Ione Wells
Political Correspondent, BBC News

Liz Truss has been addressing her backbench MPs. She received the customary banging of fists on the tables from MPs as she entered.

The meeting comes after a rocky few weeks for relations with her MPs - particularly after some of their unease caused her to perform a U-turn over her plans to cut the top rate of tax for the highest earners.

Some of her recent prominent critics, like Michael Gove, showed up. But it certainly didn't seem like it was nearly a full house of backbenchers — with many Tory MPs not there.

Others have grumbles about other issues — there is a live debate about whether benefits should rise in line with inflation or not, and whether fracking should go ahead, to name just two.

Luke Hastings
Journalist

Image source, Aaron Chown/PA Wire

Conservative MP Damian Green has told BBC Radio 4's PM programme the possibility of changing elements of the mini-budget is being discussed amongst MPs in the tea rooms of the House of Commons.

When asked if he and his colleagues are openly discussing looking again at the mini-budget, he said: "yes... because we can all do the rough maths and see that it's very difficult and in a sense the government has two challenges".

The first, Green says, is the markets.

But he also says there's a political problem with "the other half of the mini budget - the growth agenda, if you like, the deregulation part".

Green says that needs to be done in an "appropriately, politically sensitive way".

"So, at the very least you need to have put to bed the thought that the markets might erupt at any moment in the background, which would put the whole project in jeopardy," he adds.

Image source, UK Parliament

Conservative MP Alicia Kearns has been named as the new chair of the influential Commons Foreign Affairs Select Committee.

Kearns, who was elected MP for Rutland and Melton in 2019, is believed to be the first female leader of the committee.

Following former chair Tom Tugendhat’s appointment as security minister, several backbench Tory MPs - including former party leader Iain Duncan Smith and former international trade secretary Liam Fox - were campaigning to take over the role.

Speaker Sir Lindsay Hoyle announced the news in the Commons.

Will the state pension keep up with the cost of living?published at 17:38 British Summer Time 12 October 2022

17:38 BST 12 October 2022

Kevin Peachey
Personal finance correspondent

Image source, Getty Images

Don Brown wants to know: "Will the state pension keep up with the cost of living?"

There is some upheaval in the pensions sector at the moment, but that will not affect your state pension.

The government has already committed to honouring the triple-lock. So, your state pension next April will rise in line with the highest of inflation, wages, or 2.5%.

Inflation - the annual rate of rising prices - will clearly be the highest, at about 10% or so. We will get that number next week, when the next set of official inflation figures is published.

Of course, pensioners are facing higher prices now, but the backstop of the triple lock always lags behind the current situation - for better or worse.

Image source, EPA

The senior Tory MP who chairs the Treasury Select Committee has questioned whether the government will be able to go ahead with its tax-cutting plan without further market turmoil.

Earlier, during Prime Minister's Questions, Liz Truss said she would not cut government spending, despite concerns about how she intends to pay for her planned tax cuts.

Mel Stride later tweeted , externalthat this raises a question: "Whether any plan that does not now include at least some element of further row back on the tax package can actually satisfy the markets."

Stride adds: "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."

Speaking about the Chancellor's planned fiscal statement, expected on 31 October, he says: "The chancellor will only get one opportunity to land his plans and the forecast positively. He must take no chances. There is too much at stake for all of us."

Earlier, Stride pressed Treasury minister Chris Philp to change course on the government's tax-cutting plans, suggesting Chancellor Kwasi Kwarteng will “simply have to come forward with a further rowing back” on the tax announcements given the “huge challenges” he is facing.

Philp replied: "There are not any plans to reverse any of the tax measures announced in the growth plan."

What help is there for first-time buyers?published at 17:02 British Summer Time 12 October 2022

17:02 BST 12 October 2022

Kevin Peachey
Personal finance correspondent

Image source, EPA-EFE/REX/Shutterstock

Callum, from Leeds, is saving for a first home and wants to know what help is available.

He says, "I make just under £1,500 a month after tax. National Insurance and Income Tax reductions will only save me £16 a month, meanwhile prices of everything are skyrocketing."

Clearly as you watch mortgages getting more expensive, it may feel like buying a home is increasingly difficult.

Ministers will point to the help offered in the mini-budget, which means first-time buyers in England and Northern Ireland will only pay stamp duty on properties above £425,000, rather than £300,000, as well as discounts above that.

Savings rates are improving, and house prices rises look set to stall or reverse, according to experts.

But, as is always the case, the security of your job and income, and how much you earn, will be key factors when judging what home you can afford.

