Liz Truss will face her first Prime Minister’s Questions since her market crumbling mini-Budget which plunged the pound to its lowest price against the dollar ever, forcing a rare intervention by the Bank of England.
The prime minister will face off against Labour’s Sir Keir Starmer who has enjoyed a whopping lead against the Tories in the polls as Ms Truss tries to steady the ship following weeks of turbulence including party in-fighting, mortgage rate hikes and the first major U-turn of her premiership.
Returning to Westminster following the break for the party conferences, PMQs will begin at 12.00pm.
There was further turmoil on Tuesday after the Bank of England announced that its emergency support operation to protect pension funds would end this week.
Earlier, the Bank intervened for the second time in as many days to buy up government bonds, warning of a “material risk to UK financial stability” with “fire sales” of assets if did not act.
But speaking in Washington, the Bank governor Andrew Bailey said there could be no further support beyond Friday and it was up to the funds concerned to rebalance their holdings.
Meanwhile, Mr Kwarteng had to endure a further dose of criticism from the International Monetary Fund (IMF) which warned his package of unfunded tax cuts was making it harder for the Bank to get soaring inflation rates under control.
With the Institute for Fiscal Studies warning he will have to find £60 billion in public spending cuts if he persists with his tax plans, Tory MPs fear the government’s reputation on the economy is suffering grievous damage among voters and markets alike.
In the Commons on Tuesday former Cabinet minister Julian Smith warned Mr Kwarteng that the Government must not balance tax cuts “on the back of the poorest people in our country.”
Ms Truss and Mr Kwarteng have already been forced to abandon plans to scrap the top 45p rate of tax in the face of a threatened revolt during the Tory Party conference last week in Birmingham.
There are questions as to whether they will have to make further retreats with some MPs deeply sceptical of their ability to make the numbers add up.
While both prime minister and chancellor are sticking to the line that cutting taxes is the only way to get the economy growing again, there has been a noticeably more emollient tone in recent days.
Ms Truss – who will address Tory MPs at Westminster after facing Sir Keir Starmer in the Commons for Prime Minister’s Questions – is promising to bring smaller groups of backbenchers into No 10 on a regular basis to discuss their concerns.
She has also blocked plans to replace the former top civil servant at the Treasury – Sir Tom Scholar, who was abruptly sacked by Mr Kwarteng on his first day in office – with an outsider, appointing an old Treasury hand instead.
