Liz Truss is struggling to persuade Tory MPs to back her controversial mini-budget, with some even threatening an all-out rebellion amid fears they will once again be known as the ‘nasty party’.
The Prime Minister is facing a growing tide of discontent that is eclipsing the Tory conference after she insisted she would “stand by” her plans to cut the top rate of income tax and cut public spending.
Michael Gove launched a dramatic about-face at Truss’s economic plans, saying it was “not conservative” to fund tax cuts to borrow or slash the welfare budget and warning he must change course or risk his mini – budget was voted.
However, Kwasi Kwarteng, the chancellor, will pledge on Monday to “stay the course” with a “calm and credible” plan which he will insist is “underpinned by a firm commitment” to fiscal discipline despite the economic turmoil unleashed by his mini – budget
Truss offered some remorse for the way the mini-budget was received after it led to a temporary collapse in the pound, a rebuke from the International Monetary Fund and warnings that interest rates could rise again .
The prime minister tried to calm fury over her handling of the economy, but later firmly restated her tax plans and refused to rule out cuts in public spending and a fall in real terms of benefits to pay for them.
She told the BBC’s Sunday program with Laura Kuenssberg: “I accept that we should have prepared the ground better, I accept that and I’ve learned from it and I’ll make sure that in future we do a better job of preparing the ground. “
But he added: “I think there’s been too much political focus on optics or how things look, as opposed to the impact they have on our economy.”
“I believe in getting value for money for the taxpayer,” he said, pledging that “great public services” would be maintained, but warning that it would be a “difficult and stormy” winter.
After less than a month in office, Truss has faced criticism from many in his own party for measures including removing the cap on bankers’ bonuses and scrapping the 45p tax rate on an attempt to boost growth, and has been beaten in the polls.
Making a surprise appearance at a Tory conference party on Sunday night, he won applause at the Conservative Home event after saying he had delivered a “package of tax cuts and reforms to the turbocar supply our economy.”
But Tory insiders admitted they were concerned the conference room could be half-empty for his speech on Wednesday, with delegates leaving early because of the rail strike, so WhatsApp messages have been sent to the presidents local conservatives asking them to encourage members to stay.
As a large crowd of protesters gathered outside the Birmingham conference, a senior Tory admitted the “nasty party” – the label Theresa May applied to the Tories in 2002 – was back. “No one says those words, but it’s basically what everyone thinks when they look at what we’re proposing,” they said.
Cabinet minister Robert Buckland hinted at his unease at tax cuts that disproportionately benefit the rich, saying that while simplifying tax brackets was sensible, he wanted to see “smart interventionism” instead of a “trickle down economy”.
The Welsh Secretary told a fringe event: “A sensible Tory government needs to be very careful to make sure that at the other end of the equation, the most needy are not left behind.
“We must remember that it is those who genuinely need it who will also need our help as a government. We must not shirk our responsibilities in this regard, even if this means that for the time being we have to spend more.”
Senior Tory MP Damian Green warned the party would lose the next election if it did not change. “It’s a political no-brainer that if we end up painting ourselves as the party of the rich and the party of the already successful, then, funnily enough, most people won’t vote for us and we lose,” he said.
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Indicating that he hoped there would be a rethink, the former cabinet minister added: “Quite clearly, there are conversations that need to be had about the direction of the government as we move from here to the general election.”
Former Transport Secretary Grant Shapps also criticized the measures, saying the decision to scrap the 45p tax rate. it was “tin”. In an op-ed for the Times, he wrote that the government should not be “giving big gifts to those who need them least,” adding: “When there is pain, pain must be shared.”
Jake Berry, the Tory party leader, sparked anger among his colleagues when he said MPs would be expected to support the tax measures or they would no longer be allowed to sit as Tories, with at least 14 people they publicly expressed their concern and warned that the comments were at risk of “breaking”. the dam” and forcing more out into the open.
Rebel MPs will not have the chance to test support for the controversial measures for many months. No 10 is now understood to be planning a vote on the tax cuts in March, likely after a spring budget. The only immediate legislation needed is on stamp duty and the abolition of the National Insurance increase, which Tory MPs will support.
However, in a frenetic day of interventions on Sunday, Michael Gove said he supported measures to cap energy bills, but the fact that 35% of extra borrowing to the tax state would be tax cut without funding on left “deeply” concerned.
“There are two main things that are problematic about the tax event,” he said. “The first is the huge risk of using borrowed money to finance the tax cuts. That is not conservative. The second thing is the decision to cut the rate by 45p and, in fact, at the same time to change the law on how bankers are paid in the City of London.
“Ultimately, at a time when people are suffering… when you have billions of extra pounds at stake, to have a major decision, the general tax move, to cut taxes on the richest, that’s a sign of the wrong values “.
Pressed on whether he would vote against the package in the Commons, he finally admitted: “I don’t think it’s right.” In a later fringe event, he added: “If a mistake has been made, I think the right thing to do is to acknowledge it and correct course.”
In his speech at the Tory conference on Monday, Kwarteng, who was revealed to have attended a private champagne reception with financiers after delivering his mini-budget, will say: “We have to face the facts that for too long the our economy has not grown enough.. The road ahead was a slow and managed decline.
“We needed a new approach, focused on increasing economic growth. This is the only real way to deliver higher wages, more jobs and most of all revenue to fund our precious public services and is the only way to achieve long term fiscal sustainability… I am sure that our plan is the right one.”