The government has signalled it could U-turn on former chancellor Rishi Sunak’s pledge to increase benefits in line with inflation.
Treasury minister Chris Philp told ITV’s Peston that ministers have not decided whether the uprating will take place in the autumn under Kwasi Kwarteng as chancellor.
Government plans to cut taxes to the benefit of the most wealthy will continue.
In May, Sunak pledged to increase benefit and pension payments next April by the rate of inflation in September, which stands at close to 10%
Asked about whether the uprating commitment would be carried out, Philp said: “It is under consideration and I am obviously not going to make policy announcements here, it will be considered in the normal way in the course of the coming weeks.”
Pressed about the decision, he added: “I am not going to make policy commitments on live TV, it is going to be considered in the normal way, we will make a decision and it will be announced I am sure in the first instance to the House of Commons.”
In response, consumer champion Martin Lewis tweeted: “V concerned to hear on Peston govt hasn’t decided yet if it’ll follow thru on prior administration’s promise to uplift benefits with inflation.
“Even the dire optics of balancing that against high earner tax cuts, pales compared to devastating way it’d pull folk into real poverty.”
Austerity is also to be revived to tackle the economic crisis.
Philp told ITV: “We are going to look for efficiencies wherever we can find them.”
He added the objective of the exercise would be to make sure the government stays within its existing three-year spending limits.
“Those efficiency savings will firstly make sure we do stick to those spending limits,” Philp said, “and secondly it will enable us, within those spending limits which we are going to stick to, to target things which are going to stimulate growth.”
The minister defended the cut to the 45p rate of income tax, which is set to have most-benefit for high earners, claiming it was only “one-twentieth” of the “fiscal firepower” announced last Friday.
Liz Truss is expected to face public questioning about her economic plans for the first time following the fallout from the mini budget on Thursday, as the prime minister tours regional BBC radio stations in a morning round of interviews.
On Wednesday, the Bank of England launched an emergency government bond-buying programme to prevent borrowing costs from spiralling out of control and stave off a “material risk to UK financial stability”.
The Bank announced it was stepping in to buy up to £65 billion worth of government bonds – known as gilts – at an “urgent pace” after fears over the government’s economic policies sent the pound tumbling and sparked a sell-off in the gilts market.
The market turmoil had forced pension funds to sell government bonds to head off worries over their solvency, but this was threatening to see them suffer severe losses.