Devolved nations demand meeting with Kwasi Kwarteng over austerity fears

Scotland, Wales and Northern Ireland ministers warn ‘huge gamble’ on tax breaks could mean major spending cuts

Devolved governments leaders have demanded an urgent meeting with chancellor Kwasi Kwarteng over his “disastrous” mini-Budget and fears of new age of austerity.

The finance ministers of Scotland, Wales and Northern Ireland warned that the Liz Truss government’s “huge gamble” on borrowing-fuelled tax cuts will mean a decade of spending cuts.

In a joint letter they shared their alarm over reports that all government departments would be asked to make cuts – pointing out that devolved budget settlements have already been diminished by inflation.

The senior devolved ministers said “the largest set of unfunded tax cuts for the rich in over 50 years” had led to “a huge gamble on public finances and the health of our economy”.

It comes a Ms Truss’s key cabinet ally Simon Clarke suggested that the government was exploring ways to shrink the size of the “extremely large” state.

The levelling up secretary signalled welfare cuts on the way, revealing that the government wanted to make sure the size of the state was aligned to a low-tax economy.

Mr Clarke said Britons and others in western Europe were living in a “fools’ paradise” in which they enjoy a “very large welfare state” despite sluggish economic productivity.

Welsh secretary Robert Buckland also pointed to a spending squeeze, as the government looks to reassure markets it can balance the books after a week of turmoil.

“We intend to be extremely rigorous when it comes to bearing down on public expenditure,” Mr Buckland told Sky News on Saturday – saying there would be announcements on spending in the weeks ahead.

The government is on course to make public spending cuts of almost £50bn a year after the “unenforced error” of Mr Kwarteng’s mini-Budget, according to the Resolution Foundation think tank.

The think tank warned that if Ms Truss refuses to U-turn on her borrowing-fuelled splurge on tax cuts, the level of spending cuts will have to be “broadly the same or bigger” than then-chancellor George Osborne set out in 2010.

Mr Swinney said earlier this week he had “never seen financial strain and pressure like I am seeing just now”. The SNP minister told the Scottish parliament that budgetary pressures could be worse than “years of austerity under George Osborne”.

Former Labour chancellor Alistair Darling told Times Radio on Saturday that an OBR assessment would have made it “blindingly obvious that they were going to have to start cutting into the amount of money we spend on public services”.

Mr Darling added: “This is chaos, and chaos was a result of what the government did … It’s totally different from what happened in the financial crisis, where just about every country in the world found that their banking system was teetering on the brink of collapse.”

Ms Truss has refused to commit to the annual uprating of benefits in line with inflation in April – something Rishi Sunak had promised to do when chancellor. Some Tory MPs have predicted that the PM would struggle to push real-terms cuts to benefits through the Commons.

With the Tories tanking in the opinion polls – one showed Labour opening up an astonishing 33-point lead – some Conservative MPs have been pressing for a change of course amid fears the party’s electoral prospects may be irreparably damaged.

There have been calls also for the publication of the next set of economic forecasts by the OBR – due to be released alongside Mr Kwarteng’s mid-term plan on November 23 – to be brought forward to help restore confidence.

Some uneasy Tory rebels are also keen reverse Ms Truss’s axing of the 45p tax rate. Some backbenchers have to reportedly start talks with Labour about moves to vote it down in the Commons. “It is not all [the] usual suspects,” one figure involved told The Times.