London politics latest LIVE: Liz Truss faces pressure for tax cut U-turn after insisting public spending will not be slashed

Liz Truss came under growing pressure on Wednesday from a senior Tory MP to climb down further on her tax-cutting plans after ruling out public spending cuts.

Treasury Select Committee chairman Mel Stride warned that Chancellor Kwasi Kwarteng would only get one chance - in a fiscal statement on October 31 -  to sort out the economic mayhem caused by his mini-budget. Liz Truss insisted at PMQs public spending will not be cut as market turmoil following the mini-budget continues.

Mr Stride tweeted: “Given the clear government position expressed today on protecting public spending there is an emerging question. Whether any plan that does not now include at least some element of further row back on the tax package can actually satisfy the markets.

“Credibility might now be swinging towards evidence of a clear change in tack rather than just coming up with other measures that try to square the fiscal circle. The Chancellor will only get one opportunity to land his plans and the forecast positively.

“He must take no chances. There is too much at stake for all of us.”

The Prime Minister was facing PMQs for the first time since Chancellor Kwasi Kwarteng’s £43 billion mini-Budget tax giveaway unleashed chaos in the financial markets.

Sir Keir Starmer asked Ms Truss if she will stick to a pledge made during the Tory leadership contest that she would not reduce public spending.

He asked: “During her leadership contest, the Prime Minister said ‘I’m very clear, I’m not planning public spending reductions’. Is she going to stick to that?”

Ms Truss said: “Absolutely. We are spending almost a trillion pounds on public spending. We were spending £700 billion back in 2010. What we will make sure is that over the medium term the debt is falling. But we will do that not by cutting public spending but by making sure we spend public money well.”

Sir Keir repeatedly asked the prime minister, “Who voted for this?”.

On Tuesday, senior Tories warned the Government’s economic credibility would be further shredded if the Chancellor tries to push through the disputed mini-Budget policies without the support of Conservative MPs.

It comes as the pound has fallen again, after the governor of the Bank of England warned its emergency support package for the financial markets will end on Friday.

Prime Minister to face MPs at PMQs

07:30 , Lydia Chantler-Hicks

Good morning. It’s Wednesday, October 12 and we’re bringing you everything you need to know as pressure mounts on the Prime Minister and Chancellor over their plans for the economy.

At midday, we’ll be following what happens when Liz Truss faces uneasy MPs at Prime Minister’s Questions - for the first time since the Chancellor unveiled his hugely controversial mini-budget last month.

Pound wobbles as Bank of England warns market support will end on Friday

07:33 , Lydia Chantler-Hicks

The pound wobbled again overnight Tuesday after the Bank of England’s governor warned its emergency support package for the financial markets would end on Friday.

Earlier, the Bank intervened for the second time in as many days to prevent “fire sales” of pension fund assets, amid the continuing market turmoil in the wake of Chancellor Kwasi Kwarteng’s mini-Budget.

But speaking later in Washington, Governor Andrew Bailey warned there could be no further extension beyond the end of the week.

“My message to the (pension) funds involved – you’ve got three days left now,” he said. “You have got to get this done. Part of the essence of a financial stability intervention is that it is clearly temporary.”

Following his remarks sterling fell more than a cent against the dollar to its lowest rate since September 29.

UK economy shrank in August raising new fears of imminent recession

07:35 , Lydia Chantler-Hicks

The economy shrank by 0.3 per cent in August raising new fears of an imminent recession.

GDP fell more sharply than expected during the month, figures from the Office for National Statistics (ONS) showed.

Most analysts had been expecting output to remain flat in August. It means that the economy is likely to have shrunk during the third quarter as a whole as September’s output will have been depressed by the extra Bank Holiday for the Queen’s funeral.

The latest fall comes after growth of just 0.1 per cent in July. This was revised down from an initial estimate of 0.2 per cent.

Rees-Mogg refuses to say whether BoE should extend market intervention

07:49 , Lydia Chantler-Hicks

Jacob Rees-Mogg has refused to get drawn into speculation about whether the Bank of England should extend its emergency bond-buying programme beyond the end of the week.

The Business Secretary told Sky News on Wednesday: “First of all, there’s the issue of the relatively high-risk investments that some pension funds have made that they were gearing on their gilt holdings.

“The problem with gearing is that when values change, if they change sharply, which has been a phenomenon with gilts because of the change in interest rates, so the underlying base rate has gone up significantly in this country and globally.

