‘Inept madness’: Tory MPs break ranks and publicly slam Truss and Kwarteng’s economic plans
Outrage in the Conservative party with Liz Truss' and Kwasi Kwarteng's mini-budget intensified on Wednesday - with one MP describing it as "inept madness", and a former Tory chancellor describing it as a "catastrophic start" amid escalating economic chaos.
Simon Hoare, who represents North Dorset, tweeted on Wednesday: "In the words of Norman Lamont on Black Wednesday: “today has been a very difficult day”. These are not circumstances beyond the control of Govt/Treasury. They were authored there. This inept madness cannot go on."
It comes amid a growing political backlash aimed at Truss and Kwarteng, who are being held responsible by many for plunging the UK into economic turmoil.
The Bank of England has been forced to take emergency action, buying up long-term government bonds because of a “material risk to UK financial stability”, while the International Monetary Fund (IMF) urged the chancellor to change course.
Hoare has become the first Conservative MP to make the extent of his anger amid widespread reports of serious concerns among Tory backbenches.
Some Conservative MPs are already said to have sent letters of no confidence in Truss, less than a month into her premiership.
An unnamed former minister told Sky News on Monday: "You cannot have monetary policy and fiscal policy at loggerheads. Something has to give... They are already putting letters in as [they] think she will crash the economy."
Under Tory party rules, 54 letters need to be sent in for a confidence vote to be triggered.
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Another Tory MP and former cabinet minister, Julian Smith, reacted strongly to comments by former chief Brexit negotiator Lord Frost dismissing the concerns of the IMF.
“Arghhhhhhhhhhhhhhhhh,” he tweeted.
Ken Clarke, former Tory chancellor and former cabinet minister under Margaret Thatcher, said: “I’ve never known a budget to cause a financial crisis immediately like this."
He added: “They have made a catastrophic start, the budget was a serious mistake."
The temporary measure to buy government bonds – known as gilts – to bring down spiralling borrowing costs has been met with a mixed reaction in the City.
The Bank’s extraordinary intervention, responding directly to the government’s £45 billion tax-cutting strategy, will pile further pressure on Truss and Kwarteng to defend a vision for the economy that has spooked markets and shocked most mainstream economists.
While the pound hit an all-time record low of £1.03 against the US dollar on Monday, the yield on 10-year gilts – which is a proxy for the effective interest rate on public borrowing – has also soared by the most in a five-day period since 1976, according to experts.
Senior Tory MP Roger Gale on Wednesday said: "We need a statement in very short order indeed to steady the nerves, steady the market and set out very clearly what the business plan is so that everybody understands properly where we are going.”
On Wednesday afternoon financial secretary to the Treasury Andrew Griffith told Sky News: “We think they are the right plans because those plans make our economy competitive.”
He added: “Get on and deliver that plan. That’s what I, the chancellor and my colleagues in government are focused on is getting on and delivering that growth."
However, the scale of the crisis in the markets has led to unease in some quarters of the Tory party, while Labour has joined calls for Parliament, currently on a conference recess, to be recalled.
“The government has clearly lost control of the economy,” Sir Keir Starmer told reporters in Liverpool.
The Labour leader said: “What the government needs to do now is recall Parliament and abandon this budget before any more damage is done.”
It all comes just days before Tory MPs and thousands of members will descend upon Birmingham for Truss’ first party conference as prime minister.
In today's statement, the Bank of England said: “Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability.
“This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy.
“In line with its financial stability objective, the Bank of England stands ready to restore market functioning and reduce any risks from contagion to credit conditions for UK households and businesses.”
The Treasury responded by reaffirming its commitment to the Bank of England’s independence and said the government “will continue to work closely with the Bank in support of its financial stability and inflation objectives”.
The Bank's statement follows an extraordinary intervention from the IMF, who said it was “closely monitoring” developments in the UK and was in touch with the authorities, urging the chancellor to “re-evaluate the tax measures”.
It warned the current plans, including the abolition of the 45p rate of income tax for people on more than £150,000, are likely to increase inequality.