Today, Conservative ministers faced criticism from their own backbenches over the Chancellor’s proposal for dramatic tax cuts financed by enormous public borrowing.
Senior Conservative insiders warned that they would need to take dramatic measures to balance the budget in the face of a growing Conservative uprising against Liz Truss and Kwasi Kwarteng’s economic agenda.
After widespread opposition, Ms. Truss already gave up her intentions to eliminate the 45p income tax rate for the highest incomes.
The Chancellor’s previously stated reduction to stamp duty and abandonment of a 6p rise in corporation tax, however, were reaffirmed by ministers today.
It comes at a time when Ms. Truss is facing opposition from her own disgruntled backbenchers over various policies, including fracking and the amount of foreign assistance.
In response to reports that he could need to make £60 billion in cuts, Mr. Kwarteng has pushed out an announcement on expenditure until Halloween.
But at today’s tense PMQs, Liz Truss swore she would “definitely” not reduce public expenditure while fending off criticism of the mini-Budget.
The Treasury Committee’s head, Conservative MP Mel Stride, said in the Commons that Mr. Kwarteng had “a significant problem today landing those measures to calm the markets.”
The former minister told Treasury Chief Secretary Chris Philp today, “He needs to get the fiscal rules right, he has to come out with expenditure reduction and revenue raisers that are politically doable.”
Many people, like me, think that he may just have to come forth with a further retraction of the tax announcements he made on September 23 given the enormous hurdles.
Could you please clarify that that idea is still on the table, Mr. Philp?
In response, Mr. Philp said that “none of the tax changes proposed in the growth plan are being reversed.”
Along with it, Robert Largan enquired as to if the Government was “considering delaying any of the tax measures recently proposed by the Chancellor.”
“The Conservative Party advocates for low taxes, as well as for budgetary restraint and sound money,” he said.
“Can I ask the chief secretary to the Treasury whether the Government is contemplating delaying any of the tax measures recently outlined by the Chancellor?” the Prime Minister just said that there won’t be any cutbacks to public sector expenditure.
“We don’t intend to postpone the tax measures,” Chris Philp said. “We believe having an internationally competitive tax system is crucial because it will assist attract firms and successful people to move here in the UK rather than anyplace else.”
Later, Kevin Hollinrake, a Tory MP and member of the Treasury Committee, said that Kwasi Kwarteng should reconsider some of the proposals in his mini-Budget rather than going through and causing further market turbulence.
In an interview with BBC Radio 4’s World at One program, he said that even while it did not “augur well,” he thought the Chancellor could withstand such a humiliating reversal.
“I believe we’ve got part of this wrong and these tax cuts need to be implemented over time,” you should have said after carefully examining the situation in light of recent events. It’s plausible, in my opinion, if he made that argument and claimed that they had been paying attention, as they had with the maximum rate, but it doesn’t bode well for promises that have already been made.
He mentioned the possibility of the Government changing its mind on scrapping the proposed increase in corporate tax.
According to him, the markets will want “something more substantial.”
To restore the legitimacy of the government, either some of those tax cuts must be scaled back or expenditure must be reduced.
Additionally, Downing Street denied that it was reevaluating the policies outlined in Chancellor Kwasi Kwarteng’s mini-budget.
The tax-cutting plan is not being evaluated, according to a story in the Independent, the Prime Minister’s official spokesperson said. Despite our tight collaboration with the Treasury, I don’t recognize that report.
On the “medium-term budgetary strategy and the economy more broadly,” he said that they were closely collaborating.
When asked whether they were still committed to the mini-budget in its entirety, he said, “Yes. We are dedicated to implementing the policies the Chancellor outlined in the growth package.
When asked whether it was within the previously specified timeframe, he answered: “Yes.”
It happens as anti-fracking Tory rebels meet with Labour representatives in an effort to thwart legislation that would make it simpler to drill in Liz Truss’s constituency.
Backbenchers who support the environment are said to have reached out to the opposition as the prime minister tries to unify her fractured party.
Plans to relax regulations controlling the technology, which has been connected to earth tremors beneath houses, are being driven by Ms. Truss and Business Secretary Jacob Res-Mogg.
However, the BBC claimed that she is up against opposition from MPs in regions where the technology is expected to return.
The Truss government is increasingly in disarray as ministers deal with increasing rebellions on a variety of topics.
Chancellor Kwasi Kwarteng has come under heavy criticism for allegedly considering delaying an increase of foreign funding.
With the caveat that it will increase again in 2024, his predecessor Rishi Sunak reduced the rate from 0.7% of GDP to 0.5% in 2020.
However, Mr. Kwarteng is reportedly thinking about deferring the rise until 2027.
‘Tempting as it may be to further curtail the foreign development budget, it would surely not be in Britain’s national interests,’ former minister Andrew Mitchell said to the Telegraph.
It is doubtful that Parliament will tolerate the Government breaking its promise to restore the 0.7% assistance level by 2024–2025.
David Davis, a former cabinet minister, today launched a new front in the debate over government expenditure reductions by denouncing rumors that funding for research and development would be reduced in order to balance the budget.
Such a move, according to the Brexiteer, would be “totally incongruous” with the Government’s efforts to spur economic development.
The PM today chose an MP who supported Rishi Sunak in the Tory leadership race as her parliamentary private secretary in an effort to appease the parliamentary party (PPS).
Marcus Jones, a member of parliament from Nuneaton, Arley, and Hartshill, posted a statement on social media announcing his new position: “I am very honored to have been named parliamentary private secretary to the Prime Minister.”
“The UK needs greater investment and development at this crucial juncture, and we also need to lighten the load on families and assist individuals in advancing in life.”
His selection will probably be seen as Ms. Truss’s continued effort to appease party opponents after she appointed Greg Hands, another supporter of Mr. Sunak, as the international trade minister.
In response to rumors that some Conservative MPs would team up with Labour to demand a vote on the Government’s fracking plans, Mr. Rees-Mogg stated today that lawmakers always “have a voice.”
Many Conservatives reject the proposal to lift the fracking moratorium, which is one of numerous issues dividing the party since Liz Truss took over as leader.
MPs always have a voice in what happens, the Business and Energy Secretary told BBC Radio 4’s Today program.
There are several other channels that MPs might utilize to voice their opinions. The Government is not required to cast votes. Backbench business discussions, opposition day discussions, and amendments all exist.