“Now if you’ve seen long rates move out, and that’s been happening here as elsewhere, that’s had an effect on pension funds.

“The Bank of England is obviously operationally independent, and that’s quite right, and that the Governor will make decisions in accordance with the markets. But the Bank of England does have responsibility and has had responsibility for a very long time to ensure the orderly functioning of markets and, therefore, it intervenes from time to time when there are unexpected events.”

Pressed on whether the Bank of England was right to signal an end to its market intervention, Mr Rees-Mogg repeatedly refused to be drawn on the matter but insisted he had confidence in Governor Andrew Bailey.

“I’m not going to criticise the Bank of England or the Governor. It is not for me to speculate on what the Bank of England is doing.”

Business Secretary refuses to share opinion on benefits rise

07:53 , Lydia Chantler-Hicks

Jacob Rees-Mogg has refused to indicate his own view on whether benefits should rise in line with inflation - the latest issue that is splitting the Tory party.

“We haven’t yet had the inflation figure on which benefits will be set. So, that is something that will be decided once the figure is available,” he told Sky News.

“Most predictions, most economic forecasts, turn out to be inaccurate rather than spot on. So, one has got to be careful about forecasts.”

While he acknowledged that inflation will likely remain high, he said the process happening at the moment is “completely routine”.

“There is a process for making this decision,” he said. “This decision will be made once the figures come out. The statutory instrument has to be laid in November to put through the increase. That will be done in the normal way. This is completely routine governmental decision-making.”

Rees-Mogg: ‘My mortgage payments have gone up’

07:55 , Lydia Chantler-Hicks

Jacob Rees-Mogg has insisted that parts of the economy were in a “good state” as he admitted that after the economic turmoil of recent weeks his own mortgage payments have gone up.

The Business Secretary told Sky News: “Mortgage rates have gone up for everybody who has a mortgage and I have a mortgage.”

“Any floating rate mortgages have gone up,” he continued.

Asked by host Kay Burley if his had gone up, he said: “Yes, mine has gone up.”

He also told the programme that some parts of the economy remained strong, despite the problem with inflation.

He cited employment as an area of strength.

“I think the economy has some good points and some there is a difficulty,” he said.

Former health minister says free school meals should be extended

08:14 , Lydia Chantler-Hicks

Former Conservative health minister Lord Bethell has backed calls for the free school meals programme to be extended to all those on Universal Credit.

Speaking to BBC Radio 4’s Today programme, Lord Bethell said: “This...is an intervention at the most important times of a child’s life so that they get the best attainment at school.

“They then have the best health outcomes during their life and they can be the most productive in their economy. For me, those are the three most important reasons for doing this.”

When asked about the Government’s attitudes to health policy proposals, he replied: “I understand the Prime Minister’s concerns about the culture of the country. She is concerned that there is an infantilisation of the people, that measures like this are a form of collectivisation, and I understand where she’s coming from on this, but I’m totally pragmatic.

“There are important economic reasons for making the £477 million expenditure on extending the free school meal programme.”

Lord Bethell, who served in the Department of Health and Social Care under Boris Johnson, added: “I think voters for a measure like this are very emphatic, 72% of them support this move. I think that a lot of people in the party rather thought we had put discussions like this to bed some time ago. So, I think they’re a little bit puzzled why we’re reopening them.”

Rees-Mogg: Pension funds instability ‘not necessarily’ to do with mini-budget

08:40 , Lydia Chantler-Hicks

Jacob Rees-Mogg has hit out at the line of questioning on BBC Radio 4’s Today programme, after he was quizzed about the turmoil in the markets following the Chancellor’s mini-budget.

Asked by presenter Mishal Husain if the Government might bring forward again the fiscal statement from the new date of October 31 to address the crisis sparked by Kwasi Kwarteng’s financial plans, the Business and Energy Secretary said: “Hold on, you suggest something is causal, which is a speculation.”

He said the instability in pension funds is “not necessarily” to do with the mini-budget.

“It could just as easily be the fact that, the day before, the Bank of England did not raise interest rates as much as the Federal Reserve did.

“And I think jumping to conclusions about causality is not meeting the BBC’s requirement for impartiality. It is a commentary rather than a factual question.”

