Chancellor to return early for crunch talks over mini-budget with PM

Chancellor Kwasi Kwarteng has cancelled meetings in the US and is leaving a day early for crunch talks in the UK as pressure mounts on Liz Truss to U-turn over the mini-budget.

The prime minister is facing calls to change her economic plans to reassure markets and her party.

Mr Kwarteng is expected to arrive back on Friday for discussions with the prime minister and Conservative MPs.

On Thursday, the chancellor said the government’s position had not changed.

Speaking about the change in his travel plans, a source close to Mr Kwarteng said he “really wants to engage not only with government colleagues, but also MP colleagues” over the financial plans.

The source said “fiscal responsibility is absolutely core to what we’re trying to do”.

No 11 dismissed a comparison to the Greek financial crisis of 2011, when its finance minister was hauled back from an international meeting to meet the country’s prime minister, saying that was a debt crisis “on a completely different scale to anything that’s happening in our markets”.

It comes as the Bank of England withdraws its post mini-budget emergency support later on Friday – and as many Tory MPs think a U-turn on some of the tax-cutting package is inevitable.

The tense atmosphere in Westminster was apparent as the BBC spoke to dozens of sources across Parliament and the government.

“It’s checkmate, we’re screwed,” one Tory MP remarked.

“There is no question in my mind, they’ll have to junk loads of this stuff and U-turn,” another said.

If the government does announce changes to its plans it is not clear when this might happen.

On Thursday, he said he was “not going anywhere” – and when asked if he and Ms Truss would still be in their jobs this time next month, he said: “Absolutely, 100%.”

As it stands, Mr Kwarteng is set to spell out how he will pay for the government’s £43bn package of tax cuts and get the UK’s national debt falling in a statement on 31 October, alongside an independent economic forecast.

The government has already U-turned on its plan to scrap the top rate of income tax, but this only made up £2bn of the tax cuts announced by the chancellor last month.

Some Tory MPs think the government’s tax-cutting plans should be reversed, while others believe the help with energy bills should be more targeted.

Other scenarios being discussed by Tory MPs include the chancellor resigning or the prime minister being ousted.

However, there is little agreement on what should happen next or who should replace Ms Truss if she is removed.

According to the Times, senior Conservatives are holding talks about replacing Ms Truss with a joint ticket of Rishi Sunak and Penny Mordaunt, who both ran for the leadership this summer.

Unlike the summer leadership contest, MPs would propose just one person to succeed the PM, with the other individual taking a senior cabinet role, the paper reported.

Among the possible U-turns, there has been speculation the government could reverse its plan for corporation tax.

Ms Truss has pledged to scrap a planned rise to the tax, which was set to increase from 19% to 25% in 2023.

When asked about the positive market response to the speculation of a U-turn on corporation tax, Mr Kwarteng told the Daily Telegraph: “Let’s see.”

However, he added that he still thought ensuring “competitive” tax rates for businesses was a “great idea”.

Former Home Secretary Priti Patel, meanwhile, told Sky News the market would now “dictate” the prime minister’s decision on corporation tax “primarily because we want to see stability”.

Senior Tories are continuing to call for the government to change course.

Alicia Kearns, the new chairwoman of the Commons Foreign Affairs Committee, said the government had to “adapt” during a “crisis”.

Asked if the government’s tax cuts should be reversed, she told the BBC: “There are some that are worth keeping, there are some that are not, but do I want to see mass borrowing at this point? I don’t think that’s reassuring.”

Former minister Johnny Mercer called for a “course correction” from No 10, describing the impact of rising mortgage rates on people who want to buy a home as “unconscionable” and “politically unsurvivable”.

“Get on and do it – we all know it’s coming. It’s not a game for folks down here,” he said of his Plymouth Moor View constituency.

Scottish Conservative leader Douglas Ross called on the prime minister and chancellor to “get a grip” on the economy.

“There have been mistakes, they’ve got to work this out to settle the markets, to settle the economy and to get things back up and running again,” he told the BBC One’s Question Time.

Asked whether he believed Ms Truss could win the next general election, he replied: “Yes.”

But other Tory MPs expressed support for the prime minister and said she must not reverse her plans.

Sir Christopher Chope, a Truss backer, told the BBC Two’s Newsnight: “If we were to increase corporation tax having said that we’re not going to, that would be totally inconsistent with the prime minister’s policy of promoting growth, growth and growth.”

He added that a U-turn would be a “complete betrayal of that she believed in” and he believed it would not happen.

Wales Office Minister David Davies said the government had to be “flexible” in what he described as an economic “storm”.

However, he said Mr Kwarteng should remain chancellor and refused to accept recent market turmoil was due to a “mistake” by the government.