JUANA SUMMERS, HOST:
Just days into his new job last month, Britain's finance minister announced a series of tax proposals that would usher in what he called a new economic era for Britain. That plan prompted a major sell-off in the country's currency and its government debt, causing havoc for U.K. pension funds and mortgage lenders alike. But the finance minister and his boss, Prime Minister Liz Truss, refused to back down until today, as Willem Marx reports.
WILLEM MARX, BYLINE: Finance Minister Kwasi Kwarteng has changed direction by cancelling an element of his plans that would have seen the country's highest earners enjoy a 5% cut to their tax burden, a small part of a much larger financial stimulus package that had proved politically unpalatable, with the wealthiest retaining more of their wages as the country's poorest are seeing their pay struggle to keep up with spiraling inflation. Nevertheless, Liz Truss appeared on a top political talk show Sunday morning and was asked by the BBC's Laura Kuenssberg if she was still absolutely committed to abolishing the top tax rate for the U.K.'s wealthiest people.
(SOUNDBITE OF TV SHOW, "SUNDAY WITH LAURA KUENSSBERG")
LIZ TRUSS: Yes. And it is part, Laura - it is part of an overall package of making our tax system simpler and lower.
MARX: Last month it was markets reacting badly to the unusual dearth of details in the government's overall proposals. Since then, it's been members of Truss' own Conservative Party bashing the top tax rate idea. One senior former minister called it a, quote, "display of the wrong values." Even so, last night, a pre-released version of Kwarteng's planned speech to the annual Conservative Party conference included an urge to, quote, "stay the course on his tax cutting plans." This morning, he performed what Britain's political press likes to call a screeching U-turn. During a radio interview, he said he would no longer cut that top rate of tax.
(SOUNDBITE OF ARCHIVED RECORDING)
KWASI KWARTENG: My job is simply to deliver an ambitious set of policies, and I'm very proud of that. And I've listened on the 45p rate. I think it was a huge distraction on the growth plan, and that's why I've decided not to proceed with its abolition.
MARX: This climbdown constitutes a major challenge to the stability of Truss' new government, showing critics both inside her own party and among her opponents that she can succumb to pressure, public or parliamentary. For NPR News, I'm Willem Marx in London.
(SOUNDBITE OF KACEY MUSGRAVES SONG, "SLOW BURN") Transcript provided by NPR, Copyright NPR.