Rees-Mogg responds to backlash over fracking plans

09:09 , Lydia Chantler-Hicks

Jacob Rees-Mogg said MPs always “have a say”, amid reports that some Conservative MPs could work with Labour to force a vote on the Government’s fracking plans.

The move to reverse the ban on fracking is opposed by many Tories, one of several issues causing splits in the party since Liz Truss became leader.

The Business and Energy Secretary told BBC Radio 4’s Today programme: “MPs always have a say on what goes on.

“There are any number of mechanisms that MPs can use to have a say on things. The Government doesn’t have to give votes. There are backbench business debates, there are opposition day debates, there are amendments.”

Mini-budget not main reason for economic turmoil, suggests Business Secretary

09:16 , Lydia Chantler-Hicks

Jacob Rees-Mogg said “nothing is entirely unconnected” but suggested that the mini-budget is not the main reason behind the market turmoil of recent weeks.

Appearing on ITV’s Good Morning Britain programme on Wednesday, the Business Secretary said: “I would point to the day before, when the Monetary Policy Committee did not put up interest rates as much as the Federal Reserve had. And that was the more profound effect on markets.

“That’s an actual price and that was a widening of the differential between the benchmark which is effectively the US, the low-risk investment and the UK.”

He also defended the Government from the latest criticism by the International Monetary Fund regarding the UK’s financial plans, telling the programme: “Almost invariably, when you have a monetary tightening cycle, you have some element of fiscal loosening to ameliorate the difficulties that come from a monetary tightening.”

Truss appoints Rishi Sunak-backing MP as private secretary

10:50 , Lydia Chantler-Hicks

Liz Truss has appointed an MP who backed Rishi Sunak in the Tory leadership contest as her parliamentary private secretary.

Announcing his appointment on social media, Nuneaton, Arley and Hartshill MP Marcus Jones said: “I am deeply honoured to have been appointed parliamentary private secretary to the Prime Minister.

“This is an important time when the UK needs more investment and growth, and we need to reduce the burden on families and help people get on in life.”

His appointment is likely to be seen as a further attempt by Ms Truss to reach out to critics in the party after she made another backer of Mr Sunak, Greg Hands, an international trade minister.

Senior Tory warns Chancellor against cutting research funding

11:08 , Lydia Chantler-Hicks

Senior Tory MP David Davis has warned Chancellor Kwasi Kwarteng against any move to cut research and development funding as he tries to get the public finances back on track following his mini-budget.

The former cabinet minister said such a move would be “completely inconsistent” with the Government’s attempts to drive economic growth.

“Rumours are flying around that the Treasury is planning to cut R&D to balance the books,” he tweeted.

“This would be completely inconsistent with any intelligent growth plan.”

Experts reject Rees-Mogg’s claim mini-budget isn’t to blame for economic turmoil

11:11 , Lydia Chantler-Hicks

Economists have roundly rejected suggestions from Business Secretary Jacob Rees-Mogg that the financial turmoil was not being driven by the mini-budget.

Resolution Foundation chief executive Torsten Bell told the Commons Treasury Committee: “Yes, firing Treasury civil servants isn’t a good idea, that hasn’t helped, sidelining your fiscal watchdog hasn’t helped.

“But the big picture is that if you spend the summer telling people you are intending to abandon fiscal orthodoxy, if you then announce a package that dumps fiscal orthodoxy, then if you say on Sunday you are going to keep doing it, then I don’t think any of this should be a surprise to any of us that this is where you end up and this is what happens if you aren’t paying attention.

“Maybe you could have got away with that in more benign times, it wouldn’t have been a good idea in any times, but you definitely shouldn’t be doing it in the current climate.

“It was always going to be hard, but it was exactly because it was always going to be hard that you don’t do this.”

Mini-budget was ‘straw that broke camel’s back’, says banking chief

11:12 , Lydia Chantler-Hicks

Deutsche Bank’s chief UK economist said the Government’s mini-budget was the “straw that broke the camel’s back” to trigger the financial turmoil.

Sanjay Raja told the Commons Treasury Committee there is “absolutely a global component” to the issues but he said there is an “idiosyncratic UK-specific component”.

He said the “trade shock” because of Brexit is another factor and added: “You throw on the September 23 event, you’ve got a sidelined financial watchdog, you’ve got lack of a medium-term fiscal plan, one of the largest unfunded tax cuts we’ve seen since the early 1970s, it was kind of the straw that broke the camel’s back.”