Image source, PA Media

Renewable energy generators and nuclear power plants could have their revenues capped under a new government plan.

Ministers say the move would ensure consumers and businesses pay a fair price for energy.

The proposal could hit the profits that energy companies, such as SSE and Scottish Power, generate from record-high wholesale power prices.

However, energy bosses say the plan - for which there are few details - could put off investors.

Currently in the UK, wholesale electricity prices are set by gas-fired generation.

With the price of gas rocketing in recent months, some nuclear power plants and solar and wind farms have made big profits.

You can read more on this story here.

What should I do if I can't pay my mortgage?published at 16:34 British Summer Time 12 October 2022

16:34 BST 12 October 2022

Kevin Peachey
Personal finance correspondent

Image source, EPA-EFE/REX/Shutterstock

Ethan Jones from Wolverhampton asks: "What's the worst that can happen if I can't afford to pay my mortgage for say, three consecutive months?"

You are technically defined as being in arrears after missing two or more months of payments.

The universal advice from debt charities here is to avoid putting your head in the sand.

If you are struggling, or know you will struggle, to make your monthly repayments, then you should contact your lender. Charities can also offer free, independent guidance.

Your lender is obliged to treat you fairly and consider any request to pay, for example, just part of the payment for a short period.

It is not allowed to repossess your home unless all reasonable attempts to resolve the situation have failed.

Simon Read
Personal Finance Reporter

The yield, or return, on 10-year government bonds has climbed to 4.62% - the highest levels since 2008, at the height of the financial crisis.

Meanwhile, the yield on 30-year bonds has climbed to 4.92%, close to its 5.1% peak after the mini-budget that prompted the Bank of England to begin its emergency bond-buying programme last month.

The rises suggest the Bank of England’s two interventions this week - when it bought more government bonds on Monday and Tuesday - have failed to calm the market’s nerves.

Are my savings safe?published at 16:11 British Summer Time 12 October 2022

16:11 BST 12 October 2022

Kevin Peachey
Personal finance correspondent

Image source, PA Media

First up, Kam Wan, who asks, "Are my savings safe in a bank or building society?"

This is a question that was asked a lot during the financial crisis over a decade ago, which was a very different scenario.

The answer is yes. The Financial Services Compensation Scheme completely protects the first £85,000 saved per person, per financial institution if a bank of building society goes bust.

If you have more savings than that, experts suggest putting it into different accounts with different providers.

And, just to stress, there is no suggestion of a threat to the future of any banks or building societies right now.

We've been collecting your questions on the economy and how it affects you - and our personal finance correspondent Kevin Peachey has been giving them some thought.

Stay with us as we rattle through some of the topics we've had the most questions on.

Image source, .

Earlier this morning, MPs on the Treasury Select Committee quizzed several leading economists on the government's mini-budget and wider economic plans.

Here are a few key moments:

On the government's 2.5% growth target

Sanjay Raja, chief UK economist from Deutsche Bank, said the goal was a huge undertaking and "to get there within five years is almost impossible".

Prof Jagjit Chadha, director of the National Institute of Economic and Social Research, told MPs that to achieve levels of growth close to that target "would likely come in the form of a “boom and bust".

On funding planned tax cuts:

Torsten Bell, chief executive of the Resolution Foundation, said: "I don't think there is a plausible credible package that's going to work on 31 [October] now that doesn't involve U-turning on more of these [tax cuts]." He said the most likely U-turns would be on corporation tax.

On how the mini-budget was announced:

Chadha said the mini-budget undermined the cooperative arrangement that existed between the government and financial institutions and was "not the way policy should be run".

And Dr Gemma Tetlow, chief economist at the Institute for Government, echoed his comments and said there was no need for the policies to be announced in such a hurried manner, as some of them will only come into play in April 2023.

Image source, PA Media

Earlier, Jacob Rees-Mogg claimed that the economic turmoil the UK has witnessed in recent weeks was not linked to the mini-budget.

Speaking to the BBC this morning, the business secretary said market volatility could be due to the Bank of England's failure to raise interest rates in line with the US.

"It's much more to do with interest rates than it is do with a minor part of fiscal policy," he said.

But economists and some MPs said huge tax cut plans without explaining the economic impact had worried investors.

Deutsche Bank's chief UK economist Sanjay Raja told MPs that the "combination of a side-lined financial watchdog, a lack of a medium-term fiscal plan, one of the largest unfunded tax cuts we've seen since the early 1970s" meant that the mini-budget was the "straw that broke the camel's back".

