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 “this short extra delay is acceptable”.
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 rates more likely.
The senior Tory welcomed the move on Monday, saying it may result in a smaller rise in interest rates “critical to millions” – but only if the plan for borrowing “lands well with the markets” ahead of a Bank of England meeting on 3 November.
Former cabinet minister Grant Shapps said it was a “belated but sensible move given the urgent need to show markets the most transparent view of the UK economy”, while fellow Rishi Sunak backer Mark Garnier MP said it was a “very welcome news”.
Tulip Siddiq, Labour’s shadow City minister, welcomed the plan being brought forward. “But 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.”
The Lib Dems said the speeding up of plan was a “screeching U-turn” – insisting that Mr Kwarteng still had to explain “what he’ll do to tackle soaring mortgage costs caused by his botched budget”.
The party’s Treasury spokesperson Sarah Olney said: “Without a clear plan to protect homeowners, this risks ending up as Kwasi Kwarteng’s Halloween horror show.”
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 “must” 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. “I think the sooner the better, as far as the markets are concerned.”
It comes as the Bank of 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.
The Bank said it will double the daily limit on its gilt-buying programme from £5bn to £10bn as it brings the scheme to an “orderly” close ahead of Friday’s cut-off.
But 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.
“I 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,” she told LBC.
Ms Truss is expected to launch a “charm offensive” 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 “genuinely undecided” on the issue and will be “listening” to colleagues, Downing Street sources have said.