Labour’s Dame Angela Eagle asked if the UK’s turmoil in the international markets was a result of the mini-budget.

Everyone nodded on the panel, including the Institute for Fiscal Studies’ Paul Johnson, Gemma Tetlow, the chief economist at Institute for Government, and the Resolution Foundation’s Torsten Bell.

Shadow Chancellor will ask a question on the economy in the Commons today

11:28 , Lydia Chantler-Hicks

Shadow chancellor Rachel Reeves has been granted a Commons urgent question on the economic situation.

A Treasury minister will respond to the shadow chancellor after Prime Minister’s Questions.

Shock fall in monthly growth leads to new fears of recession

11:58 , Lydia Chantler-Hicks

Fears of a recession are growing after the UK economy unexpectedly shrank in August, adding to market uncertainty over the Government’s tax-cutting growth plan.

GDP fell by 0.3 per cent in August, according to the Office for National Statistics, while July’s growth figure of 0.2 per cent was downgraded to 0.1 per cent.

Economists predict a decline in GDP when figures for September are released next month. If the final quarter of the year falls into negative territory, Britain would then officially be in recession — defined as two consecutive quarters of negative growth.

Prime Minister’s Questions begins

12:02 , Lydia Chantler-Hicks

PMQs has begun. Liz Truss is due to face MPs for the first time since the Chancellor unveiled his divisive mini-budget last month.

Truss points to ‘international’ difficulties surrounding economic turmoil

12:09 , Lydia Chantler-Hicks

Keir Starmer has asked the Prime Minister is she agrees with Jacob Rees-Mogg’s assertions this morning that the mini-budget is not to blame for the UK’s recent financial turmoil.

Liz Truss alluded to “international” pressures affecting the market, as she avoided giving a direct anwer.

“What we have done is we have taken decisive action to make sure that people are not facing energy bills of £6,000 for two years,” she said.

“We’ve also taken decisive action to make sure we aren’t facing the highest taxes for 70 years amidst a global econmoic slowdown, and what we’re making sure is we protect our economy at this very difficult time internationally.”

She added that she remains confident these measures will lead to “higher growth and slower inflation”.

PM commits to taking action against no-fault evictions

12:11 , Lydia Chantler-Hicks

The Prime Minister has committed to taking action to get rid of no-fault evictions.

Labour MP for Blackley and Broughton, Graham Stringer, told the Commons: “Spooking the markets and increasing the cost of borrowing and increasing the cost of mortgages was almost certainly an act of gross incompetence rather than malovelence.

“But going back on the commitment to end no-fault evictions is an act of extreme callousness.

“Can the Prime Minister reassure the 11 million private renters in this country that she will carry out her commitment to get rid of no-fault evictions?”

Ms Truss replied simply: “I can.”

On Tuesday, Downing Street said no decisions had been made on whether to pause a promised ban on section 21 notices which allow landlords to evict a tenant without having to give a reason.

Keir Starmer asks if public will ever forgive the Tories for ‘kamikaze’ budget

12:21 , Lydia Chantler-Hicks

Keir Starmer has asked if Liz Truss thinks the public will ever forgive the Conservatives if they carry on with their “kamikaze budget”.

He asked: “Who voted for this? Not home owners paying extra on their mortgages, not working people paying for tax cuts for the largest companies, not even most of the MPs behind the PM who know you can’t pay for tax cuts on the never-never.”

‘Budget will give families security for two winters’, responds PM

12:23 , Lydia Chantler-Hicks

Truss responded to the Labour leader by saying the budget “has delivered is security for families for the next two winters”.

“It’s made sure we’re going to see higher economic growth, lower inflation and more opportunities,” she said.

“The way we’ll get our country growing is through more growth, more jobs and more opportunities. Not through higher taxes, higher spending and his friends in the union stopping hard-working people get to work.”

‘There will be no cuts to public spending’, promises Truss

12:25 , Lydia Chantler-Hicks

Liz Truss said she would stick to her pledge not to reduce public spending.

Labour leader Sir Keir Starmer said: “During her leadership contest the Prime Minister said, I quote her exactly, ‘I’m very clear, I’m not planning public spending reductions’. Is she going to stick to that?”

Ms Truss replied: “Absolutely. Look, Mr Speaker, we’re spending almost £1 trillion on public spending. We were spending £700 billion back in 2010. What we will make sure is that over the medium-term the debt is falling. We will do that, not by cutting public spending, but by making sure we spend public money well.

