'I'm not going anywhere': Chancellor Kwasi Kwarteng 'focused' on delivering mini-budget

Political Correspondent Libby Wiener on the mounting pressure facing the chancellor and the prime minister

Chancellor Kwasi Kwarteng said he and Prime Minister Liz Truss are determined to carry on - despite criticism of his mini-budget - saying he was "not going anywhere".

The embattled chancellor also said he is "totally focused" on delivering his tax-cutting plans, which are aimed at increasing UK economic growth.

However, there have been reports that talks are under way between No 10 and the Treasury on abandoning elements of the £43 billion plan, including the commitment to axe the proposed increase in corporation tax.

ITV News Political Editor Robert Peston said he is "as confident as [he] can be" that, early next week, Liz Truss and Kwasi Kwarteng will cancel their promise not to increase corporation tax by six percentage points "in one of the most humiliating ever tax U-turns".

The chancellor was at the IMF making the point that there are many countries around the world where inflation is driving up interest rates - is that fair? ITV News Economics Editor Joel Hills has the latest.

In response to discussions in London about scrapping measures in the mini-budget, the chancellor, who was in Washington on Thursday, said: "We are totally focused on delivering the growth plan. What we were facing was a tax high of 70 years and no growth.”

He said his talks with the International Monetary Fund (IMF) on Thursday had illustrated that “growth is a central focus of the international community” and the government was “quite right to focus on growth”.

But in an interview with the Telegraph later on Thursday, he appeared not to rule out a U-turn on corporation tax.

When asked about the expectation from financial markets that the government could ditch the plan not to increase corporation tax in order to demonstrate a commitment to balancing the books, he said: “Let’s see.”

'We are totally focused on delivering the growth plan': Chancellor Kwasi Kwarteng said he and Liz Truss are determined to carry on despite criticism of his mini-budget

Earlier on Thursday, Ms Truss renewed her commitment to controversial tax cuts, with her official spokesperson telling reporters that the prime minister's position "has not changed".

She has come under fire for ruling out public spending cuts to balance the books in her first PMQs since the chancellor's £43 billion mini-budget.

Her comments followed the IFS saying public spending will need to be cut by £62 billion to fund the mini-budget.

Political Editor Robert Peston on how damaging a possible U-turn on the mini budget could be for the chancellor and the prime minister

Ms Truss has insisted that the plan to cancel a rise in corporation tax from 19% to 25% will boost growth, but the so-far unfunded measures in the chancellor’s mini-budget have sparked chaos in the financial markets.

On Thursday, the IMF's managing director Kristalina Georgieva said it is sometimes right for a “recalibration” of policies as she was asked about reports of a UK government U-turn.

Speaking at a press conference in Washington, Ms Georgieva said: “Our message to everybody, not just the UK, is that at this time, fiscal policy should not undermine monetary policy.”

Kwasi Kwarteng acknowledged the UK suffered some “turbulence” following his mini-budget but said the economy was facing the same problems as other countries around the world

She said that “if it does, the task of monetary policy becomes only harder”, as it can increase “rate-tightening conditions”.

“Don’t prolong the pain – make sure actions are coherent and consistent,” she said.

“It is correct to be led by the evidence, so if the evidence is that there has to be a recalibration, it’s right for governments to do so.”

The IMF has previously said the UK government’s tax cuts threatened to cause “problems” for the British economy.

Ms Georgieva also confirmed IMF leaders have had a “constructive” meeting with the chancellor, who is in Washington for meetings of the IMF and World Bank.

It's not only the UK grappling with soaring inflation as consumer prices in the US rose 8.2% in September compared with last year. The figures were down slightly on August but higher than expected.

September’s CPI rate in the UK is expected to be around 10%, according to independent think tank Resolution Foundation.

'Don’t prolong the pain': Kristalina Georgieva said it is sometimes right for a “recalibration” of policies as she was asked about reports of a UK government U-turn

Division among Tories over PM's policies

International Trade Secretary Kemi Badenoch became the latest Tory MP to offer support to the party's leader on Thursday as she urged critical backbenchers to support the prime minister.

“I think that at the moment, given what is happening globally – there is a war in Ukraine, there’s an inflation crisis, we’ve been talking about the cost of living for several months – what we need to focus on is getting behind the prime minister and her growth plans so that she can improve the economy for the country,” Ms Badenoch said.

International Trade Secretary Kemi Badenoch has urged her party to 'get behind' the prime minister’s growth plans. Credit: PA

It followed a show of support from Foreign Secretary James Cleverly, who said that a change at the top of the party would be a “disastrously bad idea”.

However, Mel Stride, the Tory chairman of the Commons Treasury Committee, was among those levelling strong criticism at Ms Truss's policies.

He said that given the PM's commitments to protect public spending, there was a question over whether any plan that did not include “at least some element of further row back” on the £43 billion tax-slashing package can reassure investors.

“Credibility might now be swinging towards evidence of a clear change in tack rather than just coming up with other measures that try to square the fiscal circle,” Mr Stride said.

A meeting of the Tory backbench 1922 Committee on Wednesday evening failed to win over support with MPs reportedly raising concerns about soaring mortgage rates and the Tories’ slump in the polls.

Commons education committee chair Robert Halfon told Ms Truss she had “trashed the last ten years of workers’ Conservatism”.

Downing Street declined to say on Thursday whether Ms Truss is concerned about a loss of confidence in her leadership.

The prime minister and chancellor are expected to meet with critical MPs from next week to try to assure them that Mr Kwarteng’s medium-term fiscal plan on 31 October will address their concerns.

But Jacob Rees-Mogg suggested the government could ignore Office for Budget Responsibility forecasts accompanying the strategy if they predict low growth and rising debt.

The Business Secretary told ITV’s Peston that “its record of forecasting accurately hasn’t been enormously good” and that the chancellor could draw on “other sources of information”.

Downing Street aimed to distance itself from Mr Rees-Mogg’s comments on Thursday.

Since Mr Kwarteng’s 23 September mini-budget, the value of sterling has fluctuated and yields on government bonds, the cost of state borrowing, rose to such an extent that the Bank of England was forced to intervene to prevent problems for pension funds.

Ms Truss was also warned by senior advisers that it was “no longer credible” to press ahead with large tax cuts without risking a financial crisis, The Times newspaper reported.

She has already abandoned plans to cut the 45p rate of income tax for top earners.

Economists have suggested that restoring confidence in the government’s grip on the national finances will require tens of billions of pounds’ worth of spending cuts or tax rises.

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