'What a day': Chancellor admits mini Budget caused 'a little turbulence' after govt U-turn on 45p tax plan

3 October 2022, 16:48 | Updated: 3 October 2022, 18:48

Kwasi Kwarteng said the UK had experienced 'a little turbulence' as a result of his mini Budget
Kwasi Kwarteng said the UK had experienced 'a little turbulence' as a result of his mini Budget. Picture: Alamy/Getty

By Daisy Stephens

Chancellor Kwasi Kwarteng has admitted his mini budget caused "a little turbulence", after over a week of economic turmoil sparked by his fiscal plan.

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Last week the pound plummeted to a record low and lenders pulled mortgages from the market after his plan, which included scrapping the bankers' bonus cap and the top level of tax - the latter of which the government U-turned on 10 days later.

Opening his speech to the Conservative Party conference hours after the change on Monday, Mr Kwarteng said: "What a day.

"It has been tough but we need to focus on the job in hand."

Read more: Britain faces blackout: 'Significant risk' of UK gas supply emergency, energy regulator warns

Read more: 'This is not over': Labour and Lib Dems demand more changes to 'kamikaze Budget' as pound surges after Govt U-turn

He went on: "I can be frank.

"I know the plan put forward only 10 days ago has caused a little turbulence.

"I get it. I get it. We are listening and have listened, and now I want to focus on delivering the major parts of our growth package."

His comments have drawn criticism from opposition parties, with Liberal Democrat Treasury spokesperson Sarah Olney accusing him of making light of the situation facing "the millions of people already facing spiralling mortgage costs".

Following Kwasi Kwarteng's conference speech..

Mr Kwarteng outlined his mini Budget on September 23.

Afterwards the pound went into free-fall and the Bank of England was forced to make a £65 billion emergency intervention to restore order.

The Chancellor defended the U-turn on LBC on Monday - but also failed to rule out further U-turns on his plans.

Speaking on Nick Ferrari at Breakfast, Mr Kwarteng was asked three times if he planned to backtrack on any other elements of his Budget.

"I've said what I've said about the 45p rate and I'm totally focused on delivering the growth plan, on delivering the energy intervention or making sure that the 1p reduction in the basic rate continues," he said.

"And we're totally focused on the growth plan."

Asked the third time if there would be more U-turns, he repeated: "We're totally focused on the growth plan."

Watch: 'I shouldn't have gone to meet hedge fund managers after my mini-budget crashed the pound', Kwarteng admits

At his speech on Monday, Mr Kwarteng defended the plans and said "we couldn't simply do nothing".

"Because with energy bills skyrocketing, a painful Covid aftermath, war on our continent, a 70-year high tax burden, slowing global growth rates and glacially slow infrastructure delivery, we couldn't simply do nothing," he said.

"We can't sit idly by.

"What Britain needs more than ever is economic growth."

Tom Swarbrick gives immediate reaction to Chancellor's speech

Shadow chancellor Rachel Reeves MP said Kwasi Kwarteng's speech showed "a Chancellor and a Tory government completely out of touch, with no understanding on its own appalling record on growth".

"What the Chancellor called a little financial disturbance is a huge economic body blow to working people that will mean higher prices and soaring mortgages," she said.

"That's the Tory economic premium.

"This is an economic crisis made in Downing Street, paid for by working people.

"The Tories have damaged the UK's reputation on the global stage and left us all worse off. The fact the Bank of England had to step in with a £65 billion bailout out with taxpayers' money is deeply shameful.

"They must reverse this Budget and abandon their discredited, dangerous trickle-down approach."

Read more: Nadine Dorries calls for a general election and accuses Liz Truss of not having a mandate for her policies

Read more: James O'Brien reacts to 'humiliating' U-turn by Truss and Kwarteng, saying they've lost credibility 'probably forever'

The Liberal Democrats said the Chancellor's speech will bring "cold comfort" to struggling households.

"Laughing about the turbulence caused by this botched budget is an insult to the millions of people already facing spiralling mortgage costs," said the party's Treasury spokesperson Sarah Olney.

"Kwasi Kwarteng's fiscal failure saw the economy tank and mortgage rates go through the roof, his words will bring cold comfort to struggling families and pensioners.

"This should be his first and last conference speech as Chancellor.

"If he had any integrity left Kwarteng would hand in his notice and apologise to the British people for the damage he has caused."

Updates to follow