So, no abolition of the 45p rate after all…

45p tax cut U-turn: Now scrap corporation tax cut and bankers bonuses too

Responding to Kwasi Kwarteng’s U-turn on abolishing the 45p rate of tax, Liberal Democrat Leader Ed Davey said:

This humiliating U-turn comes too late for the millions seeing their mortgage rates soar because of this botched budget.

The Conservatives must now cancel their conference and recall Parliament, to sort out this mess for the sake of the country.

The corporation tax cut and the bankers bonus rise need to be scrapped and we need a clear plan to help mortgage borrowers cope with eye-watering interest rate rises. It can’t be right that big banks and huge companies will see their taxes slashed while people struggle to pay the bills.

Every day it becomes clearer this Conservative government has no plan, no clue and is completely out of touch.

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24 Comments

  • So, the proposed abolition of the 45% tax rate was a “distraction”, not “wrong”! Presumably that also applies to other Tory policies.

  • Barry Lofty 3rd Oct '22 - 9:39am

    Quite right Ed, this shambles of a government have lost all credibility even if it had any to begin with, we badly need a government that understands how the majority of the population have to cope with life in these very troubling times not just the wealthy Tory donors who spare cash trickles down into their party funds.

  • Helen Dudden 3rd Oct '22 - 10:03am

    Politics is heading in a even less credible direction.

    I personally believe in the ending of the House of Lords in it’s present state. The subject of expenses needs reviewing as with the alcohol consumption and the subsidised restaurants.

    I don’t know how any the decent MPs can make a voice heard as one dire situation follows another.

    The NHS is going further down a large hole, there should have been air cleansing units in schools. As school returns it starts the cycle of the flu again.

    I believe if you are unwell then staying home is the answer until well enough to return.

    School meals is still on the list, does anyone remember the baby boomers had small bottles of milk every day. Helps the farmers, and helps our children stay healthy. There should be options for those dairy intolerant.

    The rich get richer and the poor get poorer, that’s now the norm.

    Much time has been wasted with lock downs for some, and parties for other.

  • Paul Barker 3rd Oct '22 - 10:06am

    The petition calling for an Election has passed 450,000.

  • Nigel Jones 3rd Oct '22 - 11:36am

    I understand Ed Davey saying Parliament should be recalled to debate the budget proposals immediately, but I doubt if Kwasi would have done a speedy U-turn on income tax if there had not been a Conservative party conference. Truss and Kwasi did not even consult the cabinet, so it is by senior party members meeting in Birmingham that they were able to put on the required pressure.
    Did you notice also that when interviewed about it, Liz Truss did the dirty on Kwasi by saying it was his decision alone ? She is turning out to be worse in character than Boris.

  • Chris Haigh 3rd Oct '22 - 11:55am

    With regard to the next urgent subject
    that Truss has changed policy on – net cero.n carbon emission and her of directive to King Charles 111 that he is not allowed to attend COP27 in Egypt. Surely he must go to represent Australia or Canada for instance ?

  • The problem is that this does not help with stabilising the damage done, with the markets and investors. If anything it causes more constenation. If the markets aren’t sure which way policy is going to be conducted, by it lurching from one extreme to another, this will deter investment not only in the market, but in the economy.

    It also creates further problems for the BoE. How can they manage their monetary policy mandate, if they are going to be placed in the same predicament of suddenly having to step in with emergency measures.

    None of the current measures or indeed this chaotic Government policy, is going to be taken seriously if there is going to be sudden changes in the reversal or implementation of policy.

    Ultimately, it is going to be the public who suffer even more, piling on additional worry and stress. How can people try to budget and sort out their cost of living during this crisis, with such chaotic policy which appears to be done on the hoof!

  • John Roffey 3rd Oct '22 - 12:27pm

    A general election is required so that a new government can be formed – one supported by most voters. However, this clearly will not be the case because the revision on policy with regard to the top rate of tax, made by Truss, is expressly aimed at avoiding one at present – in the hope that she will be able to improve her Party’s prospectives by the time she is obliged to call one.

