Cabinet panic over budget after May's austerity pledge

Leading Conservative politicians are said to be in "panic" over the possibility of the next budget failing to pass the House of Commons after warnings by backbench Brexiteers and the DUP that they could vote it down if their demands over Brexit aren't met. 

The Tories' allies in the Democratic Unionist Party have threatened to vote down the budget if their "blood red lines" over the Northern Irish backstop are not honoured by the government, causing a headache for the government, who may lack the votes to pass any budget whatsoever. 

Leading Tory Brexiteer, Jacob Rees-Mogg has also said some of his supporters in the European Research Group were considering voting against the government to put pressure on Theresa May to drop her support for an "indefinite" customs agreement with the EU.

The Chancellor is said to be considering raising income tax rates, and planning a "VAT raid" on small businesses in an attempt to raise money.

The treasury has also been forced to make concessions on Universal Credit after uproar over the policy costing some families up to £2,000 a year. 

It comes after a report by the influential Institute for Fiscal Studies said that the PM’s pledge to end austerity at Tory conference was “unlikely” to be achieved, unless the government could find another £19bn a year by 2022/23 to meet the minimum costs of ending austerity. 

John McDonnell, Labour’s Shadow Chancellor, added that there was :“clearly panic in the Treasury and Philip Hammond is having to look at the spreadsheets all over again and start tearing them up, but they’ve only got a limited number of days to do that."

“They’re looking to see whether they can find something to stack up on their own backbenches so all of a sudden this Budget, in a way they never wanted, is becoming more significant than they thought.”

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