Truss is under increasing pressure to change course at Mini-Budget

A parliamentary coup to oust Liz Truss would be a “disastrously bad idea,” Secretary of State James Cleverly said on Thursday, as the PM faced mounting pressure to change course on her economic policies.

Truss has been in office for just over a month, but some Tory MPs are privately discussing whether she should be ousted after the messy aftermath of the government’s ‘mini’ budget last month.

On Wednesday she was confronted by a string of Conservative MPs who were angry at her economic policies, with Rob Halfon, a Tory MP for the working-class seat in Harlow, accusing her of “destroying” workers’ conservatism. Another MP described the mood as “buried”.

The Prime Minister has promised to consult Tory MPs next week on the shape of a new medium-term fiscal plan, which Chancellor Kwasi Kwarteng is expected to present on October 31.

But some Tory MPs said it was a sign of weakness. A former cabinet minister said: “It’s a deadlocked budget exercise, with markets having to wait for 365 MPs to dictate their priorities.

“There are massive problems related to the relationship between the executive and parliament. This reflects a comprehensive loss of authority – it is essentially asking the faction to opt out.”

These ’round table’ meetings with Tory MPs are likely to include mounting calls for Kwarteng and Truss to scrap parts of the ‘mini’ budget, notably a £17bn plan to cut corporate tax rates.

So far, Truss and Kwarteng have insisted on sticking to their economic plan, but some government advisers have warned that markets and parliamentary opposition will force them to scrap or change it.

Rishi Sunak, former chancellor, had planned to increase corporate income tax from 19 percent to 25 percent next April, and the expected additional revenue is already on the government’s books.

If Kwarteng delivers on his promise to reverse that increase, he’ll have to come up with £17billion to pay for it. The Institute for Fiscal Studies estimates the Chancellor faces a £60bn budget deficit this week.

The corporate tax move is the biggest tax change in Kwarteng’s plan, but it’s also totemic; It featured prominently in Truss’s Tory leadership campaign. Postponing or canceling the cut would save billions of pounds.

Clever told the BBC Kwarteng had to “bring certainty to the markets” but added: “I think a change in leadership would be a catastrophically bad idea politically and also economically.

“We will absolutely remain focused on growing the economy.”

In a separate Sky News interview, Cleverly made no mention of the corporate tax cut, instead insisting that the key parts of the “mini-budget” related to the government’s energy package and separate cuts to income taxes and Social Security.

Cleverly said the focus has been “to make sure taxes get a little bit lower for 30 million people, and those are really strong principles.” He said: “I think we should definitely stick with those.”

Truss and Kwarteng are under significant pressure to overturn the corporate tax plan and could use next week’s consultations with Tory MPs as an opportunity to show they are “listening” to concerns.

A Conservative MP predicted colleagues would also raise concerns about other parts of the package, preferring instead more public spending on schools or hospitals rather than paying for years of austerity for tax cuts.

Mohamed El-Erian, President of Queens’ College Cambridge and adviser to insurer Allianz, told the BBC: “You now understand that cutting spending drastically will not solve the problem, it just won’t work.

“There’s starting to be talk among backbenchers that we might need a re-ruling of the ‘mini’ budget and particularly the unfunded tax cuts. And that is ultimately a necessary condition to get out of this mess.”