    Unfortunately, the indications are at present – that once one does take place – the Lib Dems will have fewer seats than they have now.

  • Barry Lofty 3rd Oct '22 - 1:07pm

    Hopefully the massive lead for Labour in recent polls is a reflection of the utter disgust with the Conservatives that the electorate feel at the moment, but maybe the Lib Dems can enjoy success in the seats where they are well placed to remove the Tories and gain some more MPs whenever that election happens, at least that should be the aim, we can only hope??

  • Nick Collins 3rd Oct '22 - 1:34pm

    Has anyone else noticed how frequently Liz Truss begins a sentence with the words “As Prime Minister…”? Does she feel the need to remind herself, or us, that, for the time being, she holds that position?

  • Nick Collins: Yes: Perhaps to morph into “When I was Prime Minister” like Dr Death’s “when I was Foreign Secretary”

  • John Roffey 3rd Oct '22 - 2:46pm

    @ Barry Lofty “but maybe the Lib Dems can enjoy success in the seats where they are well placed to remove the Tories and gain some more MPs whenever that election happens, at least that should be the aim, we can only hope??”

    My main purpose in making this comment relates to the fact that the Party does have some time to review the policies under which it intends to fight the next GE. There is good evidence that Labour’s current popularity is due to their introduction of policies to tackle the climate crisis.

    It does seem likely that the experiences of very hot weather and drought during the summer has severely impacted on the majority of voters. This view was supported by a Guardian article that showed 70% + of UK voters were very concerned about global warming (both of the left and right) – I am sorry I cannot find the article at present. If this is the new reality – it is likely that the Party will have difficulty winning and/or holding any UK seat unless it adapts it policies accordingly.

  • John Roffey 3rd Oct '22 - 2:56pm

    Perhaps Churchill’s hierarchy of nation/constituency/party has been superseded, for many, by planet/nation/constituency/party!

    This will need to be the case – if the issue is to be resolved in the time available.

  • @ John Roffey. I’m afraid a more accurate version of Churchill’s hierarchy (as seen by the good burghers of Dundee in 1922) would have been : “Ego, Self interest, Nation, Constituency….. and a long way behind them, Party”.

  • Lorenzo Cherin 3rd Oct '22 - 4:46pm

    Yes Nick, and “I this, I that,” unless unpopular, when it is “His!” responsibility! , ie someone else!

  • Paul Barker 3rd Oct '22 - 5:55pm

    Two Polls today confirming the general picture –
    Labour 50%
    Con. 24% & falling
    Libdems 10%

    While we are down on the last Election, The Tories are down a lot more so we should get more Seats. Tactical Doing might give another 20 MPs.

  • George Thomas 3rd Oct '22 - 8:39pm

    Hugo Gye, political editor of The Independent, in article and tweet on 30/09/22 said that policies apart from top rate tax cut and bankers’ bonuses polled well with net support but even this is dangerous, in my opinion.

    In getting a strong reaction to top rate tax cut with u-turn they’ve been able to get through banker’s bonuses, corporation tax cut, tightening rules around UC claimants even further, stamp duty cuts and NI rise reversal.

    They’re still the party which demonise benefit claimants (majority in work) and are set to pay for tax cuts for wealthiest with government budget cuts – a rerun of austerity having already stripped public services to the bone. It’s also been pointed out that raising corporation tax increases risk that profit making companies avoiding re-investment as they’re now able to keep more of the profit.

    I’m not smart enough to say what the correct step is now but am confident in being able to point out that i) Tory budgets since 2012 (some propped up by LDs) have made UK so, so weak and unable to deal with further world-wide crisis, ii) Jacob Rees Mogg attitude towards climate change will make UK less able to deal with increasing impact of climate crisis and ii) if Liz Truss wants to run on substantially different position to the one Boris Johnson won a mandate for, then she should call for early general election.

