Kwarteng U-turn on statement timing ‘could ease mortgage pain for millions’

Kwasi Kwarteng’s decision to bring forward his announcement on the government’s spending plans could help ease mortgage pain for millions of home-owners, a senior Tory has said.

The chancellor’s climbdown on the seven-week wait – his second major U-turn within 24 hours – came after sustained lobbying from the chair of the Commons Treasury Committee, Mel Stride, who argued that Mr Kwarteng’s plan for a 23 November statement would prolong market uncertainty.

No new date has yet been announced for the unveiling of the medium-term fiscal plan, but it is expected to come later this month, along with the publication of the all-important report on the chancellor’s plans by the Office for Budget Responsibility watchdog.

Mr Stride today urged the chancellor to ensure it comes before a crunch meeting of the Bank of England’s Monetary Policy Committee of 3 November, when analysts expect the base rate to be hiked by as much as a full percentage point.

Markets will be watching closely to see whether the OBR report finds that Mr Kwarteng’s plans enable him credibly to claim that he can get debt as a proportion of GDP on a downward trajectory within three years, or whether the target will be put off to five or seven years in the future.

Mr Stride told The Independent that the reception of the OBR report is likely to determine whether the MPC are able to shave a fraction off the expected rate rise, which will have knock-on effects for 1.6m home-owners on tracker mortgages and 300,000 who come off fixed-rate deals each quarter.

Even a quarter-point variation one way or the other can make hundreds of pounds’ difference to monthly mortgage payments, making the 3 November meeting a crucial moment for household budgets this winter.

Former Treasury minister Mr Stride welcomed the decision to bring the statement forward.

"I have pressed the chancellor very hard on this and to his credit he has listened,” he said.

“Provided the OBR forecast and new fiscal targets are credible then bringing these forward should calm markets more quickly and reduce the upward pressure on interest rates to the benefit of millions of people up and down the country.

"In particular getting the forecast out ahead of the MPC meeting on 3 November should help to reassure our rate-setters that they can go with a smaller base rate increase than would otherwise be the case."