Mini-budget: UK government must be flexible, says Wales Office minister

Kwasi Kwarteng announced a series of tax cuts in his mini-budget

A Wales Office minister has said the UK government has to be "flexible" in an economic "storm" as speculation mounts of a further U-turn on the mini-budget.

David Davies suggested the tax-cutting package could change and any government would be "tilting the tiller on the ship of state".

He said the crisis was more economically serious than Covid and the credit crunch of 2008.

Earlier the chancellor sidestepped questions on changing course.

Kwasi Kwarteng said he was "not going anywhere", but has admitted that the market turbulence was caused in part by his policies.

Mr Davies backed the chancellor and linked the turmoil in the markets to borrowing required for the energy package.

But he added that ministers will need to "do what we need to do to make sure that the markets are satisfied" to continue with the plans.

"I don't think you can say that what's up with the markets is down to a mistake," the minister told BBC Wales.

"The markets will look at it and say this country is borrowing a lot of money.

"Well, we are borrowing a lot of money because we have a very, very big problem, which is that people and businesses can't afford to pay their energy bills at the rate that they're going up."

David Davies said the UK government needs to be flexible in the economic crisis.

The government has dropped its plan to scrap the top rate of income tax. The Conservative junior minister said he didn't know if there will be further changes to the mini-budget.

But the Monmouth MP added: "Any government facing a situation we're facing at the moment - an unprecedented financial situation really - is going to have to be tilting the tiller on the ship of state in order to steer us through what is a very serious storm.

"I think this is more serious than the financial collapse in 2008. It has potentially economic consequences that are far more serious than Covid.

"I think it's a situation where we have to be flexible, we have to expect some flexibility from everyone to do the right thing."

Asked if the UK government will stick to the current timetable to announce its medium term fiscal plan, he said: "Let's stick to the current plan, which is to guarantee energy prices for all homes, businesses and buildings in this country.

"And let's do what we need to do to make sure that the markets are satisfied that we can we can continue with that commitment for the next two years."

• What does the mini-budget mean for Wales?

• What will the tax changes mean for you?

• Rees-Mogg says market turmoil not due to mini-budget

Prime Minister Liz Truss has been facing growing calls from within her party to rethink part or all of the government's tax-cutting package to reassure financial markets.

Asked about speculation he is preparing to scrap major parts of his tax-cutting growth plan, in an interview Mr Kwarteng said: "Our position hasn't changed."

Asked if he and Ms Truss would still be in their jobs this time next month, he said: "Absolutely, 100%."

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