Penny Mordaunt DENIES plotting to replace Liz Truss as PM battles to survive

The government’s tax and spending plans descended further into confusion today as No10 ruled out more U-turns on the mini-Budget – minutes before it emerged officials are working on water down vows on corporation tax.

Downing Street defied rising pressure from the Tory backbenches to insist there is no question of further mini-Budget measures being reversed. 

No10 also declared at the daily briefing that public spending will continue to rise in real terms, despite warning of a £60billion black hole in the finances. 

But almost immediately it was reported that officials are working on proposals to overhaul Liz Truss’s key promise to keep corporation tax at 19p rather than proceed with the schedule hike to 25p in April.

The news sent the Pound soaring, while gilts yields dropped sharply from highs.  

No10 sources tried to play down the suggestion, with one saying: ‘The PM wants to keep the mini budget plan intact but is of course committed to making sure the numbers add up on the 31st. It’s wrong to say officials are pushing for a corporation tax U-turn. 

‘The path to the 31st is still being figured out and worked through.’

The extraordinary chaos came as Penny Mordaunt laughed off coup rumours – despite mutinous MPs pushing for a leadership ‘dream ticket’ of her and Rishi Sunak.

Responding to claims her expressions were giving away her intentions, the Commons Leader quipped in Parliament that her ‘resting face’ looks like a ‘bulldog chewing a wasp’ and people ‘should not read too much into that’. 

The PM is desperately seeking solutions after a brutal showdown with Tory MPs last night, where she was accused of ‘trashing the last 10 years’ of work.

She is being warned that she must rethink on key measures in Kwasi Kwarteng’s mini-Budget, which helped trigger market chaos that has sent the Pound plummeting and government borrowing costs soaring.

The grim situation the Conservatives face has been underlined by a poll showing Labour leading by 13 points in the so-called ‘Blue Wall’ – suggesting Keir Starmer would seize a swathe of previously safe seats in heartlands.

Some Tory MPs are plotting to replace Ms Truss with a ‘dream ticket’ of her leadership contest rivals Ms Mordaunt and Rishi Sunak, while others want a comeback for Boris Johnson. 

The panic is so deep that there are claims politicians are even mulling ‘bizarre’ options, such as backing a snap election so that a Labour government has to deal with the worst of the cost of living crisis. 

Former Cabinet minister Nadine Dorries compared the PM witheringly to Gordon Brown, but repeated her warning that changing the resident of No10 again would require going to voters for a new mandate.  

On another day of chaos in the UK:

• Downing Street has distanced itself from Jacob Rees-Mogg’s suggestion that the Chancellor can ignore the OBR watchdog’s verdict on his Budget at Halloween because the body has a poor record on forecasting;
• No10 has confirmed that overall Government public spending will continue to rise in real terms but refused to rule out the prospect that some departments could face cuts; 
• Pension funds could have more breathing space as long-dated gilts stabilised despite the Bank of England declaring its support will end tomorrow – although prices remain very low;
• Mr Kwarteng is at an IMF meeting in Washington after the international body criticised his unfunded tax cuts and energy bills cap;
• The King could be heard remarking ‘dear, oh dear’ as he welcomed Mr Truss for her weekly audience last night. 

1922 Committee members demanded more U-turns on Liz Truss’s tax-slashing agenda after she ruled out spending cuts to balance the books. Pictured: Ms Truss at Prime Minister’s Questions yesterday

The grim situation the Conservatives face has been underlined by a poll showing Labour leading by 13 points in the so-called ‘Blue Wall’ – suggesting Keir Starmer would seize a swathe of previously safe seats in heartlands

Foreign Secretary James Cleverly toured broadcast studios to try and cool the mood this morning, but fueled more speculation as he stopped short of saying plans to axe a rise in corporation tax will be kept

Foreign Secretary James Cleverly toured broadcast studios to try and cool the mood this morning, but fueled more speculation as he stopped short of saying plans to axe a rise in corporation tax will be kept.  

Ms Truss had promised to stop the scheduled increase from 19 per cent to 25 per cent in April, which would have raised around £18billion. However, many MPs are now adamant that cannot happen while the government faces imposing an estimated £60billion of spending cuts to balance the books.  

Barely a month into the PM’s time in No10, Mr Cleverly was also left begging Tories not to mount a coup.  

