Embattled Prime Minister Liz Truss is under pressure to rule out a real-terms cut in benefits, which she has so far refused to rule out as she looks for ways to fund Chancellor Kwasi Kwarteng's unfunded promises of tax cuts.
The Chancellor has so far been into two humiliating U-turns, one on the 45p top rate of income tax and one on a promise to publish much faster his debt reduction plan. However the Tory leadership remains under pressure over its plans for benefits.
There are reports that the Government is considering increasing benefits in line with average wage rises instead of by the rate of inflation. Although some senior Tories argue that it would be fair for benefits to rise at the same rate as wages, others say the least well off are being hit hardest by inflation and benefits must not suffer real terms cuts.
Questioned on LBC radio on Tuesday morning, Ms Truss said no decision on benefits had been made. She said: "No decision has been made on benefit uprating" and there would be a decision in due course.
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Former leadership contender Penny Mordaunt, and a current cabinet member, said on Tuesday morning that she had always supported welfare payments keeping pace with inflation saying it "made sense" and Ms Truss's predecessor Boris Johnson had promised to increase benefits in line with inflation.
"I've always supported, whether it's pensions, whether it's our welfare system, keeping pace with inflation. We are not trying to help people with one hand and take away with another," she said.
Former Wales secretary and MP for Preseli Pembrokeshire Stephen Crabb told LBC radio that the 45p tax rate U-turn “probably doesn’t draw a full line under the mini-budget” and backbenchers wanted to see guarantees for welfare payments, which he referred to as social security.
“Certainly, when the government starts signalling it wants wide-ranging spending cuts, there are going to be some pretty gritty conversations with backbenchers about where those spending cuts might fall,” said the former cabinet minister.
“Don’t forget, the social security uprating this April just gone was only 3 per cent even though the real inflation rate was 6 per cent. The government at the time promised the following April there’d be a correction. It looks like that might be ditched. That would be the wrong choice. I’ve always been clear that we need to do a full uprating next April.”
Former Work and Pensions Secretary Damian Green has said that the government would "probably not" get any plan to limit benefit rises to rises in earnings rather than rises in prices through parliament.
The plan to axe the 45% income tax rate for top earners and scrap the curbs on bankers' bonuses at a time when many households face a cost-of-living crisis has been condemned by political opponents and Tory critics, with Mr Kwarteng bearing the brunt of the criticism.
Prime Minister Liz Truss was accused of throwing Mr Kwarteng under a bus by singling him out as responsible for the tax cut, saying "it was a decision the Chancellor made", rather than one debated by the entire Cabinet.
Shadow Chancellor Rachel Reeves said it comes "too late" for families. She said: "The PM has been forced to abandon her unfunded tax cut for the richest 1%. But it comes too late for the families who will pay higher mortgages and higher prices for years. The Tories have destroyed their economic credibility and damaged trust in the British economy."
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