Liz Truss sacked Kwasi Kwarteng and his chancellor and replaced him with Jeremy Hunt before a U-turn on key sections of his disastrous mini-budget as she launched a desperate bid to restore his crumbling political authority.
In a sequence of quick events, the Prime Minister first sacked Kwarteng, his longtime friend and ideological ally, along with Chris Philp, the second Treasury Minister, who is moving to the Cabinet Office.
In a tweeted letter to Truss, Kwarteng began: “You have asked me to step down as chancellor. I accepted.”
Hunt, the former Foreign Secretary and Health Secretary who has been in the backbench since Boris Johnson took over in 2019, was later named Kwarteng’s replacement, an apparent move by Truss to reach out more widely to Conservative MPs.
In a direct exchange with Philp, Edward Argar, a former Cabinet Office minister as Paymaster General, takes over as Chief Secretary to the Treasury.
The sudden reshuffle came just before Truss was due to hold an emergency press conference in Downing Street, at which she was expected to backtrack on plans laid out last month not to raise corporation tax , under a largely unfunded mini-budget that sparked unrest. in the markets and shredded Truss’ credibility, just weeks into her role.
Hunt’s appointment appears to be a response to criticism from Tory MPs that Truss’ initial cabinet was chosen for loyalty rather than skill and experience, being almost entirely made up of those who supported her in the race to The direction.
Labor and the Liberal Democrats said Truss must now stand down. Rachel Reeves, Labour’s shadow chancellor, said: “We don’t just need a change of chancellor, we need a change of government.”
Earlier, sources had said the Prime Minister wanted Kwarteng to ‘carry the box’ on her descent as she sought to calm the markets and the nerves of jittery Tory MPs.
Truss met Kwarteng, previously his closest political ally and co-architect of his growth plan, for crisis talks in Downing Street after he returned overnight from an International Monetary Fund (IMF) meeting in Washington DC.
In the letter, Kwarteng says their plan to cut taxes quickly was the right one despite the market’s turbulent reaction to his September 23 mini-budget, saying, “Going with the status quo was simply not an option.”
He continues: “The economic situation has changed rapidly since we set out the growth plan on September 23. In response, together with the Bank of England and excellent Treasury officials, we have reacted to these events, and I commend my officials for their dedication.
Noting that he and Truss had been “co-workers and friends for many years,” Kwarteng supported Truss’ business vision and said it had been “an honor” to serve her.
In a response letter, Truss paid tribute to Kwarteng’s brief time in the job, adding: ‘I deeply respect the decision you have made today. You put the national interest first.
Whitehall insiders said the two had different views on how far the government should go to undo key parts of its plan to stabilize markets and appease anxious Tory MPs.
They said Kwarteng had pushed for a full rollback of corporate tax policy from the current rate of 19% to the planned 25%, despite the prime minister only wanting to opt for a fraction of the rise.
A Treasury insider said Kwarteng had always been “more prepared to turn back” than Truss on corporation tax and previously the 45p rate, despite being largely in charge of policy.
However, Downing Street insiders have said Truss must back out of the plan altogether.
The prime minister’s position is apparently so threatened, with Tory MPs actively plotting his downfall, that she has concluded the chancellor’s sacking is essential to his political survival.
But the move is unlikely to appease angry Tory MPs, with one telling Sky News: ‘The idea that the Prime Minister can just scapegoat his Chancellor and move on is a delusion . It is his vision. She approved every detail and she stood up for it.
Truss is under intense pressure from Tory MPs and the markets, leading No10 to redesign the mini-budget to pave the way for a major U-turn in its corporation tax cut.
After weeks of defending proposals for large-scale unfunded tax cuts, government sources said a rollback of the plan to scrap the corporate tax hike was now “on the table”.
Earlier this week, Kwarteng denied his chancellorship was in jeopardy, saying he was “absolutely, 100 per cent” confident he would still be in office next month despite a growing Tory rebellion.
When asked by the Daily Telegraph On Thursday, if people were to expect a corporate tax reversal, he replied, “Let’s see.