Truss scraps plans to cut corporation tax

The prime minister has abandoned her key policy to cut the rate of corporation tax to 19%, after sacking her chancellor. After announcing the departure of Kwasi Kwarteng earlier today, Liz Truss gave a brief statement to the press in Number 10 to confirm that Jeremy Hunt would replace him as chancellor. Truss said: “The way we are delivering our mission right now has to change. We need to act now to reassure the markets of our fiscal discipline. I have therefore decided to keep the increase in corporation tax that was planned by the previous government.” However she was clear that she was still committed to her policy reforms. “The mission remains the same… But ultimately we also need to make sure that we have economic stability, and I have to act in the national interest.” The prime minister had previously said she and the sacked chancellor were “in lockstep”. Today Truss said she had “taken the difficult decisions” and acted “decisively” in the “national interest”. She implied that she still believed the tax cut was the right move, but said the mini-Budget “went further and faster” than the markets could handle. “We recognise because of current market issues, we have to deliver the mission in a different way. That is why we are absolutely committed to achieving that stability in what is a very difficult time globally.” She added that the new chancellor, former health secretary Jeremy Hunt, shared her vision, despite him backing Rishi Sunak in the leadership election. Hunt was also briefly in the race, advocating a cut in corporation tax to 15%. She said the supply-side reforms, which include a “reset” of the planning system, would still be delivered. Commenting on Hunt’s appointment, Melanie Leach, chief executive at the British Property Federation, told EG: “Clearly the events of the past couple of weeks had made the chancellor’s position extremely difficult. Real damage is being done to the economy and markets and we now urgently need clear policies. In Jeremy Hunt we have somebody who has resolved various crises, and hopefully he can stabilise the situation.” To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews Photo © James McCauley/Shutterstock