UK benefits decision under wraps until end of October, chancellor suggests

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Low-income households will have to wait until the end of October to find out if welfare payments will rise with inflation or be subject to a real-terms cut, the chancellor has suggested.

Kwasi Kwarteng sought to calm the markets by proclaiming that his Halloween growth plan would be “relentlessly upbeat”, but faced hostile questions from Tory MPs during the first Commons showdown over September’s mini-budget.

Amid a push by some cabinet ministers and Conservative backbenchers for welfare payments to rise in line with inflation, Treasury ministers sought to play down any suggestion they had made up their mind.

Kwarteng said that “no decisions have been made” and there was a “natural, usual statutory process that’s being taken”.

He added: “We will have more detail at the time of the medium-term fiscal plan.”

The plan was hastily brought forward from 23 November to 31 October amid huge pressure from Tory MPs, who said the government had to act more swiftly to avoid more market turmoil.

After Tuesday’s cabinet meeting, some Conservative backbenchers sought to keep up the pressure for benefits to be raised above average wages, which are growing at about 5.5%, and with inflation, hovering at about 10%.

Julian Smith, a former chief whip, said ministers should “not balance the forthcoming tax cuts on the back of the poorest people in our country”.

No 10 later confirmed the announcement on benefits uprating would come in the medium-term growth plan.

While Kwarteng tried to brush off criticism about the reaction to his mini-budget, he was challenged in the Commons by Mel Stride, the chair of the Treasury select committee.

In a warning to the chancellor, Stride said he should ensure any policies unveiled on 31 October would command support from the Tory and opposition benches and added “any failure to do so will unsettle the markets” further.

Kwarteng assured him “we will and should canvass opinion widely ahead of the publication of the plan”. He confirmed an independent analysis and a set of forecasts from the Office for Budget Responsibility would be published alongside it.

However, the chancellor was laughed at for saying he wanted to be “very careful not to make unfunded spending commitments on the floor of the House”.

Another barb was aimed at the Treasury when the Tory MP Kevin Hollinrake warned spending cuts should not come at the expense of vital infrastructure investment in northern England.

Opposition MPs accused Kwarteng’s mini-budget of driving up interest rates and spooking the markets.

Labour’s shadow chancellor, Rachel Reeves, urged the chancellor to “put aside his pride, do the right thing for our country, end this trickle-down nonsense and reverse the budget”, accusing him of “being in a dangerous state of denial”.

The SNP’s Stephen Flynn also said Downing Street had turned from a night club into a casino.