Image source, PA Media

The chancellor U-turned on his proposal to abolish the top rate of income tax "because it was a political reality", says Business Secretary Jacob Rees-Mogg.

Speaking at a Telegraph event at the Tory conference he said: "There's no point in sticking with them [policies] stubbornly if there simply isn't the desire, the appetite to do them."

He insisted the Conservatives were a "tax-cutting government" and said he was "always" in favour of them.

Asked if Kwasi Kwarteng should resign, the business secretary said: "Of course, he shouldn't resign."

A former Tory cabinet minister has said that what British businesses want "above all else is stability".

As part of a "message" to Conservative MPs, Baroness Nicky Morgan said "actually just a period of calm, confident government would be much appreciated by the business world".

Speaking at a Tory conference event earlier, Morgan, who served under David Cameron as Education Secretary and as Culture Secretary under Boris Johnson, also joked about the possible sacking of Chancellor Kwasi Kwarteng.

In a remark to Treasury Minister Felicity Buchan, who was also on the panel at the fringe event, she said: "Keep your phone on you. You never know, you might be asked to be chancellor next."

Paul Seddon
Reporting from Conservative conference in Birmingham

However there’s a different reaction from Oliver Rose, a first-time conference attendee who says he is disappointed the government has U-turned “at the first sign of pressure”.

“Purely from a press perspective, we were going to get slated for doing it, but now we’re going to get more slated for U-turning on it,” says the member from Hornchurch and Upminster.

He says he voted for Liz Truss over Rishi Sunak during the members’ ballot at the Tory leadership election, although he says the prime minister wasn’t his “first choice”.

Referencing a decision by Truss during the campaign to make a U-turn on a proposal for regional public sector pay, he adds he hopes it doesn’t become “a habit to U-turn again and again”.

Paul Seddon
Reporting from Conservative conference in Birmingham

Another person welcoming this morning’s U-turn on the 45p tax rate is Donna Gavin, a party member from Stroud in Gloucestershire and former candidate for the party at the Senedd elections in Wales.

The ex-soldier says the government had communicated its decisions for the U-turn, adding this shows “they’re learning”.

“I really welcome leaders that are brave enough to realise when a decision perhaps wasn’t the right one, to listen to their people and be able to respond,” she says.

“Being unwilling to change our minds on things just drives us into rabbit holes we really don’t want to be in,” she adds.

Katie Thompson
Reporting from Birmingham

Dave Merricks, 67, from Stourport in Worcestershire, says the government has got off to an "awful" start.

“It could not have been any worse,” he says.

“I am just glad they have done a U-turn to be honest. I was a Tory voter at the last few elections, but I would not vote for them next time. They are not helping the working man.”

His wife Sue said she was really worried for her children’s futures.

“We are really lucky, we’re retired and have not got a mortgage, but I’m worried for our children - they have got mortgages to pay.”

Image source, Reuters

We briefly mentioned Michael Gove's thoughts earlier, with the former minister signalling he wouldn't have voted to scrap the 45p top rate of tax.

Speaking to Times Radio later on, Gove went a step further, suggesting the government's U-turn was a bad look not just for Chancellor Kwasi Kwarteng - but for PM Liz Truss.

"I think she's recognised, as we all do in politics, that if you bite off just that little bit more than you can chew, then the right thing to do is to extract the gobstopper as it were, and then get on with the job," he said.

He added the newly installed pair should be given time to "develop their package" of cuts, but acknowledged criticism about the mini-budget benefitting mainly the wealthy. "I think that we should look at decisions thinking always how are the most vulnerable in our society going to be affected," Gove told the radio station.

During the Tory leadership campaign, Gove, whose last cabinet position was as Boris Johnson's levelling up secretary, backed Rishi Sunak - who ultimately lost to Truss.

Tom Peters from the advocacy organisation Tax Justice has been speaking to the BBC, and said the chancellor’s announcement this morning didn’t go far enough in dealing with the cost of living crisis.

“There are several tax cuts still going to the very wealthy that the chancellor plans to continue with during a cost of living crisis, and for us there’s a question about whether that is fair or indeed sustainable,” he says.

