Tory ministers are threatening millions of poor Brits with a real-terms benefits cut and will rein in government spending to help fund tax cuts for the rich.
The Chief Secretary to the Treasury today declared “I’m not going to apologise” after the economy was hurled into turmoil after the mini-Budget.
Liz Truss was finally breaking her week-long silence this morning after the Bank of England announced a £65bn bond bailout to steady the markets.
But the Prime Minister is refusing to U-turn and scrap her mini-Budget - which pledged a wave of tax cuts funded by £72bn of borrowing in a year.
Tories have also refused to heed Labour and Lib Dem pleas to recall Parliament, or a Lib Dem call to cancel the Conservative Party Conference.
Since Friday the pound plunged against the dollar, pushing up the cost of borrowing and destabilising the markets.
Pension funds could reportedly have collapsed en masse within hours on Thursday if the Bank of England had not acted.
Now Chief Secretary to the Treasury Chris Philp is refusing to promise a rise in benefits of about 10% will still happen next April.
Benefits and pensions were both due to rise by this September’s CPI inflation figure - after rising by only 3% this year, a real-terms cut.
But Mr Philp told ITV ’s Peston: “I am not going to make policy commitments on live TV, it is going to be considered in the normal way.
“We will make a decision and it will be announced I am sure in the first instance to the House of Commons."
Treasury officials tried to downplay his remarks, saying April’s benefit rise was always going to be “subject to a review” by the DWP.
But that review is usually just a formality.
And Mr Philp’s refusal to confirm a benefits rise - while axing the 45p top tax rate in a £10k-a-head boost to £150k earners - is a change in position.
In May, then-Chancellor Rishi Sunak said: “I can reassure the House that next year, subject to the review by the Secretary of State for Work and Pensions, benefits will be uprated by this September’s consumer prices index.
“On the current forecast [this] is likely to be significantly higher than the forecast inflation rate for next year. Similarly, the triple lock will apply to the state pension.”
Mr Philp said: “DWP every autumn review plans for benefits, they do that every single year, that process will take place as normal this autumn.”
Baroness Philippa Stroud - a Tory peer and architect of universal credit - told The Mirror: "Obviously what he's saying is this is under consideration in the normal way and that he's not going to make policy decisions on live TV.
"But I think the reason why it's unnerving is because obviously the previously chancellor had already committed to this uprating.
"Just the fact that he's reconsidering it, or he's not commiting to it, makes it feel like this is genuinely up for reconsideration."
She said modelling by her organisation the Legatum Institute shows the government's energy package - combined with the uprating - would prevent 1 million less people in poverty than pre-pandemic levels.
In a message to the government, Baroness Stroud said: "The 10% uprating needs to go ahead. It should be committed to in November and should be enacted in line with the previous line Conservatve government.
"There needs to be immediate reassurance - they could make it a conference annoucement."
As post-mini-Budget chaos engulfs Britain, Mr Philp also confirmed he will ask for 'efficiency savings' in already stricken government departments.
"We are going to look for efficiencies wherever we can find them,” he told ITV.
Mr Philp said the Government would stay within three-year spending limits that were set out a year ago - despite inflation billowing since then.
He insisted: “The spending levels we’re working within will still see real-terms increases.”
He added today: “No one’s perfect, but I’m not going to apologise for having a plan to grow the UK’s economy which will increase people’s wages and create new jobs.”
But Tory MPs and grandees lined up to demand a U-turn on the mini-Budget, which also cut income tax to 19p and slashed Stamp Duty.
Others demanded Office for Budget Responsibility forecasts are produced before the planned date of November 23.
Former Bank of England governor Mark Carney warned the government was “undercutting” the markets by not producing OBR forecasts.
Former Tory MP David Gauke told the BBC : "Now we have what can only be described as a crisis, and it is directly as a consequence of decisions made by the Conservative Government.
“The pain is still to come.. pain of higher interest rates, of tougher decisions on public spending is yet to be felt.”
Treasury minister Chris Philp admitted "that's true" that the 45p tax cut helps the rich. He told Sky News: "It's benefits people who earn more than £150,000. But very often those are people who are internationally mobile - they can chose where to locate. We want people to locate here in the UK".
Liz Truss admitted it was “not necessarily popular” to cut taxes for the rich - but claimed it "helps everybody because it helps grow the economy."
She told BBC Radio Nottingham: "For too long, the debate in this country has been about distribution, rather than how we grow our economy."
Some Tories are eyeing up the prospect of another leadership race, with letters of no confidence already submitted.
Tory ex-Chancellor Ken Clarke said Liz Truss and Kwasi Kwarteng “have made a catastrophic start” and the mini budget must be “torn up”.
“I’ve never known a budget cause a financial crisis immediately like this,” he told Sky News. “The budget was a serious mistake and it has caused a serious problem.”
Conservative MP Simon Hoare said: "In the words of Norman Lamont on Black Wednesday: 'today has been a very difficult day'."
He added: "These are not circumstances beyond the control of Govt/Treasury. They were authored there. This inept madness cannot go".
Mel Stride, the Conservative chairman of the Commons Treasury Committee, warned "there's a lot of concern within the parliamentary party, there's no doubt about that".
Torsten Bell, chief executive of the Resolution Foundation think tank, warned “this is by far the worst unforced economic policy error of my lifetime”.
He tweeted: “The scale of the destruction it is bringing is hard to comprehend: higher import prices, surging mortgage bills, higher deficits risking big spending cuts to come, pension funds taking big losses on forced asset sales, likely lasting risk premiums for UK firms and govt.”
A government source said Mr Kwarteng had no plans to resign or reverse his tax cuts despite chaos on the markets.
And Mrs Truss is refusing to sack her Chancellor.
Timeline of events
- Friday September 23 - Chancellor Kwasi Kwarteng delivers his mini-budget in the House of Commons, announcing the biggest package of tax cuts in 50 years
- Friday September 23 - The pound slumps against the dollar immediately after Mr Kwarteng's announcement
- Monday September 26 - Sterling hits an all-time low against the dollar
- Monday September 26 - The Bank of England says it is monitoring developments "very closely" and "will not hesitate to change interest rates" if necessary
- Tuesday September 27 - The International Monetary Fund (IMF) urges Mr Kwarteng to "re-evaluate the tax measures"
- Wednesday September 28 - The Bank of England pledges to buy £65 billion of UK bonds to stabilise the market
