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Truss sacrifices Kwarteng to save her premiership as she ditches tax pledge

The Prime Minister has appointed Jeremy Hunt as the new Chancellor of the Exchequer.

14 October 2022

Liz Truss dramatically sacked chancellor Kwasi Kwarteng and ditched one of his key tax-cutting measures as she attempted to shore up her faltering premiership.

After three weeks of turmoil on the financial markets in the wake of Mr Kwarteng’s £43 billion mini-budget tax giveaway, the Prime Minister acknowledged “the way we are delivering our mission right now has to change”.

She replaced her ideological soulmate at the Treasury with Jeremy Hunt, the former foreign secretary who backed her rival Rishi Sunak in the Tory leadership contest.

While his appointment was welcomed by some Tory MPs as “an experienced pair of hands”, some questioned why Mr Kwarteng was the one who had to go when he was pursuing policies Ms Truss advocated in her leadership campaign.

At a hastily arranged news conference in Downing Street, Ms Truss dismissed calls for her resignation, saying she is “absolutely determined to see through what I have promised”.

As had been widely predicted, she announced she is abandoning Mr Kwarteng’s commitment to drop the planned rise in corporation tax from 19% to 25% – even though it was a central plank of her leadership campaign – saving the Exchequer £18 billion a year.

She also signalled a new squeeze on public spending which would “grow less rapidly than previously planned”.

Cost of living crisis
Kwasi Kwarteng arrives at Downing Street to be sacked (Stefan Rousseau/PA)

Ms Truss described it as a “down payment” on the medium term fiscal plan on October 31 – when Mr Hunt will now set out how he intends to get the public finances back on track – suggesting further measures to plug the estimated £60 billion black hole created by the mini-budget will have to follow.

“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,” she said.

“We will do whatever is necessary to ensure debt is falling as a share of the economy in the medium term.”

Conservative former chancellor Lord Hammond said the events of the past weeks had wrecked the party’s reputation for fiscal discipline, leaving her growth agenda “in tatters”.

Jeremy Hunt arrives in Downing Street following   his appointment as Chancellor
Jeremy Hunt is the new Chancellor (Victoria Jones/PA)

He said Ms Truss will survive in Number 10 only because Tory MPs do not want a general election they know they will lose.

He told BBC Radio 4’s The World at One: “I’m afraid we’ve thrown away years and years of painstaking work to build and maintain a reputation as a party of fiscal discipline and competence in government.

“Many of the arguments that we routinely deploy against the Labour Party around fiscal management will look extremely limp in light of what has happened over the last few weeks.”

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