the other side of the Atlantic, Kwarteng insisted his position was safe.

Asked if both he and prime minister Liz Truss would still be in office in a month, Kwarteng said: “Absolutely 100%. I am not going anywhere.”

He told broadcasters: “I speak to No 10, I speak to the prime minister all the time. We are totally focused on delivering the growth plan.”

Former chancellor George Osborne suggested Kwarteng should not delay until his October 31 statement before making the “inevitable” U-turn on his plans while former home secretary Priti Patel became the latest Tory MP to suggest that the government could be forced into a reversal.

She told Sky News: “Market forces will probably dictate some of these changes now.”

The scale of the backlash to the mini-budget has led to speculation that the prime minister’s own position could also be in jeopardy.


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