Kwasi Kwarteng’s mini-budget will prove ‘politically toxic and economically dubious’, Tory MPs have said as they lambasted the £72bn of extra borrowing needed to pay for deep tax cuts that will benefit from disproportionately to the very wealthy.
Divisions in the Tory leadership campaign came to the fore again after Kwarteng’s statement, with critics saying the Chancellor was trying to avoid scrutiny by refusing to release the independent fiscal regulator’s economic forecast.
Kwarteng’s “growth plan” was also compared by a senior party official to the ill-fated “Barber budget” of 1972, which mimicked a similar goal but ended in a boom, soaring inflation and ultimately the demise of Ted Heath’s premiership.
“I have never known a government that received so little support from its own backbench MPs, only four sitting days,” observed one MP.
The normally boiling pews roaring behind a Chancellor as they deliver a financial statement to the Commons were quieter on Friday. Several attendees said few order slips were waved and there were only a handful of “listen, listen” comments, allegedly orchestrated by party whips.
“I completely despair, because I am a member of a party that defends the restricted environment and not the very rich. It will be politically toxic and economically dubious,” said another MP present for the statement.
Sign of the level of discontent, several conservatives rose in the House of Commons to target barbed and hostile interventions in Kwarteng. Mel Stride, chairman of the Treasury Select Committee and former campaign manager for Rishi Sunak’s leadership bid, said there was a “vast void” in the mini-budget.
Stride criticized the Treasury’s refusal to release a new economic forecast from the Office of Budget Responsibility based on the metrics unveiled this week, saying markets were getting “nervous” and “it’s time for transparency” to “provide a calm “.
As the pound fell further against the dollar, former attorney general Jeremy Wright said growth depended on confidence, and that it would “evaporate” if the benefits of tax cuts were offset by the increase in mortgage repayments due to rising interest rates.
Others were gloomy about how abolishing the top tax rate and lifting the cap on bankers’ bonuses would play out in poorer constituencies, especially among the so-called red wall. “It’s the richest we help while the poorest suffer the most,” said a northern MP.
Liz Truss’ ruthless reshuffle, which ousted most Sunak supporters, also hung like a dark cloud over the statement.
“Everyone is upset with the reshuffle and the way it has been handled,” said a person who was recently ousted from government. “Going forward, you’re going to have a situation where, unless some goodwill is extended, people will be looking for a cause to put down a marker to make their displeasure clear.”
Sunak supporters said they were more likely to boycott the Conservative party conference and ruminate on WhatsApp with other frustrated colleagues over the coming holiday weeks.
Roger Gale, a veteran thorn in the side of Boris Johnson’s administration, said: ‘Fortune favors the brave, but not the reckless’, and added that Kwarteng’s ‘not so mini-budget is certainly brave but also seems very risky.”
However, some conservatives were willing to give what they called the Truss “bet” a chance. “It’s definitely driven by ideology, and politics is supposed to be – to some extent – about ideology,” one said. “She has clearly taken the view that she is not gaining from the center but a clear and distinct position.”
Ardent Truss supporters said it would put Labor in the difficult position of having to oppose tax cuts and face uncomfortable questions about whether he would reverse them next. They also said it would boost right-wing support among voters who had previously floated in support of Ukip. Nigel Farage called it “the best Conservative budget since 1986”.
David Jones, a former cabinet minister who backed Truss for leadership, said: “The tax cut was badly needed because we were overtaxed before. Kwarteng obviously marked a clean break with the Rishi regime and I personally believe he had no choice but to do so. If it had been stable over time, according to the OECD, we would have had zero growth next year.
Opposition parties have sought to portray the mini-budget as a gift to the ultra-rich that would provide little support to those who find themselves at the worst of the cost-of-living crisis.
Rachel Reeves, the shadow chancellor, attacked Kwarteng’s “casino economy” which she said was “gambling the mortgages and finances of every family in the country”.
Ed Davey, the leader of the Liberal Democrats, called it a “billionaires’ budget” that showed the Tories were “completely out of touch with families struggling to pay the bills”.