“And (Sir Keir) talks about our spending, which he doesn’t seem to support, on the energy price guarantee. But the reality is he can’t criticise us on one hand for spending money and on the other claiming we’re cutting public expenditure.”

Sir Keir said to Tory MPs: “They can cheer. I hope they listened very, very carefully to that last answer because other people will have listened very, very carefully to it.”

Starmer accuses PM of being ‘lost in denial'

12:27 , Lydia Chantler-Hicks

Sir Keir Starmer has accused Liz Truss of “avoiding the question, ducking responsibility” and being “lost in denial”.

The Labour leader also told MPs about a couple from Wolverhampton who were about to buy their first home but because the “Government’s borrowing spree sent interest rates spiralling”, their mortgage offer was withdrawn.

He asked the Prime Minister if she understands why they are “completely furious with her”.

The Prime Minister replied: “The fact is that when I came into office, people were facing energy bills of up £6,000. The party opposite are shouting, but he is opposing the very package that we brought in, the energy price guarantee. That was the major part of the mini-budget that we announced.

“He has refused to confirm whether or not he backs our energy price guarantee for two years, which protects families, not just this winter, but next winter.

“What we’re seeing is we are seeing interest rates rising globally. We are doing … they are rising globally, in the face of Putin’s appalling war in Ukraine. What we are doing is helping people with lower stamp duty, helping people with their energy costs, reducing inflation with our energy package and keeping taxes low.

“I notice that the honourable gentleman had a Damascene conversion last night when he backed our cuts in national insurance.”

PM assures fracking will only take place where it is backed by locals

12:35 , Lydia Chantler-Hicks

Asked by Labour MP Rosie Cooper if she can reassure west Lancashire constituents who are concerned over the prospect of fracking, the Prime Minister said: “I can absolutely assure...that fracking will only go ahead in areas where there is local community support”.

Labour accused of sitting on fence over energy price guarantee

12:35 , Lydia Chantler-Hicks

The Prime Minister has accused Labour of not saying whether it supports the energy price guarantee.

Responding to a claim that Labour backed lowering national insurance, Labour leader Sir Keir Starmer said: “The Prime Minister knows very well that on this side we voted against the national insurance rise in the first place. She voted for it. So who’s doing the U-turn? Honestly.

“She’s still going ahead with £18 billion of tax cuts for the richest businesses and they didn’t even ask for it. She’s still gift-wrapped a stamp duty cut for landlords, just as renters feel the pinch.

“She’s still holding out tax cuts for those who live off stocks and shares. Why does she expect working people to pick up the bill for her unfunded tax cuts for those at the top?”

Responding in the Commons, Prime Minister Liz Truss said: “The leader of the opposition is still not saying whether or not he supports our energy price guarantee. This is very relevant because it is the biggest part of our mini-budget.”

She added: “All the opposition have said that people should be supported for six months. Does he think that in March pensioners should be facing very high energy bills? Because that’s what will happen if he doesn’t support our energy price guarantee.”

‘A general election is the last thing we need,” says PM

12:44 , Lydia Chantler-Hicks

Labour MP for Warwick and Leamington, Matt Western, asked Liz Truss if she will bow to widespread calls for a general election.

He joked that “the country has been left wanting divorce” five weeks into Ms Truss’ “honeymoon” period after being made PM, which has seen the UK hit with “complete financial chaos”.

He said: “In two recent polls, 60 per cent of this counry want an immediate general election.

“The Prime Minister claims she’s in listening mode. Will she give way to the public?”

Responding, Ms Truss said: “Mr Speaker, I think the last thing we need is a general election.”

This was met with shouts and jeers from across the floor.

PMQs ends

12:45 , Lydia Chantler-Hicks

That’s all from Prime Minister’s Questions for this week.

No plans to reverse Government tax measures - treasury minister

13:08 , Josh Salisbury

Treasury minister Chris Philp has insisted there are no plans to reverse any of the tax measures announced in the Government's growth plan.

Conservative MP Mel Stride, who chairs the Treasury Select Committee, told the Commons: "The Chancellor was quite right to have brought forward the date for the medium-term plan and OBR forecast.

