Influential Conservative MP Mel Stride broke rank today to urge Prime Minister Liz Truss to “take no chances” and U-turn on the tax cuts announced last month. The chair of the Treasury select committee said that it was unclear if the panic in the markets could be quelled while still going ahead with the policies outlined by Chancellor Kwasi Kwarteng on September 23.
Economists have warned that the tax cuts are only possible if the Government commits to mass cuts in public spending.
However, in the House of Commons this afternoon, the Prime Minister insisted she would not reduce civil service budgets.
Warning the Government must now show a “clear change in tack”, Mr Stride said: “Given the clear Government position expressed today on protecting public spending there is an emerging question. Whether any plan that does not now include at least some element of further row back on the tax package can actually satisfy the markets.
“Credibility might now be swinging towards evidence of a clear change in tack rather than just coming up with other measures that try to square the fiscal circle.
“The Chancellor will only get one opportunity to land his plans and the forecast positively.
“He must take no chances. There is too much at stake for all of us.”
Since the September 23 mini-budget the value of sterling has fluctuated and yields on government bonds, the cost of state borrowing, rose to such an extent that the Bank of England was forced to intervene to prevent problems for pension funds.
The Bank’s governor, Andrew Bailey, confirmed the intervention will end on Friday, leading to a slump in the pound and another spike in bond yields.
Many Conservative backbench MPs are terrified about the impact the economic turmoil will have on the outcome of the next election.
One told Express.co.uk: “She’s crackers. She’s completely messed this up. Our record is in ruins.
“I was disappointed not to get a ministerial role in the Government. But now I’m delighted not to be associated with the sh*tshow.”
Ms Truss has previously admitted that she could have “laid the ground better” for the tax cuts announced in the mini-budget but has insisted they are necessary to get the country’s economy growing again.
Asked at PMQs if public spending would be slashed to fund the tax cuts, the Prime Minister said: “We are spending almost £1 trillion of public spending. We were spending £700billion back in 2010.
“What we will make sure is that over the medium term the debt is falling.
“But we will do that not by cutting public spending but by making sure we spend public money well.”
More to follow…