Struggling households will have to wait until the end of October to find out whether welfare payments will rise with inflation or be subject to a real-terms cut, the chancellor has announced.
Kwasi Kwarteng was accused of compounding the anxiety faced by those already at the sharp end of the cost of living crisis by telling them clarity would not come until his Halloween fiscal statement.
Cabinet ministers – including the work and pensions secretary, Chloe Smith – are continuing to push for universal credit to be lifted with inflation at a level of around 10%, instead of the average wage rise, which stands at 5.5%.
Government sources insisted it remained a “live discussion”. Though the formal review cannot begin until the new consumer prices index figures are released on 19 October, potential rebel Tory MPs said privately they were confident enough people would oppose raising payments with wages to force the government to acquiesce and back the higher rate.
Tuesday’s cabinet meeting is said to have been the final chance for ministers to lobby Kwarteng before he flies to New York for the annual meetings of the World Bank and International Monetary Fund. However, there will be more time to do so given Kwarteng and No 10 both confirmed that a final announcement would not come until 31 October.
In their first public grilling since last month’s under-fire mini-budget, Treasury ministers sought to play down any suggestion they had made up their minds. Kwarteng told the Commons that “no decisions have been made” and stressed it was a “natural, usual statutory process that’s being taken”, adding: “We will have more detail at the time of the medium-term fiscal plan.”
The plan was hastily brought forward from 23 November to 31 October amid huge pressure from Tory MPs, who said the government had to act more swiftly to avoid more market turmoil.
A growing number of them went public with their calls for benefits to rise with inflation, including the former chancellor Sajid Javid. MPs from the one-nation caucus also met on Tuesday night to plot how to put pressure on No 10.
Julian Smith, a former chief whip, also issued a warning shot to the Treasury – saying ministers should “not balance the forthcoming tax cuts on the back of the poorest people in our country”.
The wait for clarity was criticised by Save the Children, which said it was unfair pensioners had been assured their income would rise at least with inflation while parents and carers of children in poverty faced an agonising delay.
Dan Paskins, director of impact at the charity, said “the goalposts have moved again” for families on universal credit given the previous government under Boris Johnson had promised benefits would rise with inflation.
He told the Guardian: “This brings further anxiety and worry for parents and carers about how they will cope with rising food and energy prices long term and what the impact will be on their children.
“It seems unfair that some in society were given clarity from the chancellor about what the economy holds for them within days of him taking office, while the poorest families are still awaiting vital information.”
While Kwarteng tried to brush off criticism about the reaction to his mini-budget, he was challenged in the Commons by Mel Stride, a Tory MP and chair of the Treasury select committee.
Stride challenged the chancellor to ensure any policies unveiled in the medium-term growth plan on 31 October would command support from the Tory and opposition benches and added “any failure to do so will unsettle the markets” further.
Kwarteng assured him “we will and should canvass opinion widely ahead of the publication of the plan”. He confirmed an independent analysis and a set of forecasts from the Office for Budget Responsibility would be published alongside it.
However, the chancellor was laughed at for saying he wanted to be “very careful not to make unfunded spending commitments on the floor of the house”.
