The Chancellor addressed the Conservative Party last Monday after scrapping tax-cut plans
Kwasi Kwarteng has dramatically abandoned plans to scrap the 45p tax rate in a major U-turn. The Chancellor insisted he will “focus on the job at hand” and vowed “no more distractions” as he announced his economic policy on Monday at the Conservative party conference in Birmingham. He had initially planned to defend the axing of the 45p rate but withdrew his support last minute, sparking chaos within the markets. He told the party: “I can be frank. I know the plan put forward only 10 days ago has caused a little turbulence. I get it. I get it. We are listening and have listened, and now I want to focus on delivering the major parts of our growth package.
“We need to move forward, no more distractions, we have a plan and we need to get on and deliver it.” Mr Kwarteng defended the Government’s tax-cutting agenda saying Britain needed ‘economic growth’ more than ever. He said: “Because with energy bills skyrocketing, a painful Covid aftermath, war on our continent, a 70-year high tax burden, slowing global growth rates and glacially slow infrastructure delivery, we couldn’t simply do nothing.
“We can’t sit idly by. What Britain needs more than ever is economic growth.” He added: “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. We were faced with a 70-year high tax burden. We were confronted with low growth and the path we were on was clearly unsustainable. So, that’s why we’re cutting taxes for working people.”
Business leaders welcomed Mr Kwarteng’s proposals as they urge the government to continue full-steam ahead in their plans to support SMEs during mass economic uncertainty. SMEs are facing turmoil with rising energy bills and fuel hikes, along with spillover effects of Brexit and the pandemic. Businesses have praised the government’s efforts in reversing the National Insurance hike, as well as capping energy bills under the Energy Bill Relief Scheme from October. However, some are still concerned over the government’s lacklustre efforts to tackle poor payment practises – including the ongoing issue of late payments.
National Chair of the Federation of Small Businesses (FSB), Martin McTague, said: “Focusing on what’s really important is crucial at a time when the cost of doing business crisis is biting deep. The Government must focus on delivering promptly its commitments to help small firms with soaring energy bills and to reverse the hike in National Insurance. When Parliament returns, the legislation needed to implement these two changes must be achieved swiftly, so that the much-needed benefit of them will be felt by small firms by November, as they’re expecting.
“It was welcome to hear the Chancellor re-commit to scrapping changes to IR35 rules, cancelling a planned rise in Corporation Tax, and permanently increasing the Annual Investment Allowance. It is right to bring forward supply side reforms to get growth and support small firms. There remains scope for further support by tackling poor payment practices by bigger businesses towards their smaller suppliers and contractors. Strong, clear action on this would protect cashflow and the survival of small firms, while not incurring a cost to taxpayers.
“Many headwinds remain, not least inflation and rising interest rates. With the right conditions, small business entrepreneurs are the drivers of economic growth, and therefore it is vital that stringent efforts are made to ensure an economic climate in which they can invest, innovate and grow.”