Liz Truss latest: Cabinet row on benefits as Penny Mordaunt breaks ranks

Liz Truss has insisted that no decision has yet been made on benefits, despite reports she is considering a real-terms cut to help pay for her tax cuts.

Grilled on the intervention by cabinet minister Penny Mordaunt – who said she wanted benefits uprated in line with inflation – the PM told broadcasters: “On the subject of benefits, we have not yet made that decision … As I’ve said no decision has yet been made on the issue, and I look forward to having those discussions.”

On the 45p top tax rate U-turn, Ms Truss said: “We have listened to what people said on the issue. It wasn’t a core part of our growth plan … it was becoming a distraction. That’s the kind of government we are. We do respond when there are concerns.”

Asked if she still trusts her chancellor Kwasi Kwarteng, she said: “I work very, very closely with my chancellor … We will continue to deliver.”

Asked about rising soaring mortgages, she said: “I understand it’s a very, very worrying time for people … Yes, these are worrying times, but we as a government will do what we can to help people get through.”

Tory MP Caroline Nokes made clear her opposition to the prospect of real-terms benefits cuts – saying she was “glad” Penny Mordaunt made clear her commitment to uprating benefits in line with inflation.

Liz Truss has responded to claims made in the Sunday Times newspaper that she told King Charles not to go to the Cop27 climate summit.

“It’s entirely a matter for the King, his travel programme,” she told LBC. “I am not going to reveal the contents of any discussion I have with King Charles.”

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Liz Truss has said that it is the right time for Britain to take on some extra borrowing to try to spur economic growth.

She told the BBC: “This is the right time to take on some extra borrowing because of a very, very severe international situation that we face. And that situation is becoming apparent, with interest rates which are rising around the world, it’s become apparent through huge energy costs, so it’s the right decision.”

Chief executive of the Resolution Foundation, Torsten Bell, has written a thread breaking down the claim that a real-term benefit cut would incentivise people to work.

He explains that “the people who have dropped out of labour market post-pandemic are largely not on benefits. This isn’t an incentives issue in a simple sense – DWP wouldn’t know how to contact, let alone ‘incentivise’ these people to work, if they tried..”

You can read his thread here:

Pound sterling rose to an almost two-week high on Tuesday, boosted by the UK government’s U-turn on controversial plans for tax cuts.

Sterling rose 0.08 per cent to $1.1333, up about 10 per cent from the record low against the dollar seen last week following chancellor Kwasi Kwarteng’s mini-Budget announcement of scrapping the highest rate of income tax, with cuts funded by increased borrowing.

Mr Kwarteng’s pledge to abolish the 45p rate of tax, paid by people who earn more than £150,000 a year, was met with a major pushback from the opposition and a rebellion among backbench Tory MPs, who threatened to vote against the plan saying it was unfair amid a cost of living crisis.

“We get it, and we have listened,” Mr Kwarteng said regarding the reversal of a plan to cut the 45 per cent tax band.

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Commons leader Penny Mordaunt has told Times Radio that benefits should rise with inflation after Liz Truss refused to confirm the rise.

The cabinet minister said that she had “always supported” benefit payments keeping pace with inflation and said that it “makes sense to do so”.

“We want to make sure that people are looked after and that people can pay their bills,” she said.

“We are not about trying to help people with one hand and take away with another.”

Former work and pensions secretary Damian Green said Prime Minister Liz Truss has “probably not” got the support in the House of Commons to prevent an inflation-linked rise to benefits.

He told BBC Radio 4’s Today programme: “If people are already struggling, and many of these people will be, then making them struggle more is not a sensible response to the problems.

“I completely agree with the Prime Minister when she says you’ve got to see this in the round, but in the round it doesn’t make sense to an extra £1,200 of help for energy bills to the poorest people in the country and then say but we’re going to claw hundreds of pounds of that back, it militates against the Government’s own rescue package, so I don’t see the sense of this.”

Asked “If the Prime Minster doesn’t listen to you on this, could she get this policy through Parliament?”, he said: “Probably not, I think there that will be many of my colleagues who think that when you’re reaching for spending cuts, benefit payments are not the way to do it.

“As I say, cutting the welfare bill can be done a number of ways, there are other ways to do that and it of course illustrates the wider political problem of where do you find cuts, the two biggest Government budgets are health and welfare and it’s politically difficult to cut either of those budgets.”

Asked again if Ms Truss will have to do “another U-turn” if she moves ahead, he added: “Well yes and I’m trying to avoid that I think, clearly U-turns are not good for Governments and they should only do them when they realise that they are on the wrong track, we’ve had one this week and so let’s avoid the necessity for another.”

Home secretary Suella Braverman will reportedly announce a new law today which will bar anyone who crosses the Channel in a small boat from claiming asylum.

According to a report in The Times, Ms Braverman will create a blanket ban for anyone who enters the UK illegally from claiming asylum.

The new bills will also be accompanied by an increased use of detention facilities to accommodate migrants, the paper reported.

It is unclear how Ms Braverman will achieve this without breaching the 1951 UN refugee convention. Some party sources told The Times that the UK may be forced to leave the convention.

Reacting to the news, barrister Colin Yeo said: “I can’t see how a blanket ban could possibly be compatible with the Refugee Convention. Either the UK is withdrawing from the international system for protecting refugees or she’s over promising. I suspect the latter, we’ll see.”

Liz Truss has sidestepped questions about further U-turns as she faces a growing rebellion within her own party against potential benefits cuts.

Cabinet minister Penny Mordaunt broke ranks to call for payments to rise in line with soaring inflation as backbenchers warned the prime minister she would struggle to get the move through parliament.

Unlike the previous government, Ms Truss has refused to confirm her plan for benefits, meaning some of the poorest households could face a real-terms cut in their income.

A day after rebels forced her to backtrack on plans to give the richest a tax cuts, critics now have a battle over benefits in their sights.

In an interview with LBC’s Nick Ferrari, Ms Truss was pressed a number of times on future about turns. Asked if there would be further U-turns on the mini- budget, she said she was determined to press ahead with her plan for economic growth, leading the host to accuse her of not answering the question.

Read the full story from our Whitehall editor Kate Devlin here: