Rishi Sunak is tearing up Liz Truss’s growth plan and reviewing key spending commitments, including on increasing state pensions in line with soaring inflation, as he delayed the autumn budget.
The new Prime Minister also reimposed the fracking ban in England that his predecessor controversially scrapped and was reconsidering immigration and deregulation plans in a major overhaul.
Mr Sunak brushed off opposition demands for an immediate general election as he pledged to rebuild the public finances in “fair and compassionate” way and to rectify former prime minister Ms Truss’s “mistakes”.
Chancellor Jeremy Hunt delayed his Halloween budget setting out the measures to get the UK’s deficit under control to November 17 to take into account the latest economic forecasts.
Downing Street was refusing to commit to key pledges on the triple lock on state pensions and increasing defence spending to 3% of GDP by 2030 as Mr Sunak and Mr Hunt complete their review.
Just last week Ms Truss insisted she was “completely committed” to the manifesto pledge on pensions after facing a backlash when No 10 suggested it may be scrapped.
On Wednesday, Mr Sunak’s press secretary refused to “comment ahead of any fiscal statements or budgets” as she declined to say whether payments will increase in April in line with inflation, at more than 10%.
“But what I can say is he has shown through his record as chancellor is that he will do what’s right and compassionate for the most vulnerable,” she said.
Shadow work and pensions secretary Jonathan Ashworth accused Mr Sunak of not being on the side of pensioners struggling through the cost-of-living crisis.
“Rishi Sunak stood on a manifesto in 2019 on a pledge to keep the triple lock. Now he’s threatening that promise to Britain’s retirees,” the Labour MP said.
Ms Truss riled many of her backbench MPs by ending the fracking moratorium, which led to dozens of Tories refusing to back the Government in a night of chaos in the Commons before her resignation.
Downing Street confirmed Mr Sunak had quickly overturned Ms Truss’s relaxation of the rules to reinstate the ban after he told his first Prime Minister’s Questions “I stand by the manifesto on that.”
Defence Secretary Ben Wallace, who survived Mr Sunak’s reshuffle in the same role, would be on resignation watch if the Government backtracks on the defence spending commitment.
The Prime Minister’s official spokesman said “no decisions have been made” ahead of the budget.
Central to Ms Truss’s growth-boosting vision were investment zones where planning restrictions are relaxed, a “Big Bang 2.0” programme of deregulation of the financial services sector, the scrapping of environmental protections and allowing in more skilled migrants.
But Ms Truss’s official spokesman said: “There are no plans for supply-side reforms as we previously discussed.
“That’s not to say there won’t be elements the Chancellor may or may not wish to come forward with in his autumn statement.”
Businesses had welcomed those plans, with CBI director-general Tony Danker saying the Tories need to focus on policies which are not “frankly anti-growth”.
“I’m afraid when it comes to planning permission and immigration and regulatory reform, the Conservative Party need to do more to put those things second and growth first, otherwise we will have another decade of austerity, low growth and zero productivity,” he told BBC Newsnight on Monday.
The review comes after Mr Hunt tore up Ms Truss and then-chancellor Kwasi Kwarteng’s sweeping package of tax cuts after their mini-budget triggered financial turmoil.
In noisy exchanges in the Commons with Labour leader Sir Keir Starmer, Mr Sunak acknowledged that it would involve “difficult decisions” in order to restore “economic confidence and stability”.
“I will always protect the most vulnerable. We did it in Covid and we will do it again,” he said.
“This Government is going to restore economic confidence and stability and we will do it in a fair and compassionate way.”
In a combative session, Sir Keir attacked Mr Sunak’s controversial decision to reappoint Suella Braverman as Home Secretary just six days after she was forced to resign over a security breach.
The Labour leader said it was a sign of the weakness of his position that he had to do a “grubby deal” with a prominent figure on the Tory right to ensure he gained the leadership this time around.
He taunted the new premier over his defeat by Ms Truss in the last leadership contest over the summer.
“The only time he ran in a competitive election he got trounced by the former prime minister who herself got beaten by a lettuce,” Sir Keir said.
“So why doesn’t he put it to the test, let working people have their say and call a general election?”
Mr Sunak responded that he had a mandate based on the Conservative Party manifesto on which they won the 2019 election.
Earlier, Mr Hunt informed the first meeting of the new Cabinet that he and the Prime Minister had agreed it would be “prudent” to delay the medium-term fiscal plan which will now be a full autumn statement.
He said that it would enable them to take account of the latest economic forecasts from the Office for Budget Responsibility (OBR), which will be published at the same time.
“But it’s also extremely important that that statement is based on the most accurate possible economic forecasts and forecasts of public finances,” he said in a statement to broadcasters.
“The OBR also want to make sure that their forecasts are the most accurate possible and there have been a lot of changes even in the last 48 hours,” he said.
“This is my recommendation to the Prime Minister as the best way to ensure that the decisions that we take, these very, very difficult decisions, are ones that stand the test of time.”
Mr Hunt said he discussed the move with Bank of England Governor Andrew Bailey on Tuesday night, adding he (Mr Bailey) “understands the reasons for doing that and I’ll continue to work very closely with him”.