Cutting benefits to balance the books will be a “huge mistake” and “not right at all”, Tory former welfare slasher Esther McVey warned today.
The ex-Work and Pensions Secretary, once a key figure in defending the Bedroom Tax and benefit sanctions, warned helping people back into work “will not be done by slashing the benefit budget”.
It comes amid mounting speculation that Liz Truss will axe plans to raise Universal Credit by inflation in April.
At the same time she is ploughing on with nearly £45billion in tax cuts and scrapping the bankers’ bonus cap - despite U-turning and keeping the 45p top rate of Income Tax.
Ms McVey told a Tory conference fringe hosted by the Centre for Policy Studies think tank: “Government does have to reduce spending.”
But she said previous benefit cuts were done in a “Conservative way about extending opportunities and empowerment”.
She added: “I have to say that it would be a huge mistake not to give a cost of living increase in the benefits.
“It cannot be that the books are balanced on the back of benefits. That is not right at all.
“What we’ve got to do is help people back into work, and that will not be done by slashing the benefit budget.
“It is about supporting the poorest in society, but showing them there is a better way, and with those job vacancies out there, there is a way for them.”
David Gauke, a former Tory Work and Pensions Secretary, told The Mirror at a fringe event he would "very surprised" if the government didn't increase benefits in line with inflation.
"I cannot see how they refuse to increase in line with inflation given the pledges that have been made and given the current situation of a very significant cost of living crisis."
He said: "The government has left itself in difficulty by going ahead with unfunded tax cuts which I think I initially they intended to just borrow.
"The markets are now spooked and now the government is scratching around trying to find some spending to cut to fill the whole."
The Commons Work and Pensions Committee today wrote to Kwasi Kwarteng demanding benefits rise by inflation - around 10% - next April.
Chairman Stephen Timms said: "People on the lowest incomes are increasingly struggling to get by on the essentials and, because of the jump in inflation between September 2021 and April 2022, benefits claimants’ incomes have fallen sharply in real terms this year.
"The former Chancellor assured Parliament there would be a “catch up” next April. The Chancellor must honour his predecessor’s pledge to uprate benefits in the usual manner, in line with inflation. Without it, countless families risk being pushed further into crushing poverty as they are forced to stretch the same money over higher prices.”
Tory MP John Glen, a former Treasury minister, slammed claims there was a need for “handouts” to stop - something Liz Truss said. He told the event: “No there isn’t, there can’t be.
“There are some people who are in such a vulnerable state, there isn’t a growth imperative or outcome that’s going to resolve that situation for that group of people this coming Autumn or winter.”
Mr Glen said communities, churches, and charities will help but added: “We have got to be clear that there are groups of people that are excluded and this isn’t right.
“And we as a Conservative Party, I as a member of Parliament care about these things.” He added: “We should not be cutting benefits at this difficult time.”
During interviews today, Chancellor Kwasi Kwarteng refused to say if benefits will rise next April in line with September's inflation of around 10%.
Ex-Chancellor Rishi Sunak had pledged earlier this year to raise Universal Credit by inflation in April 2023, subject to a review on the exact details.
But since Liz Truss took power, ministers have refused to repeat the promise. Multiple outlets reported the rise could instead match the annual rate of pay growth - which is currently only just over 5%.
That would be a real-terms cut - the second in a row after benefits only rose by 3.1% in April 2022.
A government source suggested they were considering the move because of £650 in one-off payments this winter.
"Claimants have been given a lot of support already so that should be factored in,” they said.
Earlier, Kwasi Kwarteng refused to rule out a new era of austerity as Universal Credit claimants brace for a real-terms cut in benefits.
Fresh from a humiliating U-turn on the mini-Budget, the Chancellor faced accusations of leaving vital services with a "massive black hole in their budgets".
It comes after Mr Kwarteng unveiled over £40 billion in tax cuts - funded by borrowing - without consulting the Office for Budget Responsibility.
The Chancellor said the government will stick to the 2021 spending review. Without further funds, government departments could face real-terms cuts of around £18 billion - due to soaring inflation.
Pressed on BBC Radio 4's Today programme whether there would be a "new era of austerity”, he replied: "You will see what our spending plans are in the medium-term fiscal plan.
“But I'm not going to be drawn on that.”
Frances O'Grady, the general secretary of the Trade Union Congress, said: "The Prime Minister promised during her leadership campaign there would be no return to austerity. But that pledge now appears to be in tatters.
"If spending on public services does not rise in line with inflation, schools, hospitals and other vital services face a massive black hole in their budgets."
She added: "Public services have already been cut to the bone by successive Conservative governments. There is nothing to trim.”