“He has, of course, a huge challenge now landing those plans to reassure the markets. He has to get the fiscal rules right, he has to come forward with spending restraint and revenue raisers that are politically deliverable.

“Given the huge challenges, there are many - myself included - who believe it is quite possible that he will simply have to come forward with a further rowing back on the tax announcements that he made on September 23.

“So could I ask (Mr Philp) to confirm that that possibility is still on the table?"

Mr Philp, in his reply, said: “There are not any plans to reverse any of the tax measures announced in the growth plan."

No 10: ‘Difficult decisions need to be taken’ despite PM ruling out spending cuts

13:15 , Josh Salisbury

Downing Street has said “difficult decisions" will need to be taken despite Liz Truss ruling out public spending cuts.

The Prime Minister's official spokesman said: "The Prime Minister was clear that Government spending will continue to rise but beyond that it really is for the Chancellor to come forward with anything on spending which he will do on the 31st."

Asked if the energy support scheme could be used as cover for departmental cuts, he said: "We are clear there will need to be difficult decisions to be taken given some of the global challenges we're facing. I appreciate the interest but I'm not going to get drawn into what those might look like."

Pressed whether spending will be in line with inflation, he said: "Future spending will be for the Chancellor to set out. Public spending is due to rise, that will continue, but there will be decisions for the Chancellor on spending in the round."

He described a question on what will happen if the desired economic growth does not materialise as a “big hypothetical".

Bank of England economist: Government budget heaping ‘pressure’ on inflation

13:25 , Josh Salisbury

The Bank of England's chief economist has said the Government's mini-budget will put further pressure on inflation as he warned a substantial interest rate hike will be needed in November.

Huw Pill said in a speech given at the Scottish Council for Development and Industry in Glasgow that the fiscal announcements "will add to the inflationary pressure" that has come from the Government's energy price cap.

Mr Pill added: "Given the uncertain world and volatile markets we face, November can seem a long time away.

"At present, I am still inclined to believe that a significant monetary policy response will be required to the significant macro and market news of the past few weeks."

Minister refuses to say if Government will set out funding for tax cuts

13:31 , Josh Salisbury

A minister has refused to say whether the mini-budget’s tax cuts will be funded in the Chancellor's statement on October 31.

Conservative former minister James Cartlidge asked Treasury minister Chris Philp: “It is very welcome that a few minutes ago the chief secretary said that the effect to the statement on October 31 would be to show the Chancellor was 100% committed to fiscal responsibility. That is very welcome to colleagues on all sides, I think.

“Can he confirm that means that all the previous unfunded tax cuts will now be funded in that statement?"

Mr Philp replied: “What the statement will set out in the round is how we will get debt as a proportion of GDP falling in the medium term. That is the critical metric and that is what the medium-term fiscal plan will deliver."

Government considering ‘all options’ to make King’s coronation a bank holiday

13:44 , Josh Salisbury

The Government is considering “all options" for a bank holiday to mark the King's coronation on May 6 next year, Downing Street has said.

There have been calls from some MPs for the May bank holiday at the start of the month to be moved to coincide with the coronation weekend or for an additional bank holiday to be announced.

Labour has backed moving the May bank holiday to coincide with the event.

In response, the Prime Minister's official spokesman said: “Obviously this will be a historic event. We are carefully considering our plans. All options remain on the table."

Economist: It is wrong to suggest mini-budget solely to blame for market unrest

14:15 , Lydia Chantler-Hicks

Gerard Lyons, an economist who in the past offered advice to Liz Truss, said it is incorrect to suggest the mini-budget was the sole cause of the market turmoil but said that the Government did “misread” the situation.

He told BBC Radio 4’s World at One programme: “I think it’s wrong, since then, in terms of the narrative that everything that’s happened is solely due to the mini-budget. We should also be asking ourselves, why were markets so febrile ahead of the mini-budget?

“Why was the Bank of England seen by the markets as being so far behind the curve in terms of controlling inflation? Indeed, in terms of the problems that have emerged with the pension funds, they highlight how vulnerable parts of the financial system and, indeed, possibly the economies we might see in coming months are to interest rates rising.

“So, I think there are a whole combination of factors, but at the same time one has to say that the mini-budget itself did misread the situation.”

He confirmed he had not spoken to Ms Truss or Kwasi Kwarteng since the pair entered office.

Mr Lyons said that Mr Kwarteng needs a “clear plan that’s credible, that shows the ratio of debt to GDP coming down in time”.

