A defence minister threatened to quit live on air on Tuesday over spending cuts, piling more pressure on Liz Truss as she fought to remain Prime Minister.
In a sign of the tension at the heart of government, armed forces minister James Heappey said he would resign if Ms Truss reneged on a pledge to raise defence spending to three per cent of GDP by 2030.
Mr Heappey was not seeking to undermine the Prime Minister as he praised her “courage” and “leadership” for axing most of the mini-budget in an unprecedented blizzard of U-turns on tax and the energy bills support package.
But he also said she could not afford to make “any more mistakes” as she seeks to remain in No10.
His resignation threat, which highlighted Ms Truss’s weakened political authority, also laid bare the fraught decisions facing her and new Chancellor Jeremy Hunt over spending cuts and tax rises to plug a black hole of tens of billions of pounds in the public finances in the middle of a worsening cost-of-living crisis.
Mr Hunt, who has said that “nothing is off the table”, addressed Cabinet this morning over the “difficult decisions” on spending cuts.
A Treasury source said: “Health and defence won’t be exempt from finding savings. No department will be ring-fenced. That message will be delivered to the Cabinet.”
The stark warning came despite waiting lists in the NHS rising above seven million, a crisis in social care, schools struggling to deal with the aftermath of Covid, a backlog of cases in the courts and soaring inflation eating into Whitehall budgets, as well as pensions.
The Resolution Foundation think tank warned that spending cuts could be as deep as those after the 2009 financial crisis, and that middle-income families may be unable to pay energy bills of more than £4,000 next year after the support package U-turn to target it at the less-well-off after April.
Chief executive Torsten Bell said there was a fiscal black hole of up to £40 billion even after the Government scrapped nearly all of its mini-budget.
Mr Hunt has also not ruled out a bigger windfall tax on gas and oil giants making large profits, or being fully committed to the triple lock on pensions.
Shadow chancellor Rachel Reeves said: “I’ve been saying for months that the Government should extend the windfall tax on the big profits that oil and gas companies are making and use that money, rather than more borrowing and more debt, to support people with the rising cost of living.”
Arriving at Cabinet, Business Secretary Jacob Rees-Mogg gave a ringing endorsement of the PM. While other colleagues were tight-lipped, he said that ministers were “fully” behind Ms Truss who has apologised for the mini -budget chaos. But the Prime Minister will come under an even more intense spotlight on Wednesday when she goes head-to-head against Sir Keir Starmer at Prime Minister’s Questions. One senior Conservative MP said: “She needs to come out fighting otherwise she is gone.”
Centrist Tory MPs welcomed Mr Hunt’s appointment which has calmed the markets after the turmoil triggered by his predecessor Kwasi Kwarteng’s mini-budget. This saw the pound plunge, pushed up mortgage rates and forced the Bank of England into an emergency intervention to prop-up pension funds.
Winchester Tory MP Steve Brine said: “We tried the ‘lets light all the fireworks at once from the box’ and it didn’t go so well.” North Dorset Tory MP Simon Hoare added: “The mild flirtation with Tea Party libertarianism has been strangled at birth and I think for the general good fortune of the Tory party that has to be seen as a good thing.”
But former Cabinet minister John Redwood tweeted: “Most MPs welcomed the end of tax cuts because they were “unfunded” without an OBR (Office for Budget Responsibility) report. “They then all supported a far larger unfunded spending increase on energy with no OBR report. Why do they so hate letting people keep more of what they earn?” With Westminster awash with talk about Ms Truss’s future, Mr Heappey made clear the scale of the task that the Prime Minister faces to stay in No10. Asked on Sky News how many more mistakes she could afford to make, he said: “I don’t think that there’s the opportunity to make any more mistakes because the nation needs a government that is governing well and is making good decisions. The nation also needs a government that is honest when mistakes are made.”
He also brushed off suggestions that Ms Truss is now Prime Minister “in name only”, also insisting that she had made good decisions in past jobs including as Foreign Secretary.
But asked if he would resign if the PM ditches her pledge to increase defence spending to three per cent of GDP, Mr Heappey told LBC Radio: “Yeah. But no-one has said that three per cent is not going to happen by 2030,” he added.
He also made clear that defence ministers were willing to talk with the Treasury about how this three per cent target is reached, signalling a willingness to try to help out with the immediate economic and fiscal pressures.
Downing Street insisted later on Tuesday that it will stand by the PM’s promise of increasing defence spending to three per cent of GDP by 2030 but suggested the “shape” of how the funding gets there could change.
The Prime Minister’s official spokesman said: “You’ve heard from the Chancellor on this.
“We are obviously committed to maintaining the UK’s position at the forefront of Nato, that’s why the PM committed to raise defence spending to three per cent of GDP by 2030.
“The shape of that increase will be set out at future spending reviews in the normal way.”
No10 did not rule out the Department of Health and Social Care having to find savings.
The Prime Minister’s official spokesman said: “On health, I can only point you to what the Chancellor has said on this on a number of occasions.
“There was a lengthy discussion in Cabinet on preparations for the medium-term fiscal plan and what that would entail, I’m not going to be getting into discussion as to who said what.”
At an event last night former cabinet minister Grant Shapps called for the Conservative Party to change its rules so that it can install new leaders more quickly. The ex-transport secretary, who was sacked by Ms Truss when she was elected Prime Minister in September, said parties “must not waste time” holding extended leadership contests while in Government. Mr Shapps also said Ms Truss had “a mountain to climb” but stopped short of calling for to be replaced immediately. “She has a Mount Everest to climb I’d say,” he said.
Meanwhile, a new YouGov poll found that the Prime Minister is viewed unfavourably by 80 per cent of voters.
Her net favourability rating has fallen to minus 70, with just one in 10 holding a positive opinion, compared with Boris Johnson’s worst score of minus 53.