‘We have got to recognise that we do need to bring certainty to the markets,’ he told Sky News.

‘I think changing the leadership would be a disastrously bad idea politically and also economically. We are absolutely going to stay focused on growing the economy.’

Shadow Commons leader Thangam Debbonaire goaded Ms Mordaunt over the government’s plight in the chamber today.

‘Funereal, unspeakably bleak, just some of the last night savage stream of consciousness flowing from the 1922 Committee of Tory backbench MPs. Dear, oh dear,’ she said.

‘The country’s economic outlook almost as grim as the faces on the benches opposite during PMQs … the Leader of the House couldn’t even muster a nod for her Prime Minister. Why would she?’

Ms Debbonaire also commented on Ms Mordaunt’s remarks during the Tory party conference, saying: ‘I think I saw the right honourable lady saying our policies are great but our comms are shhh … shocking. Let’s go with that to keep it parliamentary.

‘Now, on comms of course I agree, but people across the country know that her policies, her Government’s policies, are also shhh … shocking, too.’

Ms Mordaunt replied: ‘First of all, let me address the comments the honourable lady makes about my facial expressions: my resting face is that of a bulldog chewing a wasp, and people shouldn’t read too much into that.’

The Commons Leader also insisted it is ‘the anti-growth coalition whose policies are shhh … shocking’.

Pressed repeatedly on whether there would be more U-turns on the mini-Budget, after the policy of scrapped the 45p top rate of tax was abandoned, Mr Cleverly stressed the cap on energy bills for the next two years and the income tax cut. 

‘Ultimately, what that mini-budget was about was protecting tens of millions of people from unaffordable energy prices. That was the bulk of that proposal,’ he said.

‘It was about making sure that taxes for 30 million people were reduced a little bit and those are really strong principles. I think we should absolutely stick with those.

‘All those things are really key for the growth agenda the Prime Minister has put forward.’

Pressed on whether the corporation tax increase could go ahead after all, Mr Cleverly merely said business investment was important. ‘The Chancellor will come to the despatch box,’ he said. 

Mr Cleverly also acknowledged that the turmoil in the financial markets is linked to the mini-Budget, in contrast to Jacob Rees-Mogg who suggested yesterday it was down to the Bank of England’s failure to raise interest rates as fast as the US Federal Reserve.

‘The markets of course did respond to the Chancellor’s mini-budget. I have not said that isn’t the case. The point I am making is many of the challenges we are facing are challenges shared by countries around the world,’ he said.

Ms Truss was mauled by her own MPs at the meeting of the 1922 committee last night, with a series of hostile questions. 

Commons education committee chair Robert Halfon warned that she had ‘trashed the last 10 years of workers’ Conservatism’. 

One senior Tory told MailOnline that some backbenchers even chatted through Ms Truss’s appearance. 

‘You just don’t get that sort of thing. People had lost interest in what she was saying,’ they said.

An MP said: ‘It was like someone trying to light a fire using a magnifying glass. Using damp wood. In the dark.’

Meanwhile, many took to the airwaves to demand a change of course. 

Tory chairman of the Commons Treasure Committee Mel Stride said that given Ms Truss’s commitments to protect public spending, there was a question over whether any plan that did not include ‘at least some element of further row back’ on the £43billion tax-slashing package can reassure investors.

‘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,’ Mr Stride said.

Conservative former minister David Davis also weighed in, branding the mini-budget a ‘maxi-shambles’.

He suggested reversing some of the tax cuts would allow Ms Truss and Mr Kwarteng to stay clear of leadership challenges for a few months.

‘If they do that I think people like Mel Stride and others will come in behind them and they buy some time,’ he told ITV’s Peston.

Damian Green, a former deputy prime minister, said Conservative MPs are openly discussing reversing some of the mini-budget measures, as they question how else she can reduce debt after she rejected public spending reductions.

‘It is indeed a topic of conversation around the tea rooms of the House of Commons as well, because we can all do the rough maths and see that it’s very difficult,’ he told BBC Radio 4’s PM programme.

‘One of the obvious ways would be possibly to defer some of the tax cuts or the failure to put taxes up.’

