By Stefan Boscia
Number 10 is actively considering whether to U-turn on more of the tax cuts in the government’s mini-Budget, just hours after Liz Truss’ spokesperson said no changes are on the cards.
Truss’ spokesperson today said there would be no cancellation of any more of the government’s tax cuts and that the timetable for implementing them has also not changed.
However, multiple media outlets have reported that active discussions are under way in Number 10 over shelving more of the planned tax cuts, after Truss and chancellor Kwasi Kwarteng U-turned on cutting the top rate of Income Tax last week.
It has been speculated this could mean changing course and sticking to original government plans to increase Corporation Tax for the UK’s most profitable companies.
It comes as a growing number of Tory MPs privately and publicly are calling for a row back on the mini-Budget to calm financial markets.
Number 10 sources told The Sun that a “rise in Corporation Tax is on the table”.
Tory MP and Treasury Select Committee chair Mel Stride yesterday said Truss and Kwarteng would have to “row back” on their tax cuts to satisfy markets.
Labour shadow chancellor Rachel Reeves today said that “today’s mess shows the utter chaos the government is in”.
“Labour has said repeatedly that they need to reverse the kamikaze budget. This is now urgent as the BoE’s intervention ends tomorrow,” she said.
Long-term bond yields have started to fall this morning, meaning that more investors are starting to buy government gilts, with speculation that this is due to market expectations of a U-turn.
The price of government borrowing has soared since the mini-Budget less than three weeks ago, with the markets spooked by the government’s plan to fund £100bn of energy support spending and £43bn of tax cuts by borrowing more.
It was expected that Kwarteng would announce spending cuts to balance the books and bring down debt long-term, however this is looking politically untenable.
Truss caused surprise yesterday when she told the House of Commons she was “absolutely” committed to not cutting spending.
Talk has shifted among Tory MPs about the possibility of removing Truss from office, just 38 days into her premiership.
Foreign secretary James Cleverly today said that “changing the leadership would be a disastrously bad idea, not just politically but economically”.
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