Stay up to date with notifications from TheĀ Independent

Notifications can be managed in browser preferences.

Kwasi Kwarteng will bring forward fiscal plan to Halloween in another U-turn

Chancellor bows to pressure after senior Tories called on him to reassure spooked markets

Adam Forrest
Monday 10 October 2022 12:21 BST
Comments
āœ•
Tory wipeout could be 'on the cards', says George Osborne

Kwasi Kwarteng will bring forward the government’s medium-term fiscal plan from November to the end of October following calls to reassure the markets, it has emerged.

The chancellor said in a letter to Mel Stride, Tory chairman of the Treasury select committee, that the spending and borrowing plan would be announced on 31 October – rather than 23 November as promised.

The Treasury confirmed the move to bring forward the publication of the financial strategy – and the Office for Budget Responsibility (OBR) assessment of government plans – to Halloween.

Bowing to pressure in his letter to Mr Stride, Mr Kwarteng said he hopes ā€œthis short extra delay is acceptableā€.

Mr Stride had previously told The Independent that waiting until 23 November could pile hundreds of pounds onto monthly mortgage costs by making higher interest ratesĀ more likely.

The senior Tory welcomed the move on Monday, saying it may result in a smaller rise in interest rates ā€œcritical to millionsā€ – but only if the plan for borrowing ā€œlands well with the marketsā€ ahead of a Bank of England meeting on 3 November.

Former cabinet minister Grant Shapps said it was a ā€œbelated but sensible move given the urgent need to show markets the most transparent view of the UK economyā€, while fellow Rishi Sunak backer Mark Garnier MP said it was a ā€œvery welcome newsā€.

Tulip Siddiq, Labour’s shadow City minister, welcomed the plan being brought forward. ā€œBut it is a very basic expectation of government to act with clarity on fiscal plans and to allow independent scrutiny – the bar has fallen so far you can barely see it anymore.ā€

The Lib Dems said the speeding up of plan was a ā€œscreeching U-turnā€ – insisting that Mr Kwarteng still had to explain ā€œwhat he’ll do to tackle soaring mortgage costs caused by his botched budgetā€.

The party’s Treasury spokesperson Sarah Olney said: ā€œWithout a clear plan to protect homeowners, this risks ending up as Kwasi Kwarteng’s Halloween horror show.ā€

The latest U-turn follows a decision by Liz Truss and Mr Kwarteng to ditch the planned axing of the 45p rate of tax for the very wealthiest in society.

The PM is reportedly considering another U-turn on the idea of increasing benefits payments by less than inflation, with many backbenchers irate at the prospect of a real-terms cut.

Former Tory chancellor Sajid Javid became the latest to intervene in the row, telling BBC Radio 4’s Today programme that benefits ā€œmustā€ be raised in line with inflation rather than a lower rate of earnings.

Mr Javid also warned Mr Kwarteng that 23 November was too late to announce his fiscal plan and share OBR assessments. ā€œI think the sooner the better, as far as the markets are concerned.ā€

It comes as theĀ BankĀ ofĀ England announced an expansion of its emergency bond-buying programme after Mr Kwarteng’s mini-Budget – and the promise of huge, borrowing-fuelled tax cuts – sparked market turmoil.

TheĀ BankĀ said it will double the daily limit on its gilt-buying programme from Ā£5bn to Ā£10bn as it brings the scheme to an ā€œorderlyā€ close aheadĀ ofĀ Friday’s cut-off.

ButĀ there have been fears there could be a return to pension fund woes when the scheme ends on 14 October.

Boris Johnson’s sister Rachel has warned that another round of market turmoil after the emergency bond-buying scheme stops on 14 October could spark Ms Truss’s removal and a general election.

ā€œI think they will go down with the pound if we see the pound falling on 14 October … there won’t be anything else to do apart from having maybe a general election I think,ā€ she told LBC.

Ms Truss is expected to launch a ā€œcharm offensiveā€ this week by holding policy lunches with groups of MPs and addressing the 1922 Committee of backbenchers on Wednesday.

But backbenchers are not the only ones angry over benefits. Members of the cabinet are reportedly ready to press the PM on the issue of uprating benefits in line with inflation when they meet on Tuesday.

Ms Truss is ā€œgenuinely undecidedā€ on the issue and will be ā€œlisteningā€ to colleagues, Downing Street sources have said.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in