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Liz Truss: The pitfalls lying ahead of an embattled prime minister Liz Truss: The pitfalls lying ahead of an embattled prime minister
(6 days later)
After a tumultuous first month in office, marked by party divisions and unrest over her economic policy, Liz Truss's promise to "deliver" is at risk of being thwarted in Parliament. Liz Truss is battling to save her premiership after just over a month in the job - what are the key hurdles she faces?
A chunk of Tory MPs are opposed to parts of Ms Truss's agenda, and the prime minister may struggle to push through changes despite her party's majority in the Commons. Halloween horror show?
As Parliament returns this week, we've looked at some of the upcoming moments of turbulence that could knock Ms Truss's government off course. Two things are going to happen on 31 October which could spook MPs.
1) The economic plan Chancellor Jeremy Hunt will publish independent forecasts for the UK's economic outlook, by the Office for Budget Responsibility (OBR).
Financial markets reacted badly to Chancellor Kwasi Kwarteng's so-called mini-budget, which included the biggest tax cuts in decades but few details on how they would be paid for. And he will set out details of spending cuts and possible tax rises he will say are needed.
Economic turmoil followed as the pound's value plummeted, borrowing costs soared, and the Bank of England bailed out pension funds. The chancellor has already ditched nearly all of his predecessor Kwasi Kwarteng's tax-cutting mini budget, in the biggest economic U-turn in British history.
In a move to calm the markets, Mr Kwarteng said he would set out his economic plan and an independent forecast of the nation's finances on 23 November. Many Conservative MPs have said they are waiting to see what Mr Hunt has to say, and how the markets react to it, before deciding whether to continue supporting Liz Truss.
But after Tory MPs - and the markets - expressed concerns, the chancellor brought forward his plan and the forecast. The OBR forecasts are expect to be bleak. The Institute for Fiscal Studies suggests the UK economy is facing a £60bn "black hole", while press reports suggest the OBR analysis will point to a larger gap of £72bn.
"I know the plan put forward only 10 days ago has caused a little turbulence, I get it.." The £32bn package of tax cut reversals and rises announced by Mr Hunt this week will only take the chancellor part of the way to filling that, although there is much uncertainty around the numbers.
"I know the plan put forward only 10 days ago has caused a little turbulence, I get it.." Spending cuts
A date of 31 October has been set, with Mr Kwarteng expected to give a statement to MPs in Parliament. Jeremy Hunt has already told government departments to come up with efficiency savings, and warned that public spending will not rise as quickly as some had expected.
Much will depend on the forecast by the Office for Budget Responsibility (OBR), which will assess whether the government's sums add up. In plain language, that means spending cuts.
One influential think tank has warned that Mr Kwarteng would have to make "big and painful cuts" of up to £60bn to balance the books - something that may be unpopular with the government's own MPs. Mr Hunt has said he is "not taking anything off the table".
MPs do have to approve most changes to public spending through the estimates process in Parliament, but, realistically, this provides limited opportunity to block cuts. The UK is committed to military aid to Ukraine
2) The mini-budget Health, education and defence are the biggest spending departments, but cutting the budget of any of these would be politically toxic and hard to sell to Tory MPs.
The reaction from Tory MPs and the markets to 31 October statement will give the government a better indication of whether its mini-budget can survive contact with political reality. Defence Secretary Ben Wallace - tipped by some as a potential replacement for Ms Truss - has said he intends to hold the PM to her promise to increase defence spending to 3% of GDP by 2030.
And many of the measures outlined in the mini-budget will require legislation and therefore approval by MPs. Tax cuts and other budget measures are usually passed into law through a finance bill. The welfare budget, which is the biggest source of cash spending, could end up taking the hit.
This bill will need to be passed into law by April next year, before the start of the next financial year. But if the government wanted, it could introduce the bill to Parliament earlier. Pensions triple lock
If the market turmoil continues, Tory MPs may be less minded to support the bill, leaving the government in a vulnerable position. The state pension - the biggest item in the welfare budget, according to the OBR - has long been seen as untouchable in British politics, with both Labour and the Conservatives promising to keep the triple lock guarantee. This is the policy which ensures the state pension goes up in line with inflation or average earnings or 2.5%, whichever is higher.
However, the defeat of a finance bill as a whole would be seen as a vote of no confidence in the government, and is therefore very unlikely. Under the guarantee, state pensioners would get a rise of about 10% in April 2023, which would take their weekly payment from £185.15 to just over £200.
Financial market turmoil followed the government's mini-budget, announced by Chancellor Kwasi Kwarteng But Chancellor Jeremy Hunt has indicated that the government is no longer committed to the triple lock, as he seeks savings.
Previous governments have survived defeats on specific parts of their budgets, most commonly tax cuts or rises. But if an amendment to the finance bill is selected and passes, that would be one of the likely moments of danger for Ms Truss's government. PM won't commit to raising pensions with inflation
3) Uprating benefits Uprating benefits
The former chancellor Rishi Sunak had promised to tie benefits payments in line with inflation (in other words, the rising cost of living). The chancellor could also attempt to break the previous government's commitment to ensure that benefits increase in line with the rising cost of living.
But Ms Truss's government is yet to commit to this and it has been reported that benefits such as universal credit could be raised in line with earnings, rather than prices. But this would not go down well with many Tory MPs, including Commons leader Penny Mordaunt, another figure tipped as a replacement for Ms Truss, who have argued strongly against it.