The so-far unfunded measures in Chancellor Kwasi Kwarteng’s (pictured) mini-budget have upset the financial markets

Commons education committee chair Robert Halfon (pictured) has hit back at Ms Truss, claiming that she had ‘trashed the last 10 years of workers’ Conservatism’

The editor of ConservativeHome, an influential voice within the Tory party, has said some backbenchers have become ‘piranha fish taking a bite’ at the Chancellor.

Paul Goodman, a former Conservative MP, told BBC Radio 4’s Today Programme: ‘I am beginning to wonder whether or not ministers and Conservative MPs are capable of putting together a package of public spending cuts on the scale required, and if they do whether they’re going to be acceptable to the markets, or whether the markets are now going to demand the withdrawal, in effect, of the mini-budget, or most of it, that Kwasi Kwarteng announced only very recently.

‘It’s certainly the thinking of some, we’ve seen individual backbenchers pop up in recent days rather like small piranha fish taking a bite at the whale, Stephen Hammond, Mel Stride, Kevin Hollinrake, they’ve all come out, essentially to say that quite a bit of the mini-budget, especially the corporation tax cut, have to be turned.

‘I don’t really know if they’re a majority or not, but if I’m right then we will see the Government have great difficulty in getting this package of cuts together.’

Mr Goodman said some Tory backbenchers wanted a ‘dream ticket’ of Mr Sunak and Ms Mordaunt to replace the PM.

‘All sorts of different people are talking about all sorts of different things because the Conservative backbenchers are casting around for a possible replacement for Kwasi Kwarteng, even for a possible replacement for Liz Truss,’ he said.

‘One idea doing the rounds is that Penny Mordaunt and Rishi Sunak, who, after all, between them got pretty much two-thirds of the votes of MPs, come to some kind of arrangement and essentially take over.’

Asked if this would be decided without the party members, he added: ‘Yes, I suppose the arrangement would be to come to an agreement about one candidate so the members are a cut-out.’

Sky News reported that discussions were even happening about whether Tory MPs should back an early election, on the basis that Sir Keir would have to manage the worst of the crisis and it would be easier for the party to recover.

One senior Conservative told MailOnline that some of the ideas circulating were ‘bizarre’. ‘I have heard a series of vey weird things. You just tick off a number of them and say, those are just not sane.

‘That is reflective of a state of morale, uncertainty, despair… I think they are casting around in every sort of insane direction and as yet haven’t come up with a solution.

‘She is doing U-turns and not getting the credit for them.’ 

As the prospect of ousting the Prime Minister was openly discussed, Ms Truss failed in an attempt to get MPs back on side during a meeting of the Tory backbench 1922 Committee last night.

The Prime Minister, addressing the group, claimed that small businesses would have faced ‘devastation’ had the Government not intervened to cap energy prices, according to aides.

But MPs responded with open criticism, highlighting soaring mortgage rates as well as the Tories’ decline in the polls.

The Prime Minister and Chancellor are expected to meet with critical MPs from next week to try to assure them that Mr Kwarteng’s medium-term fiscal plan on October 31 will address their concerns. 

Mr Rees-Mogg suggested the Government could ignore Office for Budget Responsibility forecasts accompanying the strategy if they predict low growth and rising debt. 

The Business Secretary told ITV’s Peston that ‘its record of forecasting accurately hasn’t been enormously good’ and that the Chancellor could draw on ‘other sources of information’. 

Earlier on Wednesday, Ms Truss insisted during her second Prime Minister’s Questions that she was ‘absolutely’ not planning public spending cuts, but insisted taxpayers’ money will be used well. 

But the remarks failed to prevent another day of economic turbulence which saw a rise in the cost of Government borrowing and the pound fall against the euro and dollar. 

Ms Truss insisted during her second Prime Minister’s Questions (pictured) that she was ‘absolutely’ not planning public spending cuts

Since Mr Kwarteng’s September 23 mini-budget, the value of sterling has fluctuated and yields on government bonds, the cost of state borrowing, rose to such an extent that the Bank of England was forced to intervene to prevent problems for pension funds. 

Ms Truss was also warned by senior advisers that it was ‘no longer credible’ to press ahead with large tax cuts without risking a financial crisis, The Times newspaper reported. 

She has already abandoned plans to cut the 45p rate of income tax for top earners. 

Economists have suggested that restoring confidence in the Government’s grip on the national finances will require tens of billions of pounds’ worth of spending cuts or tax rises.