‘Let’s see’: pressure builds for No 10 U-turn on corporation tax
The clamour among Conservative MPs for a third U-turn by Liz Truss started the same as the others: one MP begins as an outrider, backed by some party veterans or ex-cabinet ministers, and the question catches alight across broadcasters who ask every MP they see. Soon enough, it is received wisdom.
Most MPs who are squeamish about deposing their third prime minister had hoped that they would see change in the markets and contrition from No 10 and 11 after the U-turn on the 45p rate. Over the course of the past week, it has been clear to them that will not happen.
It has also become evident to senior officials in No 10 they are now in too tight a corner to produce a medium-term plan on 31 October that gives a credible blueprint of how the unfunded tax cuts can be squared. Further cuts to departmental budgets are constrained by pledges to ringfence health and to increase defence spending.
Major supply-side reforms to boost growth must somehow be bold enough to have a material effect on growth but palatable enough to get through the parliamentary party. Workplace, environmental and planning changes have all already come under fire, been watered down or been torn up before being announced.
By Monday night, officials had begun making the case that the major borrowing commitments would need to be reviewed – at the very least. Corporation tax is the best plan to ditch to avoid charges of hitting working people again.
But reversing on corporation tax would be a significantly bigger humiliation for Truss than the 45p U-turn. This was not a random rabbit out of the hat. This was a key plank of her leadership pitch.
The chancellor, Kwasi Kwarteng, flew to Washington for the International Monetary Fund gathering, temporarily out of the
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