The political optics of this decision during a cost-of-living crisis have not gone unnoticed by Tory MPs and some cabinet ministers, including Commons Leader Penny Mordaunt, who have urged Ms Truss to honour the inflation-linked increase. Some benefits - such as the disability living allowance - do have to be uprated in line with inflation, by law. If the government wanted to uprate those benefits in line with earnings instead, it would need to pass a whole new law, which would face stiff resistance inside and outside Parliament.
Some benefits - such as the disability living allowance - do have to be uprated in line with inflation, by law. If the government wanted to uprate those benefits in line with earnings, it would need to pass a whole new law, which would face stiff resistance inside and outside Parliament. But there's no suggestion this is on the cards.
There are different rules for other benefits, including universal credit, which can be increased through tweaks to existing law.There are different rules for other benefits, including universal credit, which can be increased through tweaks to existing law.
If the government decides to increase these benefits by earnings rather than the higher level of inflation, MPs could try to make a parliamentary challenge. However, the process is complicated, and not risk-free. PM faces pressure to see benefits rise with prices
MPs might prefer to force ministers into a U-turn by amending the finance bill or other government draft laws.
The Institute for Government says rebellious MPs may opt to "effectively hold up Truss's agenda up until they get concessions on benefits".
The government is likely to make its announcement on benefits on 31 October, and any change should be passed early in the new year, taking effect in April.
How much is spent on benefits?How much is spent on benefits?
4) Fracking Fracking
In her first speech as prime minister, Ms Truss said dealing with the energy crisis would be one of her main priorities. One of Liz Truss's first acts as prime minister was to announce an end to the ban on fracking, as part of a package of measures to boost domestic energy production.
She announced support for energy bills and lifted the ban on fracking, a controversial method of mining for shale gas. But she has said it would only resume where there is local consent - and the government has yet to spell out how this will be sought.
Ms Truss has said fracking will only resume where there is local consent. A number Tory MPs have spoken out against the resumption of fracking, which was banned in 2019, reflecting constituents' concerns about earth tremors.
But Conservative opinion is divided on fracking, which was halted in 2019 following opposition from environmentalists, and local concerns over earthquakes linked to the practice. However, given that overturning the ban does not require a new law, MPs may have to find other ways to get ministers to back down.
Labour is attempting to force a Commons vote on banning fracking and is urging Tory MPs to back it.
The opposition has already warned Tory MPs they will use the issue of fracking to campaign at the next election.
Labour urges Tories to back vote on fracking ban
Ms Truss's government has backed fracking as a way to boost the UK's domestic gas suppliesMs Truss's government has backed fracking as a way to boost the UK's domestic gas supplies
Some Tory MPs would like to see the ban re-imposed, while others are concerned about how local consent could be obtained in a fair way. Planning reform
Many green-minded Conservatives have already spoken out against the fracking ban being lifted. However, given that overturning the ban does not require a new law, MPs may have to find other ways to get ministers to back down. The government still plans to push ahead with potentially controversial planning law reforms, which were a key part of Liz Truss's plan to boost economic growth.
When asked if there should be a vote on fracking in Parliament, Business Secretary Jacob Rees-Mogg told the BBC there were "any number of mechanisms MPs can use to have a say on things". Ms Truss wants to deregulate planning, cutting environmental regulations and reducing the number of affordable homes in new developments. Some of the plans could be unveiled before 31 October, but they may prove difficult to get through.
Some Tories have told the BBC they are in talks with opposition parties to try to block the government's fracking plans. Attempts by Boris Johnson's government to fast track new developments had to be rethought after opposition from backbench Tory MPs.
They may try to amend the Energy Bill - although there is uncertainty over when this will come back to Parliament. Net zero review
Another method could be through a vote called by Labour during a parliamentary session known as as an opposition day debate.
If backed by enough Tory MPs, the vote could be used to show a lack of support for fracking in Parliament. While the vote would not be binding, defeat would compromise the government politically.
5) Planning reform
Another big plank of Ms Truss's programme is reform of planning law. She's mentioned this in several speeches, and in his mini-budget speech, the chancellor said "we will bring forward a new bill to unpick the complex patchwork of planning restrictions".
As yet, no date has been set to debate these reforms, which are likely to be viewed with scepticism by some MPs.
Planning reform is a touchy subject for some Tory MPs, particularly those in rural areas.
When planning reforms were last pursued by Mr Johnson's government, some of them were scrapped at the insistence of Tory MPs.
6) Net zero review
In 2019, the UK made a legally binding commitment to reach the target of net zero carbon emissions by 2050. When he was prime minister, Mr Johnson was an enthusiastic supporter of net zero.In 2019, the UK made a legally binding commitment to reach the target of net zero carbon emissions by 2050. When he was prime minister, Mr Johnson was an enthusiastic supporter of net zero.
But at a time of historically high energy prices and soaring inflation, some Tory MPs have questioned the wisdom of spending money on hitting the target.But at a time of historically high energy prices and soaring inflation, some Tory MPs have questioned the wisdom of spending money on hitting the target.
Their concerns have been taken on board by Ms Truss, who has commissioned an independent review into the delivery of net zero.Their concerns have been taken on board by Ms Truss, who has commissioned an independent review into the delivery of net zero.
Led by former energy minister Chris Skidmore, the review with a focus on "ensuring the UK's fight against climate change maximises economic growth, while increasing energy security and affordability for consumers and businesses".Led by former energy minister Chris Skidmore, the review with a focus on "ensuring the UK's fight against climate change maximises economic growth, while increasing energy security and affordability for consumers and businesses".
He will report to the government with a set of recommendations by the end of this year.He will report to the government with a set of recommendations by the end of this year.