The British government is reversing the proposed scrapping of the highest rate of income tax that has sparked a backlash in the governing Conservative Party.

Finance minister Kwasi Kwarteng sent shockwaves through financial markets when he published a mini-budget on September 23, cutting taxes including the 45p highest rate of income tax, in a plan to be funded by vast government borrowing.

The government had stuck to the policy ever since, even as the value of the pound and government bonds fell, but several senior lawmakers have stepped up their opposition to the policy at the party’s annual conference which began on Sunday.

Mr Kwarteng said on Monday the government was reversing its plan to scrap the highest rate of income tax.

We get it, and we have listened. pic.twitter.com/lOfwHTUo76

— Kwasi Kwarteng (@KwasiKwarteng) October 3, 2022

“We are not proceeding with the abolition of the 45p tax rate,” he said in a statement on Twitter.

“We get it, and we have listened.”

Mr Kwarteng had planned to tell the conference on Monday that the government “must stay the course” and he was confident the plan was the right one, according to advance excerpts released by his team.

Instead, the government would abandon the plan.

“It is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country,” he said.