He said the Government has a challenge of “numbers and the narrative” over the coming weeks.

PM ‘thinks Bank of England governor is doing a good job’

14:25 , Lydia Chantler-Hicks

Liz Truss believes the Governor of the Bank of England Andrew Bailey is doing a good job, Downing Street has said.

Business Secretary Jacob Rees-Mogg appeared to criticise the Bank when he said recent turmoil in the markets was down to higher interest rates in the US rather than Chancellor Kwasi Kwarteng’s mini-budget.

Asked if the Prime Minister believed Mr Bailey was doing a good job, her official spokesman said: “Yes. You have seen the Bank of England make a number of interventions recently.

“There are complex global issues at play which do feed into this.”

Asked about Mr Rees-Mogg’s comments, the spokesman said the Business Secretary was “giving some context to these global challenges”.

Mel Stride suggested Kwasi Kwarteng will need to show a ‘clear change in tack’ to satisfy markets

16:53 , Matt Watts

Treasury Select Committee chairman Mel Stride suggested Kwasi Kwarteng will need to show a “clear change in tack” in order to restore credibility with the markets.

Mr Strike said: “Given the clear Government position expressed today on protecting public spending there is an emerging question.

“Whether any plan that does not now include at least some element of further row back on the tax package can actually satisfy the markets.

“Credibility might now be swinging towards evidence of a clear change in tack rather than just coming up with other measures that try to square the fiscal circle.

“The Chancellor will only get one opportunity to land his plans and the forecast positively. He must take no chances. There is too much at stake for all of us.”

Liz Truss greeted with banging of desks as she addresses Tory backbenchers

17:47 , Josh Salisbury

Liz Truss has been greeted with the customary banging of desks by Tory MPs when she arrived to address the backbench 1922 Committee at Westminster.

Truss and Kwarteng should consider reversing tax cuts, says ex-deputy PM

17:55 , Josh Salisbury

Liz Truss and Kwasi Kwarteng should consider reversing some of their tax-cutting promises, a Tory ex-cabinet minister has said.

Damian Green, a former deputy prime minister, was asked how the Government can reduce debt while sticking to its mini-budget and ruling out public spending cuts.

He told BBC Radio 4's PM programme: “There are various things you could do and one of the obvious ways - because you do need some big numbers to change - one of the obvious ways would be possibly to defer some of the tax cuts or the failure to put taxes up."

He went on to say: “I don't think it involves scrapping the whole idea of deregulation and tax cuts. It needs fitting into an appropriate fiscal framework, and if you like an appropriate political framework as well.

“So I'm not saying actually do a 180-degree turn and go off in the other direction. It's a question of making the policies appropriate for the times."

Downbeat mood among some Tory MPs after PM addresses backbenchers

18:41 , Josh Salisbury

Liz Truss told the Tory backbench 1922 Committee that small businesses would have faced “devastation” if the Government had not acted to cap energy prices, aides said.

Following the meeting at Westminster, few MPs wanted to speak to waiting journalists, with one saying simply “the Prime Minister spoke to us”, while another said only “it happened”.

Among those attending were some prominent critics of the Prime Minister’s strategy, including former cabinet ministers Michael Gove and Grant Shapps.

One Tory MP quoted by the Daily Mail’s Jason Groves said: “It was like someone trying to light a fire using a magnifying glass. Using damp wood. In the dark.”

Another told Politico’s Esther Webber it was the “worst” 1922 they had been to since 2015, adding it was “unspeakably bleak”.

Rees-Mogg criticises OBR over its forecasts

19:00 , Josh Salisbury

Jacob Rees-Mogg has criticised the Office for Budget Responsibility’s (OBR) record and suggested Chancellor Kwasi Kwarteng does not have to listen to potential forecasts of low growth and rising debt.

In a pre-recorded interview on ITV’s Peston, the Business Secretary said: “Let’s see what the Office for Budget Responsibility has to say rather than guessing what it may say.

“But its record of forecasting accurately hasn’t been enormously good.

“So, the job of chancellors is to make decisions in the round rather than to assume that there is any individual forecaster who will hit the nail on the head...

“There are other sources of information. The OBR is not the only organisation that is able to give forecasts.”

Live coverage ends

21:55 , Miriam Burrell

That’s all for tonight folks.

Please check back in for more live coverage tomorrow.