Prime Minister Liz Truss
(Picture: PA Wire)Liz Truss has vowed to win the “hearts and minds” of Tory MPs after she was rocked by a fierce backlash over tax cuts — but was then hit by a fresh revolt over squeezing benefits to pay for them.
Just 24 hours after the Prime Minister was forced into an embarrassing U-turn on the abolition of the 45 per cent top rate of tax, senior Tory MPs — including Cabinet minister Penny Mordaunt — voiced concerns over scrapping the rise in welfare payments in line with inflation. In an attempt to regain the initiative after a bruising start to her premiership, Ms Truss used a round of media interviews to insist that the Government was “listening” and committed to fiscal responsibility.
“Is everything the Government has done absolutely perfect? No it’s not, I fully acknowledge that, and we have learnt from the feedback that we have received,” she told BBC Radio 4’s Today Programme.
Asked about the revolt she had faced in recent days, led by former ministers Michael Gove and Grant Shapps, she added on LBC: “I want to win over hearts and minds in the country, but also amongst my parliamentary colleagues.”
Having performed a screeching U-turn on tax cuts for the wealthy on Monday, Ms Truss and Chancellor Kwasi Kwarteng were under pressure to set out how they will pay for the remaining £43 billion of tax cuts announced in his mini-budget last month.
In what would be another significant concession designed to calm jittery financial markets, Mr Kwarteng has reportedly brought forward the publication of the Office for Budget Responsibility’s assessment of his fiscal statement, from November 23 to later this month. The pound rose this morning by 0.49 percentage points in early trading to $1.13.
But to fill the hole in the public finances caused by their new economic plan, Ms Truss is refusing to rule out a return to austerity or say whether welfare payments will no longer be increased in line with soaring inflation.
Although a government source said on Tuesday that no decision had been taken on the uprating of benefits, expected in November, a series of Tory MPs lined up to express concerns. Leader of the Commons Ms Mordaunt told Times Radio: “I have always supported, whether it’s pensions, whether it’s our welfare system, keeping pace with inflation. It makes sense to do so.
“That’s what I voted for before and so have a lot of my colleagues, but we do need to look at where we can make efficiency savings just because of the cost challenges on those departments.”
Caroline Nokes, chair of the Commons women and equalities committee, tweeted in response: “Glad to hear Leader of the House Penny Mordaunt has made clear her commitment to uprating benefits in line with inflation on radio this morning.”
Former work and pensions secretary Damian Green went further saying: “If people are already struggling, and many of these people will be, then making them struggle more is not a sensible response to the problems. Clearly U-turns are not good for governments and they should only do them when they realise that they are on the wrong track. We’ve had one this week and so let’s avoid the necessity for another.”
Benefits rose by just over three per cent in April this year, in line with CPI inflation in September 2021. But energy and food bills have soared to eye watering levels since then, partly caused by the squeeze on gas supplies following Russia’s invasion of Ukraine.
Although the Government has dampened fears of further steep rises in inflation with a £60 billion energy support package — limiting average bills to £2,500 a year — inflation is still likely to be around 10 per cent when the latest figures are published on October 19.
Mel Stride, Tory chair of the Commons Treasury Committee, said increasing benefits in line with regular pay, which was just under five per cent between April and June, would save around £6 billion. Asked if he could vote for a plan to introduce a real terms cut to benefits, Mr Stride told Times Radio: “I think that’s going to be very difficult.”
Tory MP Robert Halfon, chairman of the Commons education committee, also told how he was “very anxious” about suggested real-term cuts in benefits. He said: “I would be very reluctant to support a Budget that cut essential public services, especially in my own area of education. I’m very anxious about the stories about not increasing benefits in line with inflation. We have to help the lower paid.”
Former Tory leader Lord William Hague also warned that Ms Truss would be defeated in Parliament if she didn’t keep benefits in line with inflation.
“Why would you simultaneously give people a huge amount of help with their energy bills and reduce the real value of their benefits at the same time? I would [increase benefits in line with inflation] as a matter of fairness, [but] also as a matter of political reality, because I can almost guarantee you that just like the 45p tax proposal, ultimately it will be defeated in Parliament.”
Ms Truss said the plan to abolish the top tax rate for those earning over £150,000 had become a “distraction” but signalled her intent to press ahead with other parts of her growth plan for the economy. On the tax U-turn she told the BBC: “I think what the last 24 hours has shown is that I’m somebody who has a clear plan, has a clear direction, but is prepared to listen and is prepared to do things differently.”
