Cabinet discipline falls apart as leadership rival Mordaunt goes to battle with Truss on benefits

Cabinet discipline in Liz Truss’ government has already fallen apart after Leader of the House of Commons Penny Mordaunt publicly took on Liz Truss on the issue of a rise in benefits payments.

The Prime Minister is refusing to rule out a return to austerity or say whether welfare payments will be increased in line with soaring inflation.

But Ms Mordaunt, who ran against Ms Truss in the Tory leadership contest, told Times Radio it “makes sense” to increase benefits in line with inflation.

Not doing so would amount to a real terms cut to tens of millions of the poorest in the UK.

“I’ve always supported – whether it’s pensions, whether it’s our welfare system – keeping pace with inflation,” Penny Mordaunt said.

“It makes sense to do so. That’s what I voted for before.”

“We want to make sure that people are looked after and that people can pay their bills. We are not about trying to help people with one hand and take away with another.

“She [Truss] wants the cabinet to be a forum where we can really kick the tyres on policy, where we can have frank discussions that aren’t leaked.

“It should be consultative. We should take decisions together.”

‘Responsible’

Liz Truss has stressed she must take a “responsible” approach to the public finances, but now faces a Cabinet split and a fresh battle with Tory rebels after her u-turn on abolishing the top tax rate yesterday.

Ms Truss has committed to increase pensions in line with prices but on benefits said “we have to be fiscally responsible”.

Benefits are usually uprated in line with the consumer price index (CPI) rate of inflation from September, with the rise coming into effect the following April.

The Institute for Fiscal Studies estimates that each percentage point rise in CPI adds £1.6 billion to welfare spending.

In an interview pre-recorded on Monday, Ms Truss told Tuesday’s BBC Radio 4’s Today programme: “We are going to have to make decisions about how we bring down debt as a proportion of GDP in the medium term.

“I am very committed to supporting the most vulnerable; in fact, in addition to the energy price guarantee we’re also providing an extra £1,200 to the poorest households.

“So we have to look at these issues in the round, we have to be fiscally responsible.”

She told to LBC radio that “no decision has been made yet on benefit uprating”, adding that it “will be taken in due course”.

Pressed on why she commits to increase pensions but not benefits, she said: “What I mean is when people are on a fixed income, when they are pensioners, it is quite hard to adjust.

“I think it’s a different situation for people who are in the position to be able to work.”

Asked if she will rule out austerity, she said she has committed to reducing debt as a proportion of national income over the medium term.

“Well, I wouldn’t use the term you describe. What I’m talking about is fiscal responsibility,” she added.

‘Think hard’

A prominent Welsh Tory MP is among Conservative backbenchers who are still unhappy with some elements of the UK Government’s budget plans.

Stephen Crabb told LBC that the decision to u-turn on abolishing the 45p tax rate “probably doesn’t draw a full line under the mini-budget”.

The former Work and Pensions and Welsh Secretary said that this would be “the wrong choice”.

“Certainly when the Government starts signalling it wants wide-ranging spending cuts, there are going to be some pretty gritty conversations with backbenchers about where those spending cuts might fall,” the Preseli Pembrokeshire MP told LBC.

“Don’t forget the social security uprating this April just gone was only 3% even though the real inflation rate was 6%.

“The government at the time promised the following April there’d be a correction. It looks like that might be ditched. That would be the wrong choice.”

Former Cabinet ministers Michael Gove and Damian Green have already spoken out with concerns about any failure to raise benefits in line with inflation.

Mel Stride, Tory chairman of the Treasury Select Committee, said he would have to “think long and hard” if asked to vote to increase benefits in line with earnings rather than inflation.

Mr Stride told Today: “The last time the benefits were uprated, because of the way the mechanism works they’re uprated in April but they’re pegged against the previous September’s inflation, and the way it worked last time was the uprating was just 3.1% because inflation was low the previous September, but of course inflation was much higher than that (in April).

“So we’re coming off the back actually of a kind of quite a strong real-terms squeeze on those benefits already so I think that will be a really tough call to make.”