Truss overrules Kwarteng Treasury pick in bid to calm markets

It was also announced that the chancellor will set out plans to shore up the public finances three weeks earlier than planned and publish long-awaited forecasts by the Office of Budget Responsibility at the same time.

The move lay the groundwork for a change of approach as restive MPs return to Westminster on Tuesday, after a difficult Conservative conference where Truss was forced to U-turn on tax cuts for the wealthiest after mass internal opposition.

It comes as footage was unearthed by the Daily Mirror of Truss stressing the need for fiscal responsibility when she was a Treasury minister, saying to do otherwise risked a cycle of boom and bust.

On Monday, James Bowler was announced as the new permanent secretary of the Treasury, having served for two decades at the Treasury and then as permanent secretary at the Department for International Trade.

But a Whitehall source confirmed that the job had been offered last week to a different candidate, Antonia Romeo, an experienced permanent secretary but someone who was seen as a reformer who did not have Treasury experience.

The interest rate on 10-year government debt rose above 4.5%, returning to the level seen in the immediate aftermath of the mini-budget, when the Bank of England was forced to step in with a £65bn emergency bond-buying programme in response.

Threadneedle Street attempted to quell market jitters over the end of its support scheme, which is due to expire on Friday, by saying it stood ready to increase the value of its bond purchases for the remainder of this week.

Truss is facing battles on multiple fronts as MPs return to Westminster. Her cabinet will meet on Tuesday after a conference where several senior ministers made clear they would oppose any moves to uprate benefits in line with wages, rather than inflation, a move being considered by Truss and Kwarteng that would amount to a real-terms cut.

Chloe Smith, the work and pensions secretary, who is understood to be among those sceptical of the cut, held talks at the Treasury on Monday.

The former chancellor Sajid Javid became the latest to back an inflation-linked rise on Monday morning and speaking on the morning broadcast round, Victoria Prentis, the work and pensions minister, insisted no decision had been made, while seeming to hint that she would prefer the more generous settlement.