The government has reversed course on proposals to eliminate the 45p income tax rate for wealthier incomes.
The ideas, which were just presented ten days ago, had created "a big distraction on what was a solid package," according to Chancellor Kwasi Kwarteng, who spoke to the BBC.
I get it, we just talked to folks and listened to them, he continued.
Following criticism from several Tory MPs, the decision represents a humiliating retreat for Prime Minister Liz Truss.
Ms. Truss stated on Sunday that she was committed to the policy.
As part of a package of tax cuts, it was announced that the 45p rate, which is paid by individuals earning more than £150,000 annually, will be eliminated.
Chris Mason: People won't forget the U-turn on the 45-p tax rate
According to Mr. Kwarteng, the idea would "drown out a solid package" that included reductions in the basic rates of income tax and company tax as well as support for energy bills.
When asked if he owed anyone an apology, he responded: "People have been heard. And yes, that does contain humility and repentance. And I'm glad to have it."
He continued, saying, "We got it wrong, and we are not going to move forward with the repeal of the rate."
The prime minister chose not to proceed with the rate's removal, he stated when asked how the decision was made.
Nevertheless, when asked if it was her U-turn, Mr. Kwarteng responded: "No, we talked together, I said this is what I was planning to do, and we agreed together, we were in agreement that we wouldn't go with the abolition of the rate."
When asked if he had thought about leaving, he responded, "Not at all."
The prime minister, according to Downing Street, still has faith in Mr. Kwarteng.
Ms. Truss had told the BBC on Sunday that the decision to lower the top rate of income tax was "one that the chancellor made."
She did, however, add that she was fully committed to it as part of a plan to "simplify" the tax code and spur economic growth.
When asked if his earlier statement that there would be "more to come" in terms of tax reduction still held true, Mr. Kwarteng responded that there would be no tax cuts prior to the upcoming Budget in the spring.
When questioned about whether his economic goals will result in reductions in spending for public services, the chancellor responded that further information would be provided in the government's budget plan on November 23.
But he insisted that the government would adhere to its 2021 Comprehensive Spending Review and would not increase spending to keep up with inflation.
The independent spending watchdog, the Office for Budget Responsibility, had criticized the government for not issuing an economic prediction in addition to the 45p tax rate issue.
Mr. Kwarteng told the BBC that there wasn't enough time to obtain a complete prediction and that he had wished to at "fast speed."
A few hours prior to the chancellor's speech at the Conservative Party conference, in which he was scheduled to emphasize the value of "keeping the course," the U-turn occurs.
The administration was urged by Labour to "change their entire economic, discredited trickle-down plan."
The reversal came "too late for the people who will pay higher mortgages and greater prices for years to come," according to shadow chancellor Rachel Reeves.
While SNP leader Nicola Sturgeon stated that the government had displayed "total ineptitude," Lib Dem leader Sir Ed Davey urged for the chancellor to step down, claiming he no longer had "any credibility" and the entire mini-budget needed to be overhauled.
Markets, other parties, and an increasing number of Tory MPs had all shown significant hostility to plans to abolish the highest rate of taxation.
Jake Berry, the chairman of the Conservative Party, earlier issued a warning to Conservative MPs who dissented from the prime minister's tax proposals that they risked losing the whip, or membership in the parliamentary party.
But it looked more and more apparent that Ms. Truss lacked the support necessary for passage in Parliament.
A former cabinet minister, Grant Shapps had forewarned the prime minister that the measure would lose in the Commons.
"It's better to act, it's better to reverse ferret on something that's producing a problem like this, and it sends a very significant signal to the public and also to the markets that we are serious about sound money," he said in response to the U-announcement, turns according to the BBC.
Michael Gove, a former minister for the Tories, signaled on Sunday that he would not support the proposal in Parliament, saying, "I don't feel that's proper" and that it was "a display of the wrong principles."
After the U-turn, when asked if he would now support the government's economic package, he responded to Times Radio: "On the basis of everything I am aware of, I believe that... They made a lot of positive announcements."
The Confederation of British Industry also praised the choice.
The vow, according to director-general Tony Danker, has turned into a "distraction" from other economic measures that he claimed would "make a significant impact to growth."
With Mr. Kwarteng scheduled to speak later on Monday, the U-turn, hints of which were first reported by the Sun, occurs on the second day of the Conservative conference in Birmingham.
The pound surged in response to the news, climbing more than a cent to $1.1263 against the dollar before reversing course.
Following market turbulence brought on by Mr. Kwarteng's mini-budget last week, the currency reached a record low.
In England, Wales, and Northern Ireland, taxes on income over £150,000 are levied at a rate of 45%. The higher rate of tax in Scotland, where income tax is devolved, is 46%.
The top rate was eliminated for a savings of about £2 billion out of the £45 billion in tax cuts announced by the chancellor in his mini-budget.
The basic income tax rate was reduced to 19%, the recent increase in national insurance was reversed, and the ceiling on bankers' bonuses was removed, among other things.
"Unless [the chancellor] also U-turns on some of his other, much larger tax pronouncements, he will have little choice but to consider cuts to public spending: to social security, investment projects, or public services," said Paul Johnson, director of the independent Institute for Fiscal Studies.
Mr. Kwarteng had previously stated that department expenditure intentions for the years 2024–2025 would remain the same, which amounted to "a real-terms drop in their generosity in the face of increasing inflation," the speaker continued.
Mel Stride, a senior Conservative and ally of Liz Truss's rival Rishi Sunak for the party's leadership, echoed his sentiments, telling the BBC's World at One that "there may be even further requirements to unwind some of those positions because we've come forward, or the government has, with a number of unfunded tax cuts."
"Even though the political ones have been made simpler, the basic economic concerns here haven't gone away."