Read more here.

Another Conservative MP has called on the government to pause some of the tax cuts proposed in last month's mini-budget.

Speaking on Radio 4's World at One, Kevin Hollinrake, who sits on the Treasury's Select Committee, said he thought it would be possible for the chancellor to reverse some of his commitments, such as cutting corporation tax, though he acknowledged it did not "augur well" for the government.

"I think it's better to have looked at this more carefully in the context of what's happened over the last few weeks and say, 'I think we've got some of this wrong and these tax cuts need to be introduced over time'," he said.

"I think if he made that case and said they've been listening, as they did with the top rate [of income tax], I think that's possible. But it certainly doesn't augur well in terms of U-turning on commitments already made, particularly one that was such an important part of the prime minister's leadership campaign."

The mini-budget is not solely to blame for the current market turmoil, economist Gerard Lyons has said.

Lyons, an informal adviser to PM Liz Truss, says the recent market volatility is due to a "whole combination of factors".

He tells the BBC Radio 4's World at One: "Clearly, there is an aspect linked to the mini-budget and we shouldn't ignore that.

"But also… I think it's wrong to say… that everything that's happened is solely due to the mini-budget. We should also be asking ourselves, why were markets so febrile ahead of a mini-budget?"

Lyons, who says he has not advised the PM or chancellor since they entered Downing Street, stresses that the medium-term fiscal plan should be delivered sooner in order to calm markets.

He says it's vital that the chancellor puts forward a clear plan that outlines his fiscal principles and addresses the market's fears about the integrity of financial institutions.

Liz Truss said during PMQs that she won't cut government spending to pay for the tax cuts outlined in the mini-budget.

Later, however, her spokesman said there would be "difficult decisions" for the government on spending.

This comes after a report by the Institute for Fiscal Studies said spending would need to be £60bn less a year in order to cover the shortfall in revenue caused by a weaker economy and the promised tax cuts.

To give you an idea of the challenge facing the government, here is where the UK currently spends money:

Image source, .

The Chief Secretary to the Treasury Chris Philp says there are no plans for "real-terms cuts" in government spending.

He made the commitment after Liz Truss insisted at Prime Minister's Questions there wouldn't be any public spending cuts.

Jonathan Blake
BBC political correspondent

The prime minister's spokesman has said there will be "difficult decisions" for the government on public spending, after Liz Truss pledged to stick to her commitment not to make any cuts.

Speaking to reporters after Prime Minister's Questions, the spokesman said the chancellor would announce measures "in due course" but would not be drawn on whether departmental budgets would increase by less than inflation or whether energy support measures would be included in the government's total spending bill.

"We are clear there will need to be difficult decisions to be taken given some of the global challenges we're facing," the spokesman said.

"I appreciate the interest but I'm not going to get drawn into what those might look like."

The Bank of England is facing criticism for sending mixed messages about whether its bond-buying programme will continue after the end of this week.

Speaking to BBC News, Louise Cooper, senior lecturer in finance at Kingston University Business School, said communication on the issue had been “absolute chaos”.

A number of major business outlets, including Bloomberg and the Financial Times, reported on Tuesday that the Bank would be extending the programme, but governor Andrew Bailey later said the programme would end on Friday as originally planned.

"As the head of one of the most powerful central banks in the world, you just can’t do that. You cannot confuse your messaging," Cooper said.

"It's just an absolute own goal. You don’t say two different messages to different organisations. [It] damages credibility."

When is a cut a cut?published at 13:48 British Summer Time 12 October 2022

13:48 BST 12 October 2022

Chris Mason
Political editor

The most striking line from Liz Truss in Prime Minister's Questions was when she said there wouldn't be any government spending cuts.

But how is that going to work if the government is also intent on not junking any more of its budget plans announced a few weeks ago?

I've just spent 20 minutes in what we call a "huddle" here in Parliament, where political reporters fire questions at the prime minister's official spokesman.

There are two explanations, both of which do point to shrinking budgets.

The first is that the colossal injection of public money being spent helping families and businesses with energy bills is included, so there isn't a cut overall but government departments still face cuts to their budgets.

The second, more likely explanation, is that the numbers in the spreadsheets won't fall, but won't rise as fast as inflation.

That allows the prime minister to answer the question in the way she did, but government departments will face budgets that mean the money they have doesn't go as far as it did.

Her official spokesman wouldn’t be drawn on whether this was a plausible explanation, but didn’t deny it.