Tory MP admits government's priorities are 'odd' amid backlash over benefit cuts to fund tax reduction for rich

Tory MP Bim Afolami has described Number 10's approach to supporting Britons on the lowest incomes as "odd". (Nadine Batchelor-Hunt/Yahoo News UK)

A Tory MP has admitted the government's financial priorities are "odd" after it announced a cut in taxes for the highest earners, while hinting at a reduction in benefits for the poorest to pay for it.

Speaking at the Conservative Party's conference in Birmingham on Sunday, Bim Afolami questioned the monetary choices of Liz Truss's government.

Responding to Yahoo News UK's question on the issue, the MP for Hitchin and Harpenden said: "Taken as a focus of government policy over the next few years, if the economy grows more everybody will benefit – I believe that.

"At the same time, you've got to get to that point taking people with you... and it strikes me as odd that we aren't prioritising building the financial resilience of low income people, particularly when inflation is coming."

Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwarteng during a visit to Berkeley Modular in Northfleet Kent, to coincide with the Government's new Growth Plan. Picture date: Friday September 23, 2022.
Liz Truss and Kwasi Kwarteng have insisted their mini-budget will promote economic growth. (PA)

He added: "Maybe it's Universal Credit, maybe it's something else; there are various ways of doing it.

"But, for me, unless we can give people more opportunity to develop their financial resilience at the lower end, you're going to get big social problems and, critically, you get economic problems."

Chancellor Kwasi Kwarteng's mini-budget last month sent the UK economy into chaos after he undertook a spree of unfunded tax cuts, many of which were for the highest earners.

Read more: Just how unpopular is Liz Truss's government?

The pound dropped to a record low, the International Monetary Fund (IMF) issued the government with a warning that it could make inequality worse, and the Bank of England was forced to buy £65bn of the UK's debt to stop a run on pensions amid panicking markets.

Following the backlash over how the UK would pay for the cuts, the government signalled that it would look at slashing rises in benefits in order to foot the bill – sparking outrage from anti-poverty charities.

According to Resolution Foundation estimates, the government can raise £5bn if it raises benefits by just 5.5%, rather than by the current rate of inflation – which is 10% – as pledged by former chancellor Rishi Sunak in May.

Watch: 'Get new job' or cut your spending, Tory chair tells struggling Britons

Conservative peer David Willetts sat on the Resolution Foundation panel at the Tory conference alongside Afolami on Sunday and agreed with his "odd" diagnosis of the government's tax cuts.

Willetts questioned the logic of giving pensioners, who are increasingly better off than the poorest working families, above inflation rises while giving workers below inflation rises.

"I think a benefits system which is always putting more money on top of inflation into the pockets in pensioners and less below inflation into the pockets of families is just deeply wrong," he said.

"And Bim is right... it makes the problem of financial resilience worse."

Read more: House prices could plunge by a third, experts warn

Richard Walker, managing director of Iceland and on the panel, also described the government's priorities as "odd" amid the cost-of-living crisis.

"I referenced [they should reintroduce the £20 a week] Universal Credit top-up," he said.

"In terms of the cost of doing that for the poorest million that wouldn't necessarily break the bank compared to some of the other policies they're pushing."

Walker added: "I think some of the priorities are a bit odd in terms of reducing that [45p] top rate [of income tax to 40p]."

Afolami made the remarks about the government's economic strategy at a Resolution Foundation event at the Tory party conference in Birmingham on Sunday. (Nadine Batchelor-Hunt/Yahoo News UK)

On Friday, Save The Children said it would be "cruel" to cut taxes for the rich and pay for them with benefit cuts, arguing it would leave the most vulnerable families caught up in the government's "economic experiment".

“The last chancellor made a commitment to raise benefits in line with inflation, so this now feels like an active decision by the UK government to penalise those with the most to lose," said Becca Lyon, head of child poverty at the charity.

“Families we work with spend a greater proportion of their income on the essentials than wealthier people, therefore this increase in benefits was vital.

"Without it there will be less food, less money for the meter, and fewer warm clothes for children.

"No child deserves to be caught up in this economic experiment. We demand the government returns to its commitment to up-rate benefits in line with inflation immediately."