An emergency budget delivering winter tax cuts for millions and more details on energy handouts is expected late next week, once the country emerges from national mourning.
Although politics has been paralyzed since the Queen’s death, Liz Truss is under pressure from Tory MPs to present her plans possibly on Thursday or Friday next week, before the Commons breaks up for party conferences.
National mourning has completely overshadowed the announcement of the £150bn energy cap and left Whitehall scrambling to finalize the details of any budget at the same time as organizing the state funeral.
The new prime minister plans to travel to the UN general assembly in New York in the days after the Queen’s funeral, returning in time to sit next to her chancellor, Kwasi Kwarteng, in the Commons as he delivers his budget speech.
The timing of the trip suggests No 10 has given up hope of arranging a meeting for the new prime minister with Joe Biden at the White House. The US president and other world leaders are expected to travel to the UK for the funeral, but there will be no official bilateral meetings out of respect for the mourning period.
A minute’s silence for a “shared moment of national reflection” will be observed at 8pm on Sunday 18 September, the day before the Queen’s funeral on Monday 19, which will be a bank holiday.
The Trust’s spokesman said it still plans to hold a budget event this month. The most obvious day would be Thursday 22nd September, as parliamentary business has been adjourned until after Wednesday 21st and Truss is likely to be in New York by then.
However, it could be on Friday if the break is delayed, boosting the Labor conference, which starts in Liverpool the following day.
In the mini-budget, the government is expected to confirm plans to reverse the recent rise in national insurance, even though it benefits the highest earners more, returning around £1,800 a year to the top earners while the lowest earn around £7 a year.
Truss has already said he will scrap a planned corporation tax hike, although there have been some suggestions that this may not happen next week. Her team has also spoken to business groups about reforms to business rates and cuts to value-added tax to help with the energy crisis, as well as a longer-term review of those taxes.
The government is also expected to outline further details of the Trust’s £100bn emergency bailout for households to help with energy bills, after criticism that it had not said how the package would be funded. He has rejected Labor calls for a windfall tax on energy giants despite public support.
Paul Johnson, director of the Institute for Fiscal Studies, said the government would have to come up with a better version of the energy price guarantee next year because the Truss plan was “incredibly expensive” and “completely misguided”.
Truss is under pressure from her own party to expose her plans as soon as possible. David Davis, a Conservative MP and former cabinet minister, said it was “broadly the right way” to hold an emergency budget event next week.
“The truth is that the public thinks about politics less than 10% of the time. But this is different because it’s their own scary winter bills, and I mean scary,” he said. “That’s why it’s such a highly political shopping issue and you can’t let it go, because it’s about taking away people’s concerns. Economics and politics point in the same direction.”
He said in theory it would be preferable to have independent costing of the energy package alongside the budget event, but forecasts from the Office for Budget Responsibility and the Bank of England were so “wrong” that it would be better to proceed without them. “I would rather see reform of the forecasting method than just get rid of them,” he said.
Former cabinet minister John Redwood said: “After mourning a much-loved Queen and a state funeral, Parliament will have to sit. The current plan for a long conference break means a delayed return to October 17. We need to address the cost of living crisis and the energy shortage before then.”
Parliamentary sources have suggested that the conference break, which is currently due to end on Monday 17 October, could be shortened by a week to two weeks so that MPs can get back to work at a time when the public is worried about the rising cost of living.
Number 10 said no legislation would be needed to introduce the household energy support package as it would include guarantees between the government and private energy suppliers. However, some legislation may be needed to establish support for businesses.
Truss continues to install her top team, with Simon Case set to keep his job as cabinet secretary after previously being expected to be sacked.
Case, a former private secretary to Prince William, is believed to have impressed the UK prime minister during talks on government formation and the energy bailout.
Case’s revived fortunes are markedly different from those of Tom Scholar, who was removed as permanent secretary to the Treasury as one of the first acts of the Truss administration, sparking outrage in Whitehall.