He calls for an increase in spending on public services, especially at a time when many people are struggling to get by.

“We should be investing more in public services, and using the tax system to raise revenues to make sure that we’ve got the funding to do that – and the chancellor hasn’t gone far enough simply by reversing one of the tax cuts for the very wealthiest that he introduced a couple of weeks ago,” Peters says.

Paul Seddon
Reporting from Conservative conference in Birmingham

As the Conservative conference continues in Birmingham, party members are digesting this morning’s U-turn on the top earner tax rate.

Isaac Barnett, from the Colne Valley association in West Yorkshire, says he welcomed the reversal, adding: “I’m glad they woke up and smelt the coffee.”

Adding the government had “listened”, he says he thought other members he had spoken to were also pleased at the decision.

He adds he hopes the U-turn will deliver a “bounce back” for the Conservatives in the polls, which have shown large leads for Labour amid recent market turmoil.

A Conservative Party donor has said it was "unfortunate to be blown off course by a sort of rather sensational media".

Alasdair Locke, chairman of the Motor Fuel Group, said while the "presentation" of tax-cutting plans was "very poor", the government is heading in the "right direction of travel".

He told the BBC that the top rate of tax of 45% on people earning more than £150,000 is a "bit of a distraction" that "doesn't raise much money".

He said such a change would be "very minor" when compared with the overall package planned by the government, adding that making an environment that is "good for business" is "entirely correct".

Kevin Peachey
Personal finance correspondent

Anyone with a home loan will have been looking closely at what is happening with mortgage rates.

Last week's dramatic withdrawal of deals has slowed, and now we are getting a clearer picture as to how much the cost has risen.

Image source, .

An average two-year fixed rate deal is now 5.75%, according to the financial information service Moneyfacts.

That is one percentage point higher than the day of the mini-budget, and up from 2.34% at the start of December.

Those with slightly more complicated finances - perhaps they have missed a payment or high debt levels - may find their choice of mortgages has shrunk, brokers say.

You can read morehere.

Image source, Getty Images

Former cabinet minister Nadine Dorries has suggested the prime minister should call an election.

Dorries said there was "widespread dismay" at Truss for failing to act on plans laid out by Boris Johnson's government.

"Widespread dismay at the fact that three years of work has effectively been put on hold.

"No one asked for this. C4 (Channel 4) sale, online safety, BBC licence fee review, all signed off by Cabinet all ready to go, all stopped.

"If Liz wants a whole new mandate, she must take to the country."

It's been a very embarrassing morning for new Prime Minister Liz Truss, according to The Sun's political editor.

Speaking to the BBC from Birmingham, Harry Cole said the plan to abolish the 45p income tax band just before a party conference gave the opposition parties an "open goal".

"It's politics 101, and it's gone very badly wrong," he said.

Later in the interview, Cole speculated that the tax U-turn proved the Tory Party is "almost becoming ungovernable for anyone who won the leadership".

Cole tweeted, external in the early hours of this morning that the planned tax change would be scrapped - before many Conservative MPs knew about it.

Katie Thompson
Reporting from Birmingham

Martin Twining, 73, is from Northfield, a part of Birmingham which went from red to blue in 2019.

The Labour voter told BBC the government had got off to a "terrible start".

“The mini-budget is a disaster,” he says. “It is terrible.

“He [the chancellor] will not be in a job for long. He was bullish.”

Twining says he is lucky as he has paid his mortgage off, but feels for working people at the moment.

“It is a double whammy, people are left with nothing to live on, we work to live.”

Talking about his energy bills trebling from £64 to £180, he adds: “I’m on my own, but at the end of the day what can you do?”

More now from the prime minister's spokesman, who has confirmed that Chancellor Kwasi Kwarteng is still planning to deliver his medium-term fiscal plan on November 23.

The spokesman said there will be a number of announcements in the coming weeks on supply side reforms.

He added: "I think the chancellor set those out during his fiscal statement.

"They will seek to address some of the longstanding issues, whether it's on financial services or issues like migration and there will be more to set out but I can't obviously get into the details at this point."

