THE Tory government is set to cut benefits in real terms in order to fund tax cuts for the rich, according to reports.
Liz Truss has doubled down on her government’s disastrous “mini-budget”, insisting it is the “right plan” to get the economy moving despite chaos on the financial markets and fears of rocketing mortgage bills.
To fund the tax cuts and end to the cap on bankers’ bonuses, Truss’s government is looking at only increasing benefits in line with earnings, rather than inflation, to save an estimated £5 billion.
In May this year, then-chancellor Rishi Sunak said benefits would be uprated by this September’s Consumer Prices Index (CPI), subject to a review.
However, Treasury ministers have refused to confirm that this will be honoured.
Asked during a visit to Darlington if benefits would be uprated in line with inflation, Chancellor Kwasi Kwarteng said: “It’s premature for me to come to a decision on that, but we are absolutely focused on making sure that the most vulnerable in our society are protected through what could be a challenge.”
Treasury minister Chris Philp (below) told ITV’s Robert Peston that the matter is under consideration.
Pressed, he said: “I am not going to make policy commitments on live TV, it is going to be considered in the normal way, we will make a decision and it will be announced I am sure in the first instance to the House of Commons.”
The Times reported that Truss had been told by analysts that she would have to make cuts on the scale of the start of austerity in 2010 in order to balance the books before 2030.
The plans have been openly criticised by Tory MPs. Robert Largan, the Conservative MP for High Peaks, wrote on Twitter: “This is untenable. You cannot freeze benefits and pensions while cutting taxes for millionaires.
“A debt reduction plan needs to be both economically and politically sustainable to be credible.”
A Conservative former pensions minister also said it would be “a travesty” if the Government increased the pensions of the UK’s poorest citizens by less than inflation.
Tory peer Ros Altmann wrote in the Daily Express: “The pension credit has always been legally required to rise at least in line with earnings inflation, but the Government can choose to do better.
“I believe it must do so. If these poorest older citizens only see their pensions increase by the lower earnings figure, it would be a travesty.
“This is because the Government legislated last year to strip them of their earnings protection and instead replaced it by price inflation up-rating.”
One charity warned that failing to meet a commitment to increase benefits in line with inflation would lead to disabled people “starving and freezing in their own homes”.
James Taylor, director of strategy at disability equality charity Scope, said: “If the Government U-turns on this promise, it would be devastating.
“Refusing to increase benefits in line with the true inflation rate would show an utter disdain towards people who need this support.
“The Government must stick to its promise to increase benefits in line with inflation, and provide much more direct financial support now to disabled people at the sharp end of this crisis.”
He said many disabled people have no choice but to rely on benefits, and have seen real-terms cut after cut.
The news comes after another serious blow to the Chancellor, who it was revealed dismissed the opportunity of taking expert advice from the Office for Budget Responsibility (OBR) ahead of his disastrous “mini-budget” last Friday.
The OBR said its offer of an economic forecast had been rebuffed, even though they were "in a position" to draw up data to a high standard.
Truss and Kwarteng are set to meet with the OBR on Friday to discuss the fall-out from their "mini-budget".