Benefits must rise with inflation, says Sajid Javid as Liz Truss warned she will be ‘forced to cave’

Benefits “must” be raised in line with inflation rather than a lower rate of earnings, former Tory chancellor Sajid Javid has said, as Liz Truss faces a growing Tory rebellion on the issue.

The prime minister is said to be ready to listen to Tory backbenchers against the proposed real-terms cut, with government sources warning that she will be “forced to cave” on the issue.

Mr Javid – a Truss leadership campaign backer – made clear the scale of the rebellion, saying on Monday: “I personally believe that benefits must stay in line with inflation.”

The senior figure told BBC Radio 4’s Today programme that “people are going through incredibly challenging times – we can all see that in our community”.

He added: “I hope when – I think the government is reviewing this decision, there’s no decision – but I hope that decision is a clear one to upgrade with inflation.”

Mr Javid also joined rebel Tory MPs warning chancellor Kwasi Kwarteng that 23 November was too late to announce his fiscal plan and share Office for Budgetary Responsibility (OBR) assessments.

Asked whether the chancellor can afford to wait another six weeks, Mr Javid said: “I would definitely encourage him to publish it as soon as he can. I think the sooner the better, as far as the markets are concerned.”

The PM is reportedly considering another U-turn on the idea of increasing benefits payments by less than inflation, with many backbenchers irate at the prospect of a real-terms cut.

Ms Truss is “genuinely undecided” on the issue and will be “listening” to colleagues, Downing Street sources have said. Members of the cabinet are reportedly ready to press the PM on the issue when they meet on Tuesday.

The PM is expected to launch a “charm offensive” this week by holding policy lunches with groups of MPs and addressing the 1922 Committee of backbenchers on Wednesday.

But one government source told The Guardian that at least 30 Tory MPs would rebel and vote with Labour on benefits, while another said Ms Truss would be “forced to cave”.

Work and pensions minister Victoria Prentis said no decision had been made on benefits – suggesting that it may not come until November – insisting that the Tory party should move on from “internal squabbling”.

Sir Ed Davey, the Liberal Democrats leader, said it would be a “social catastrophe” if the government failed to uprate benefits by inflation.

The Legatum Institute said increasingly benefits by earnings rather than inflation could push an additional 450,000 Britons into poverty.

Baroness Philippa Stroud, Tory peer and chief executive of the think tank, warned that “you don’t build growth on the back of the poor”, telling Today: “We would say stop this argument and make sure that we uprate in line with inflation.”

Ms Truss handed a government job to Greg Hands – who backed her rival Rishi Sunak in the leadership race – in a move that will be widely seen as a peace offering to critics who have accused her of surrounding herself with allies.

Mr Hands replaces Conor Burns, sacked as trade minister on Friday following a misconduct complaint. Mr Burns has vowed to clear his name and said he will “fully co-operate” with a Tory probe.

But tensions were still running high ahead of this week’s return to the Commons, as a senior Tory MP warned the mood in the party was “febrile” with many backbenchers, “very concerned at where we are in the polls”.

Former Tory chancellor George Osborne warned that the party faces a potential wipeout at the next general election after Ms Truss’s economic experiment “blew up”.