Wednesday 15 June 2016 8:35 am

EU referendum: Conservative MPs threaten to bring down their own government in Brexit row

A host of Conservative MPs have threatened to vote down a revenue-raising post-Brexit budget as the civil war engulfing the Conservative Party reaches new heights.

As George Osborne threatened Brexit would force him to raise new taxes or cut spending to plug a £30bn hold in the public finances, 57 Conservatives have this morning issued a joint statement threatening to bring their own government to its knees if the chancellor pushes ahead with his proposals.

"We find it incredible that the Chancellor could seriously be threatening to renege on so many manifesto pledges … If the chancellor is serious then we cannot possibly allow this to go ahead," a joint statement from the group, issued by the official Vote Leave campaign this morning, said.

"If he were to proceed with these proposals, the chancellor’s position would become untenable," the group added.

With the Tories holding only 330 of parliament's 650 seats, the rebels could tip the government into chaos by upending an already slender majority of 17.

And it means that the Chancellor would need the support of Labour and SNP MPs to push through an emergency budget that could put an extra two pence on the basic rate of income tax and cut £15bn from public services, including the NHS, defence, education, policing and pensions.

Labour's shadow chancellor John McDonnell, however, has indicated he could not back George Osborne.

"No Labour chancellor would respond to an economic shock in this manner," he said. "It’s deeply worrying that this suggests the current Tory chancellor thinks this is a sensible response."

Former chancellor Alistair Darling joined forces with Osborne to issue his warning about a post-Brexit budget

If the government were to lose a vote on its own budget, it could be akin to losing a vote of confidence and might trigger mass changes in personnel or policy at the top of the party.

The MPs are led by former party leader and chief Brexit spokesperson Iain Duncan Smith along with ex-ministers such as Liam Fox, Cheryl Gillian and John Redwood and with a number of other high-profile Brexit backers including Peter Bone, Philip Hollobone, Crispin Blunt, Kwasi Kwateng and Jacob-Rees Mogg.

However, several of Leave camp's leading names – including former London mayor Boris Johnson, justice secretary Michael Gove, employment minister Priti Patel and energy minister Andrea Leadsom – did not lend their names to the statement.

Jonathan Portes, at the National Institute of Economic and Social Research (Niesr) who compiled some of the statistics referring to a public finance shortfall, said Osborne's threat was pure politicking: "In the short run, tax increases or spending cuts would be the entirely wrong response to a Brexit shock … Both [George Osborne and Alistair Darling] know that full well.

"It is entirely legitimate for the chancellor and Mr Darling to argue that over the long run Brexit will reduce UK growth, meaning higher tax rates and/or lower spenidng will eventually be required. But that is not an excuse for proposing an 'emergency' Budget on these lines immediately post-Brexit. It shouldn't and won't happen."

The full statement

"We find it incredible that the chancellor could seriously be threatening to renege on so many manifesto pledges. It is absurd to say that if people vote to take back control from the EU that he would want to punish them in this way. We do not believe that he would find it possible to get support in parliament for these proposals to cut the NHS, our police forces and our schools.

"If the chancellor is serious then we cannot possibly allow this to go ahead. It would be unnecessary, wrong and a rejection of the platform on which we all stood. If he were to proceed with these proposals, the chancellor’s position would become untenable.

"This is a blatant attempt to talk down the market and the country. The chancellor risks doing damage to the British economy in his bid to win this political campaign."