Prime Minister Liz Truss has confidence in Chancellor Kwasi Kwarteng despite his U-turn on the 45p rate, Downing Street says.

Asked if Truss has confidence in Kwarteng, the PM's official spokesman told reporters: "Yes."

He confirmed Truss was committed to everything else in the mini-budget.

The spokesman said he is confident Parliament will approve the rest of the measures set out in the chancellor's mini-budget.

Some more reaction to bring you now - this time from shadow chancellor Rachel Reeves.

The Labour MP said it was "obvious" the government could not get the cut through the House of Commons and it had been forced into the U-turn.

"So much damage has already been done," she added. "It was obvious they weren't going to get this through the House of Commons.

"They were forced into this screeching U-turn but so much damage has already been done with higher government borrowing costs, and huge worries to people about how they're going to afford their mortgages."

She called on the government to "get a grip" and reverse the mini-budget which, she said, showed the government's instincts to cut taxes for the wealthy, paid for by borrowing.

Ms Reeves also said the government should publish the forecast from the Office for Budget Responsibility (OBR) when it receives it this Friday, rather than wait until next month.

She added: "I wrote to the Chancellor yesterday and said that when the OBR give the Prime Minister and the Chancellor their forecast this Friday, that that should be available to everybody else as well."

Reality Check

Chancellor Kwasi Kwarteng was asked on BBC Radio 4’s Today whether he’d discussed his cut to the 45p tax rate with the Office for Budget Responsibility (OBR) before announcing it in his mini-budget.

The OBR comes up with independent economic forecasts at least twice a year, usually at the time of budgets – but it wasn’t commissioned by the government to do this before the mini-budget.

"No chancellor has trailed their budget with the OBR before announcing it," Kwasi Kwarteng said.

But that's not right. Part of the OBR's job is to alter its forecasts for the economy based on the policies in the budget and also to check how much the government says its measures will cost.

The process is set out very clearly by the OBR, external. "At the outset of the forecast process, the OBR and the Treasury agree deadlines by which the OBR must be told of a proposed policy measure," in order to be able to include it in the publication.

That deadline is "typically around 5 days before the statement" and if you look through past editions, external of the Economic and Fiscal Outlook it is very clear that the OBR has been given policy measures in advance in the past.

The pound has risen against the dollar over the last few hours - amid news that the chancellor has scrapped his proposal to abolish the top rate of income tax.

Last week the pound suffered - believed to be in response to the government's mini-budget announcement - with it hitting an all-time low of $1.03.

However, financial markets have seen the pound rise this morning. It stood at $1.12 at about 09:00.

Our colleagues at Radio 5 Live have been hearing reaction to the government's tax rate U-turn from people around the country.

Daphne in Barrow in Furness was a Conservative Party member but is unsure if she’ll renew her membership.

She believes the U-turn on the 45p tax rate is a “distraction” from “all the other things we’re now not going to be talking about” from the mini-budget.

Carol in Sussex doesn’t think the U-turn “should have happened”.

She believes scrapping the higher tax rate is essential to keep high earners in the UK and also believes removing the cap on bankers bonuses was a sensible move.

Hugh in West Sussex feels the electorate has been “taken for a ride” as this government “was not elected on this raft of policies”.

“Effectively, our economic futures have been swung by a small majority of Conservative Party members,” he says.

Mike in Bristol says all Liz Truss was doing by scrapping the 45p tax rate was putting levels back to where they historically have been.

Before 2009, the tax rate for top earners was 40p, he says, so he believes “all Liz Truss was doing is putting it back to where it had always been”.

He thinks her main problem is failing to effectively explain her policy.

Carol in Derbyshire says she’d rather have “Boris with all his foibles than what we’ve got now”.

“I think we need somebody confident and calm, and [Truss] is panicking.”

"Utter ineptitude" is how Scotland's First Minister Nicola Sturgeon described the government's actions and its U-turn on abolishing the top rate of income tax for the highest earners.

In a tweet, referencing the chancellor saying the proposed 45p tax rate cut had become a "distraction", she said: "Morally wrong and hugely costly for millions is a better description."

She said perhaps the people who criticised the Scottish government for not following suit should "be reflecting this morning".