Kwasi Kwarteng has promised his upcoming economic plan will be “relentlessly upbeat” as some of his own MPs seemed doubtful of his direction.
Speaking in the Commons for the first time since unveiling his mini-budget, the chancellor would not reveal more detail of his next financial announcement, set for Halloween.
But he promised it would include “an absolute iron commitment to fiscal responsibility”, with accompanying forecasts from the Office of Budget Responsibility (OBR).
Politics latest: ‘Ominous warning’ for chancellor as Kwasi Kwarteng faces MPs’ questions
While Mr Kwarteng had some support from his backbenchers, he was issued warnings too – including from former Northern Ireland secretary Julian Smith, asking him to ensure he will “not balance the forthcoming tax cuts on the back of the poorest people in the country”.
And chair of the Treasury Select Committee, Mel Stride, told the chancellor to make sure he “reaches out as much as he can” to all sides of the Commons to get his measures through, adding: “Any failure to do so will unsettle the markets.”
Last month’s mini-budget from the new government – released without OBR forecasts alongside it – sent the markets into turmoil, with the pound dropping, mortgage products being withdrawn and the Bank of England having to step in to save some pension funds.
Prime Minister Liz Truss and Mr Kwarteng were forced into a U-turn over their plan to scrap the 45p tax rate for the highest earners, and to bring forward the medium-term announcement that had been set for the end of November.
But the economic warnings keep coming, with the Institute for Fiscal Studies (IFS) saying the chancellor would have to cut spending or raise taxes by £62bn if he is to stabilise or reduce the national debt, and the International Monetary Fund (IMF) saying the government needed to work with the Bank of England to prevent any further troubles.
Speaking during Treasury questions after shouts from some MPs to “resign”, the chancellor insisted he would “canvass opinion widely ahead of the publication of the plan” and that the OBR’s independence was “absolutely sacrosanct”.
But Labour’s shadow chancellor Rachel Reeves called on Mr Kwarteng to “put aside his pride, do the right thing for our country, end this trickle-down nonsense and reverse the budget”.
She added: “The chancellor is in a dangerous state of denial but the cost of these mistakes are all too real for everyone else – borrowing costs up, growth down, mortgage payments set to increase by £500 a month.
“Now they scrabble around looking for cuts, hitting the most vulnerable and hitting our public services. It does not need to be this way.”
Mr Kwarteng was also pushed by a number of MPs to reveal whether the government would be raising benefits in line with inflation as Boris Johnson’s government promised to do, which has led to rows within the Tory Party.
Liberal Democrat Jamie Stone told the chancellor it was the “only fair way forward” and it would be “immoral to do otherwise”.
But the chancellor would not reveal the decision, saying he will not “prejudge any measures” to be announced on Halloween.
