Kwasi Kwarteng’s mini-budget will prove “politically toxic and economically dubious”, Conservative MPs have said as they lambasted the extra £72bn of borrowing needed to pay for swingeing tax cuts that will disproportionately benefit the very wealthy.
The divisions of the Tory leadership campaign roared back to the fore after Kwarteng’s statement, with critics claiming the chancellor was trying to avoid scrutiny by refusing to publish economic forecasts from the independent budget regulator.
Kwarteng’s “plan for growth” was also compared by one senior party figure to the ill-fated “Barber budget” of 1972, which emulated a similar aim but ended in boom, soaring inflation and ultimately the demise of Ted Heath’s premiership.
“I’ve never known a government that has had so little support from its own backbenches, just four sitting days in,” observed one MP.
The normally ebullient benches that roar behind a chancellor as they make a fiscal statement to the Commons were more hushed on Friday. Several present said few order papers were waved and there was only a smattering of comments of “hear, hear”, allegedly orchestrated by party whips.
“I completely despair, because I’m a member of a party that stands up for the squeezed middle not the very rich. This will be politically toxic and economically dubious,” said another MP present for the statement.
In a sign of the level of discontent, several Conservatives rose in the Commons chamber to aim barbed and hostile interventions at Kwarteng. Mel Stride, the chair 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 publish fresh economic forecasts from the Office for Budget Responsibility based on the measures unveiled this week, saying the markets were getting “twitchy” and “now is the time for transparency” to “provide a calmness”.
As the pound fell further against the dollar, the former attorney general Jeremy Wright said growth depended on confidence, and that would “evaporate” if the benefits of tax cuts were outweighed by mortgage repayments rising due to higher interest rates.
Others were gloomy about how the abolition of the highest tax rate and lifting the cap on bankers’ bonuses would play in poorer constituencies, particularly among the so-called red wall. “It’s the richest we’re helping while the poorest are suffering the most,” was one northern MP’s stark assessment.
Liz Truss’s ruthless reshuffle which ousted most Sunak supporters also hung like a dark cloud over the statement.
“Everybody is distraught at the reshuffle and the way it’s been handled,” said one person recently heard from the government. “Looking ahead, you’re going to have a situation where, unless some goodwill is extended, people will look for a cause to lay a marker down to make clear their unhappiness.”
Sunak’s supporters said they were more likely to boycott the Conservative party conference and ruminate over WhatsApp with other frustrated colleagues over the following few weeks of recess.
Roger Gale, a veteran thorn in the side of Boris Johnson’s administration, said: “Fortune favors the brave, but not the foolhardy,” and added that Kwarteng’s “not-so-mini-budget is certainly brave but also looks very high risk indeed “.
However, some Tories were willing to give what they called Truss’s “gamble” a chance. “This is definitely driven by ideology, and politics is supposed to be – to some extent – about ideology,” said one. “She’s clearly taken the view she doesn’t win from the center but a clear distinct position.”
Ardent Truss backers said it would force Labor into a difficult position of having to oppose the tax cuts and face uncomfortable questions about whether it would then reverse them. They also said it would shore up support on the right among voters who previously floated to support Ukip. Nigel Farage proclaimed it to have been “the best Conservative budget since 1986”.
David Jones, a former cabinet minister who supported Truss for the leadership, said: “Cutting taxes was very much called for because we were overtaxed previously. Kwarteng has obviously marked a clear break with the Rishi regime and I personally think he had no option but to do it. If it had been steady as she goes then according to the OECD we would have had zero growth next year.”
Opposition parties sought to paint the mini-budget as a giveaway to the ultra-rich that would provide little support for those at the sharp end of the cost of living crisis.
Rachel Reeves, the shadow chancellor, attacked Kwarteng’s “casino economics” that she said were “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 had shown the Conservatives to be “completely out of touch with families struggling to pay the bills”.