Kwasi Kwarteng arrives at Darlington station on Thursday
(Picture: PA)The Chancellor has appealed for unity within the Tory party as a new poll gave Labour a 33-point lead over the Conservatives.
Liz Truss and Kwasi Kwarteng insisted their controversial £45 billion package of tax cuts revealed on Friday is the “right plan” to get the economy moving, despite subsequent chaos on the financial markets and fears of rocketing mortgage bills.
They are now reportedly due to meet with the head of the Office for Budget Responsibility on Friday, after the Government came under fire for not gaining an OBR forecast before revealing the mini-budget.
Worries among Tory MPs that the financial fallout following the mini-budget could hurt them at the ballot box were dramatically underlined when a YouGov poll gave Labour a massive 33-point lead over the Conservatives on Thursday.
It is thought to be the largest poll lead any political party has enjoyed since the 1990s.
Amid reports of unease among some Tory MPs following the market chaos of recent days, the Chancellor sent a message to colleagues on Thursday calling for unity.
“I understand your concern,” Mr Kwarteng wrote in the message seen by Sky News. “We are one team and need to remain focused.
“There is immense global market volatility - not just a UK issue - being driven by war, Covid hangover, and a super strong USD all other major currencies are wrestling with (see Japan this week; Euro down).
“The path we were on was unsustainable - we couldn’t simply continue to raise taxes.”
He promised to show the Government’s plan is “sound, credible and will work to drive growth” before ending: “The only people who win if we divide is the Labour Party”.
In their first public comments since the pound hit a record low on Monday, neither the Prime Minister nor the Chancellor commented directly on the turmoil created by the so-called mini-budget.
During a round of BBC local radio interviews, Ms Truss said the Government had to take “urgent action” to kick-start the economy and protect consumers from rising energy costs.
And during a visit to an engine plant in Darlington, Mr Kwarteng said the package he announced in the Commons on Friday was “absolutely essential” if the economy was to generate the revenues needed to fund public services.
However, Labour warned that ordinary families would pay the price with thousands of pounds added to mortgage bills as the Bank of England will be forced to increase interest rates to shore up the pound.
Some Conservative MPs have now called for an urgent change of course from the Prime Minister.
Julian Smith, a former Cabinet minister, urged the Government to “take responsibility” for the crisis.
“The Government must scrap 45p, take responsibility for the link between last Friday and the impact on people’s mortgages and make clear that it will do everything possible to stabilise markets and protect public services,” tweeted the Tory MP.
Former science minister also George Freeman called on the Cabinet to meet and agree a “Plan B”.
“The economic package of borrowing & tax cuts announced last week clearly can’t command market or voter confidence,” he said on Twitter.
Another MP, Sir Charles Walker, admitted that his party would likely lose an election if it was called today based on the polling, but ruled out the possibility of a leadership challenge against Ms Truss. “We’ve made our bed, we’ve got to lie in it,” he said.
Meanwhile, Mr Kwarteng came under renewed pressure to bring forward his planned statement setting out how he intends to get the public finances back on track after the Office for Budget Responsibility (OBR) said it could produce a preliminary set of forecasts by October 7.
The Chancellor previously said he would deliver his medium-term fiscal plan explaining how he would get debt falling as a percentage of GDP, alongside the updated OBR forecasts, on November 23.
But with the absence of any forecasts to accompany Friday’s “fiscal event” seen as a key factor in spooking the markets, many Tory MPs believe that is too long to wait if they are to restore stability.
Mel Stride, the Conservative chairman of the Commons Treasury Committee, said it should be brought forward to late October - or even earlier - as there was an “urgent need” to increase the confidence of the markets.
Late on Thursday, the PA news agency said it understands Mr Kwarteng and the Prime Minister are due to meet with the head of the OBR, Richard Hughes, on Friday.
The Chancellor has also faced external criticism from the UK’s closest ally, as US Secretary of Commerce Gina Raimondo joined said the UK’s radical package of measures “isn’t going to fight inflation” or promote long-term economic growth.
“Investors, business people want to see world leaders taking inflation very seriously, and it’s hard to see that out of this new government,” she told Channel 4 News.
But Mr Kwarteng brushed off suggestions his mini-budget had been a “major economic disaster” on Thursday, saying: “Without growth you are not going to get the public services, we are not going to generate the income and the tax revenue to pay for public services.
“That’s why the mini-budget was absolutely essential in re-setting the debate around growth and focusing us on delivering much better outcomes for our people.”
The Prime Minister also appeared to double-down on her support for the plan, as she told BBC Radio Leeds: “We had to take urgent action to get our economy growing, get Britain moving and also deal with inflation.
“Of course that means taking controversial and difficult decisions but I am prepared to do that.”
Their comments came after the Bank launched an emergency government bond-buying programme on Wednesday to prevent borrowing costs from spiralling out of control and stave off a “material risk to UK financial stability”.
It bought up to £65 billion worth of government bonds - known as gilts - at an “urgent pace” after fears over the Government’s tax-cutting plans sent the pound tumbling and sparked a sell-off in the gilts market, which left some UK pension funds teetering on the brink of collapse.
On Thursday, the pound regained some ground, rising to above 1.1 dollars for the first time since last Friday.
However, the FTSE 100 dropped around 2% to 6,864 - its lowest point since March this year, amid a global sell-off, while yields on the UK’s 10-year gilts were up to 4.14%.
Speaking in Northern Ireland, the Bank’s chief economist, Huw Pill, underlined warnings that they would have to sharply raise interest rates, noting that there was “undoubtedly a UK-specific component” to recent market movements.
His comments contrasted with Ms Truss who, in her interviews, blamed “Vladimir Putin’s war in Ukraine” for pushing up global energy prices.
For Labour, shadow chancellor Rachel Reeves called on Ms Truss and Mr Kwarteng to reverse their “kamikaze budget”.
“It is disgraceful that the family finances of people across the country are being put on the line simply so the Government can give huge unfunded tax cuts to the richest companies and those earning hundreds of thousands of pounds a year,” she said.
“This is a serious situation made in Downing Street and is the direct result of the Conservative Government’s reckless actions.”
Earlier, trade unions called for a “cast-iron guarantee” that there would be no more cuts to public spending after Treasury Chief Secretary Chris Philp confirmed Whitehall departments had been instructed to carry out an “efficiency and prioritisation exercise” in an effort to find savings.
Speaking to broadcasters, Mr Kwarteng said that despite the pressures on the public finances, the Government would maintain the state pension “triple lock” but refused to commit to uprating benefits in line with inflation.
“It’s premature for me to come to a decision on that, but we are absolutely focused on making sure that the most vulnerable in our society are protected through what could be a challenge,” he said.