  • John Roffey 3rd Oct ’22 – 2:46pm:
    This view was supported by a Guardian article that showed 70% + of UK voters were very concerned about global warming (both of the left and right) – I am sorry I cannot find the article at present. If this is the new reality…

    Perhaps this Guardian editorial?…

    ‘The Guardian view on public attitudes to the climate crisis: burning for change’ [July 2022]:
    https://www.theguardian.com/commentisfree/2022/jul/19/the-guardian-view-on-public-attitudes-to-the-climate-crisis-burning-for-change

    Government data shows that three-quarters of UK adults are worried about climate change and two-thirds feel “negative” about the future of the environment. This is not a view confined to the left of politics, with polling by the Conservative Environment Network showing that three-quarters of Tory “red wall” voters are similarly concerned.

    However, the new reality is that the globe has not been warming for over six years…

    Climate at a Glance: Global Land and Ocean:
    https://www.ncei.noaa.gov/cag/global/time-series/globe/land_ocean/all/7/2016-2022?trend=true&trend_base=10&begtrendyear=2016&endtrendyear=2022

    2016-2022 Trend (-0.14˚C/Decade)

  • Jeff 4th Oct ’22 – 10:25pm..

    Yet another of your ‘selective’ graphs…Change the period start to 1997 (25 years) and look again at the ‘smooth’, steady increase..

  • The present flat or falling GDP has come about after a decade of extreme austerity, cutting below the bone of public services, in doing so it cut the economy which is partly made up of government expenditure. Pound notes do not have written on them “Bad Pound from Public sector” or Good Pound from Private Sector” as Osborne inferred. They are the same worth.
    If we have another round of cuts in spending, that money will stop being re-spent and re-spent until saved or sent overseas by 3.5 times on average (multiplier). If it instead goes to the richest 1%, most of it will just go straight into bank accounts to sit there ( low marginal propensity to consume), or play a bit part in an international jet setting lifestyle. The only other likely trigger might be bidding up property prices a bit more as happened to Mayfair property prices following the bank bosses paid out of Brown’s no strings bail outs.
    Most politicians already know all this but the Tory Party knows which side their bread is buttered on and they want more butter from rich donors.

  • Kwarteng’s growth at all costs approach, even if it works ( it would not) , would be pointless to the vast majority, if the growth was in bankers bonuses, the London finance sector and billionaire’s bank accounts. That appears to be the strategy and not even the world’s finance people think it will work. The public certainly don’t.

    Trickle down does not work except in reverse. The Laffer Curve has been mis-used incredibly by the right in claiming that low taxes increase revenue. Instead, companies fiddle the books slightly to delay announcing profits to the following year at the new lower rate, which gives the impression of a boost, but it’s just a delay.

    The big example given for tax cuts and booms was via Reagan as Republican Governor of California. He cut taxes and for a while there was a boom in the 70’s, but after he left to become President, the state ran out of money, went bankrupt and sacked thousands of staff. They always conveniently forget the last part.

  • expats 5th Oct ’22 – 8:20am:
    Change the period start to 1997 (25 years) and look again at the ‘smooth’, steady increase.

    There is no “‘smooth’, steady increase”. From 1997 to 2014 there was a slight rise which may not even be real due to changes in measurement location (increasing Urban Heat Island effect) and instrumentation accuracy (e.g. the repainting of Stevenson screens with modern latex paints which absorb much more Infrared than the originally specified natural lime whitewash, potentially adding 0.4-0.5˚C to recorded temperatures). Following that period, the temperature rose steeply for a year, coinciding with a strong El Niño, before edging back down at a trend rate of -0.14˚C per decade. This is markedly different to the rise in average global temperature seen in the last decades of the 20th. century. A near seven year period of cooling is not consistent with the hypothesis that global warming is caused wholly or mostly by a rise in CO2 level (which has continued to rise at an increasing rate). Climate models based on that hypothesis predict rises far in excess of observed reality. The models also predict polar temperatures will rise much faster, but recently the reverse has been happening…

    ‘Antarctic interior posts coldest April-to-September on record’ [October 2021]:
    https://www.weatherzone.com.au/news/antarctic-interior-posts-coldest-april-to-september-on-record/535178

    As the BBC might say if it was impartial and uncensored: other theories are available.

  • John Roffey 5th Oct '22 - 4:18pm

    climate.nasa.gov

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