Chancellor Kwasi Kwarteng has confirmed further public service cuts which could total up to £18 billion. 

The Chancellor has said that budgets will not be topped up despite soaring inflation in a move that many economic experts have predicted will have an “extraordinary” impact on the NHS and schools.

Mr Kwarteng has argued that it was right to stick with spending allocations made in 2021 even though the Bank of Egland predicts that inflation will peak at 11% this month.

An extra £18 billion is needed in each of the next two years to restore “the real-terms generosity intended”, according to the Institute for Fiscal Studies (IFS).

The Chancellor also confirmed that the government would U-turning on the abolition of the 45p tax rate in a social media post ahead of his appearance on BBC Breakfast.

Mr Kwarteng issued the statement on Monday ahead of his speech at the Conservative Party conference, he wrote: "From supporting British business to lowering the tax burden for the lowest paid, our Growth Plan sets out a new approach to build a more prosperous economy.

"However, it is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle challenges facing our country.

"As a result, I am announcing that I am not proceeding with the abolition of the 45p tax rate.

"We get it, and we have listened.

"This will allow us to focus on delivering the major parts of our growth package."

The Chancellor continued in his statement: "First, our Energy Price Guarantee, which will support households and businesses with their energy bills.

Bournemouth Echo: PAPA (Image: PA)

"Second, cutting taxes to put money back in the pockets of 30 million hard-working people and grow our economy.

"Third, driving supply side reforms – including accelerating major infrastructure projects – to get Britain moving.”

In a morning of interviews with BBC Breakfast, BBC Radio 4’s Today programme and LBC Radio, the Chancellor did not rule out a new era of austerity to pay for tax cuts.

Speaking to BBC Radio 4’s Today programme, he said: “You will see what our spending plans are in the medium-term fiscal plan but I’m not going to be drawn into that.”

READ MORE: Liz Truss ‘throws Kwasi Kwarteng under a bus’ over controversial tax cut

READ MORE: Cost of living: What kitchen appliances use the most electricity?

Mr Kwarteng was also pressed on whether benefits will be uprated in line with inflation.

The Chancellor told LBC Radio: “I’m not committed to any spending.”

Kwasi Kwarteng will speak at the Conservative Party Conference in Birmingham on Monday, October 3.

The speech will be keenly watched across the country following the U-turn announced earlier in the day.

He is expected to make the address around 4 pm just shortly before the markets close.