Kwasi Kwarteng has been told by a senior Tory MP not to balance the books “on the back of the poorest people”, as he prepares to announce his plan to cut debt.
The chancellor was also warned on Tuesday to check if he actually has he votes of Conservative MPs to push the measures through parliament.
On October 31 Kwarteng will set out his medium-term fiscal plan explaining how he will get debt falling in the wake of his £43bn mini-budget tax giveaway.
The Institute for Fiscal Studies has calculated he will be forced to make “big and painful” spending cuts worth £60bn if he sticks to his tax plans.
Kwarteng’s mini-Budget triggered deep splits in the Tory party and he has already been forced to abandon plans to scrap the 45p rate of tax paid by the highest earners.
Taking questions in the Commons on Tuesday, he was warned he could not necessarily count on the loyalty of backbenchers when the package of measures came to a vote.
Mel Stride, the Tory chair of the Commons Treasury committee, said Kwarteng should act with “caution” when setting out how he plans to balance the books.
“When it comes to the measures that he puts forward to underpin that forecast that he reaches out as much as he can across this side of the House and the other side of the House to be absolutely certain that he can get those measures through this House,” he said.
Stride added: “Any failure to do so will unsettle the markets.”
In a further sign of Tory disquiet, two of the party’s former chief whips also piled pressure on the government over its economic strategy.
Julian Smith, who served under Theresa May, told Kwarteng not to pay for his tax cuts “on the back of the poorest people in our country”.
That was a reference to the government considering increasing benefits by average earnings rather than the rate of inflation.
The chancellor told MPs “no decisions have been made” on benefits, but that the government would announce its plans in time for his medium term fiscal plan at the end of the month.
Mark Harper, who was chief whip when David Cameron was prime minister, asked Kwarteng whether he agreed with the IFS’s warning on spending cuts.
However, the chancellor failed to give him a straight answer and would only say he will reveal his plans on October 31.
On Tuesday morning the Bank of England made a further intervention in the markets to ensure “financial stability”.
Shortly before Kwarteng took questions in the Commons, the IMF issued further criticism of the chancellor’s financial plans and warned they would fuel inflation.
Rachel Reeves, Labour’s shadow chancellor, said “no other government is sabotaging their own country’s economic credibility as this government is”. She asked:
“Are the chancellor and the prime minister the last people left on Earth who actually think that their plan is working?”
“No other government is sabotaging their own country’s economic credibility as this government is.”
