From the Times looking like KK has filled his bucket with ordure and is poring it over her head.
Kwasi Kwarteng thinks Liz Truss will be gone within weeks
Tory MPs are circling the wagons, ousted chancellor believes
Steven Swinford, Political Editor Oliver Wright, Policy Editor Geraldine Scott, Henry Zeffman
Friday October 14 2022, 9.30pm BST, The Times
Kwasi Kwarteng believes that Liz Truss has bought herself just “a few weeks” by sacking him and reversing her budget because the “wagons are circling” on the end of her premiership.
The prime minister mounted a desperate attempt for survival as she told her chancellor that he had to go to restore market confidence and also reversed her pledge to freeze corporation tax.
In a sign of her political weakness she turned to the former foreign secretary Jeremy Hunt, a Rishi Sunak supporter who was excluded when she named her cabinet last month, to succeed Kwarteng as chancellor.
Hunt will have to draw up plans to balance the government books before a fiscal statement at the end of the month. Forecasts by the independent Office for Budget Responsibility are said to be “dire” and suggest that there will be a £60 billion hole in the public finances by 2026-27.
Truss’s decision to raise corporation tax next year from 19 per cent to 25 per cent will raise £17 billion, meaning that public spending cuts of up to £40 billion will still be required to balance the books. Officials believe that this will make untenable Truss’s claim that there will be no return to austerity.
Truss said today that she would not resign, arguing that she “acted decisively” to ensure the country’s economic stability. “I am absolutely determined to see through what I have promised,” she said. She admitted, though, that the country was facing a financial “storm” triggered by market reaction to the government’s tax-cutting plans.
“I want to be honest, this is difficult,” she said. “But we will get through this storm and we will deliver the strong and sustained growth that can transform the prosperity of our country for generations to come.”
This morning Kwarteng flew back earlier than planned from talks at the International Monetary Fund in the United States
Kwarteng became the second shortest-serving chancellor, having served for 38 days. The prime minister asked him to stand aside at a meeting this morning after he flew back earlier than planned from talks at the International Monetary Fund in the United States. He learnt he was being dismissed after reading a report by The Times as he was being driven to Downing Street.
Kwarteng believes that Truss’s policy reversal and decision to sack him is unlikely to be enough to save her premiership. “Kwasi thinks it only buys her a few more weeks,” a source said. “His view is that the wagons are still going to circle.”
Even inside Downing Street senior officials believe it is a matter of time before she is forced out of office. “Senior civil servants are now openly talking about her going,” one Whitehall source said. “They think she’s had it.”
Ministers and Truss-supporting Conservative MPs also expressed doubts about how long she could survive. One cabinet minister said it looked as though Truss had “given up” while another warned that the government was “hitting a state of paralysis” quickly.
Next week Conservative rebels will co-ordinate the submission of letters to Sir Graham Brady, chairman of the 1922 Committee of Tory MPs, to give him a mandate to change the rules and remove Truss from office. They want a “unity” candidate to replace Truss, although there is little agreement on who it should be.
Chris Loder, who backed Truss for the leadership, told the BBC he hoped she would be able to continue but added: “I get the feeling from the parliamentary party and a number of her supporters that it is actually quite difficult at the moment.”
Sir Christopher Chope, also a Truss supporter, said that he felt “grave disappointment” after her policy reversals. Veteran Tories also suggested her premiership was coming to an end. Lord Hague of Richmond, a former party leader, told Times Radio: “It’s been a catastrophic episode and I think it [Truss’s position] hangs by a thread.”
In an exchange of letters with Truss, Kwarteng hinted at the disagreement that led to his departure, defending his budget and saying that the “status quo was simply not an option”.
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Truss defied calls to resign today. In a nearly nine-minute press conference, in which she took only four questions, the prime minister admitted her budget measures had been pushed through too quickly and had spooked the markets.
She promised public sector efficiencies and said that “spending will grow less rapidly than previously planned”. But she insisted “the mission remains the same” as she was determined to “get through this storm”.
Truss did not back down from her fiscal ideology and told the country, affected by the impacts of the economic measures drawn up with her former chancellor: “I want to deliver a low-tax, high-wage, high-growth economy. It’s what I was elected by my party to do.”
She added: “But it is clear that parts of our mini-budget went further and faster than markets were expecting. So the way we are delivering our mission right now has to change. We need to act now to reassure the markets of our fiscal discipline.”
One senior Tory MP said: “I have no idea why she did the press conference, it’s made everything worse.”
Another MP said Truss’s demeanour had reminded him of Theresa’s May’s in the dying days of her premiership.
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Hours earlier Greg Hands, the trade minister, had insisted there would be no U-turn and Kwarteng was “totally safe” in his job. He told Sky News: “I know the prime minister has got total confidence in Kwasi Kwarteng” whom he called “an incredibly capable person, a very, very bright person who makes good judgment calls”.
Fewer than five hours later, The Times revealed Kwarteng had been sacked, along with Chris Philp, the chief secretary to the Treasury.
In the press conference, which was stilted by hesitation, Truss said she was “incredibly sorry” to lose Kwarteng. She said: “He is a great friend and he shares my vision to set this country on the path to growth.”
But she said Hunt also “shares my convictions and ambitions for our country”.
A senior Conservative MP told The Times the appointment of Hunt “buys her a bit of time” but said: “He is now unsackable.” The MP said: “He can now stand up and change everything and she can’t stop him. He can basically undo all her economic pledges, and if he doesn’t undo most of them, then he won’t calm the markets, and then he’ll be the next Kwasi.”
He called Hunt “a safe pair of hands” but on Truss’s future, he was less sure. “The question is, once he’s calmed the markets, interest rates have gone down, do the polls start to recover, or have we had a Theresa May, Gordon Brown moment where people have made up their minds about her?”
He added: “Fiscally, it’s an incredible humiliation.”
Truss did not take the opportunity to apologise to her party when offered and dodged questions over whether she too should stand aside because of her involvement in the mini-budget.
She said: “I’m absolutely determined to see through what I have promised, to deliver a higher growth, more prosperous United Kingdom. We will control the size of the state to ensure that taxpayers’ money is always well spent. Our public sector will become more efficient to deliver world-class services for the British people, and spending will grow less rapidly than previously planned.”
Only two days earlier, Truss had told the Commons there would be no public spending cuts. She said the increase in corporation tax would raise £18 billion a year and would act as a “downpayment” on the wider plan to be set out on October 31, leaving open the door to more concessions. Estimates had said Truss could have had to make savings of more than £60 billion a year by 2026 to cover her plans.
The October statement will be delivered by Hunt and Truss promised it would be accompanied by an Office for Budget Responsibility forecast.
The corporation tax rate will increase from 19 per cent to 25 per cent from April. Smaller businesses will not be hit by the rise and it will apply to businesses with more than £250,000 in annual profits.
The rise in the levy had been scheduled by Sunak, Truss’s leadership rival and former chancellor. During the summer’s leadership race, the prime minister dismissed the plans at least 20 times. She suggested it would choke off investment and growth and risk a recession, and said raising the tax to the same level as France would be “wrong”. She said: “The last time I checked, France wasn’t a low-tax country.”
But today Truss said: “I have acted decisively today because my priority is ensuring our country’s economic stability. As prime minister, I will always act in the national interest, this is always my first consideration.
“I want to be honest, this is difficult. But we will get through this storm and we will deliver the strong and sustained growth that can transform the prosperity of our country for generations to come.”
As she left the room, reporters called out “you’re out of your depth” and asked: “Aren’t you even going to apologise?”