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Liz Truss faces riots as angry Tory MPs call for a U-turn on tax plans

Liz Truss faces open revolt from Conservative MPs who are calling for further U-turns on her mini-budget for tax breaks after she ruled out spending cuts to balance the nation’s books.

Increasingly recalcitrant Tories made it clear that the Prime Minister should reverse or postpone her decision to scrap a corporate tax hike planned for 2023 at a cost of £18.7 billion.

The calls came after that pleasemynews revealed Downing Street staff went through Chancellor Kwasi Kwarteng’s September 23 statement line by line after receiving the Office for Budget Responsibility’s (OBR) first assessment of its impact.

Tory Chair of the Commons Treasury Committee Mel Stride said there were now doubts as to whether Ms Truss and Mr Kwarteng would be able to “satisfy the markets” without backtracking on other elements of the £43bn package.

An attempt to calm Tory nerves failed when Mrs Truss was accused of “destroying the last 10 years of conservatism” at a 1922 meeting of the Backbench Committee in Westminster, where she urged MPs to get behind to gather her.

One MP in attendance said the attack came from Education Committee chairman Robert Halfon, who said the new prime minister had destroyed in days a decade of efforts to extend the party’s appeal to the working class by offering tax breaks for the wealthy and welfare cuts .

A Conservative MP said pleasemynews that there was “a robust exchange of views” – code for an argument – within the closed-door meeting. When asked if Ms Truss had convinced any of her critics, the MP replied: “Probably not.”

And a former minister told pleasemynews: “It was horrible. She’s not going anywhere, but she can’t survive.”

Previously, the Prime Minister received little support from the muted Conservative benches at the Prime Minister’s Questions, where Sir Keir Starmer accused her of being “lost in denial” over the damage her program has done.

In a sign of growing nervousness in markets after the Bank of England confirmed Friday that it was withdrawing its bailout program, government bond yields – effectively the price the UK government has to pay for borrowing – rose again on Wednesday. 30-year gilts topped 5.1 percent for the first time in 20 years, and 10-year gilts hit a 14-year high of 4.64 percent.

Yields are now reaching levels that only triggered central bank intervention after the mini-budget.

And the bank’s chief economist Huw Pill said he expects a “significant” rate hike at the next Monetary Policy Committee (MPC) meeting on March 3.

A further increase from the current 2.25 per cent would inevitably add hundreds of pounds a month to mortgage payments for millions of homeowners.

Tensions between ministers and the bank erupted openly, with Business Secretary Jacob Rees-Mogg claiming the market turmoil was not caused by the mini-budget but by the previous day’s MPC decision to opt for a lower rate hike than US central bank to decide.

Mr Rees-Mogg also took a swipe at the OBR and told ITV pest his forecast record “wasn’t particularly good”.

And he took aim at the International Monetary Fund (IMF), which has called for a tougher tax regime in the UK, saying his comments should not be treated as “holy scripture”.

However, his arguments were dismissed by a panel of leading economists, who told the Commons Treasury Committee that the mini-budget was the “straw that broke the camel’s back”.

Torsten Bell, Executive Chairman of the Resolution Foundation, said: “If you spend the summer telling people you intend to abandon tax orthodoxy, if you then announce a package that abandons tax orthodoxy, then if you say on Sunday will you keep doing it then I don’t think it should come as a surprise to any of us that you end up here.”

Ms Truss came under continued pressure at her second Prime Minister’s Questions session in the House of Commons to explain how she would pay for Mr Kwarteng’s tax cuts.

But she shocked many, when asked by Mr Starmer if she would stand by a no-spending pledge, she replied: “Absolutely.

“We will ensure that the debt falls in the medium term. But we will not do that by cutting public spending, but by making sure we spend public money well.”

The think tank Institute for Fiscal Studies (IFS) said that public spending will increase by 18 billion next year in 2026/27.

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