After government U-turn, baffled bosses say 45p tax cut was ‘ludicrous’ thing to have done

Top construction bosses have told Building the government was right to abandon its plan to abolish the 45p top tax rate but questioned why it was introduced in the first place – with one saying it was a “ludicrous thing to do”.

Building contacted several senior industry figures – all of whom earn £150,000 or more and so would have been beneficiaries of the plan to lower the top rate of tax by 5p – to ask for their views on the proposal which was jettisoned yesterday by chancellor Kwasi Kwarteng after a storm of criticism.

Speaking on condition of anonymity, one said: “Their growth agenda has been overshadowed by a crazy thing. I don’t know anyone who earns good money who thinks it was a good idea. It was a ludicrous thing to do.”

Another added: “When you have railway workers and postal workers going on strike, nurses who are underpaid, to then take 5p off the well-off was totally the wrong thing to do. The growth plan is positive but it’s been totally overshadowed by this [row].”

And a third said he suspected the move was to try and attract business people from US, where the top rate of tax is 37%, to set up base in the UK.

“I haven’t heard any of my peers saying they want this tax change. We need to improve productivity, yes, but this was totally the wrong to do. There is a growing inequality in society and this would have done nothing to help close that gap. We have to grow the economy, improve productivity and improve the lives of people.”

The cut would have meant just £2bn less for the Treasury and the director of the Institute for Fiscal Studies, Paul Johnson, said: “From a fiscal point of view [it’s] important to remember [the] cut to [the] 45p rate was just about smallest part of the mini budget. What was a £45bn tax cutting package is now a £43bn package.”

Announcing the U-turn yesterday morning, Kwarteng said the cut in the top rate of tax had become a “distraction” from the policies he announced in his mini-budget last month.

He later told the Tory party conference yesterday afternoon the plan had caused “a little turbulence” and added: “What a day, it has been tough but we need to focus on the job in hand.”