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

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”.

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.”

Voters appeared to endorse her decision, with a snap poll by YouGov revealing that 49% of voters said that Ms Truss was right to sack her chancellor.

Publicly too, Cabinet ministers tweeted support for Ms Truss and her new chancellor.

Welsh Secretary Sir Robert Buckland, during an appearance on BBC Radio 4’s Any Questions programme, was laughed at by the audience when he called the current situation “difficult”.

“I think if we start with gay abandon, throwing another prime minister to the wolves, we’re going to be faced with more delay, more debate, more instability,” he warned.

But the reaction from party grandees was withering, with former leader Lord Hague warning that Ms Truss’s premiership “hangs by a thread”.

“It’s been a catastrophic episode,” he told Times Radio.

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”.

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 programme: “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.”

Experts wondered too whether even the drastic measures taken on Friday would be enough to reassure the markets.

Paul Johnson, director of the Institute for Fiscal Studies, said: “The issue is that credibility has been lost and these piecemeal announcements, piecemeal announcements of sacking a chancellor or changing one tax here or there, aren’t going to cut it.”

The day began in dramatic fashion with Mr Kwarteng summoned back early from the annual meeting of the International Monetary Fund in Washington DC to be informed by Ms Truss that he was being fired.

Mr Kwarteng’s deputy, Treasury Chief Secretary Chris Philp, another free marketeer, was moved to the Cabinet Office in a job swap with Edward Argar.

In her press conference, Ms Truss said she was “incredibly sorry” to lose Mr Kwarteng, a long-standing political ally and friend who had backed her leadership bid from the outset.

She insisted that Mr Hunt shared her vision of a “high-growth, low-tax economy”.

The former foreign secretary is however seen as a less ideological figure than his predecessor and his appointment will be seen as a fresh attempt to reach out to those MPs who did not vote for her and who have questioned her economic strategy.

One ally of Mr Hunt, Tory MP Steve Brine, suggested that he would be the “chief executive” to Liz Truss’s “chairman”.

It is far from clear whether it will be enough to quell the fevered plotting among some Tory MPs who believe that Ms Truss, who is due to spend the weekend at her Chequers residence, also has to go if they are to stand any chance at the next election.

Veteran Tory MP Sir Roger Gale said it was “hard to understand” why she had sacked Mr Kwarteng “for promoting the policies upon which she was elected”.

Earlier former culture secretary Nadine Dorries hit out at supporters of former chancellor Mr Sunak – who lost out to Ms Truss in the leadership contest – accusing them of agitating to get rid of the Prime Minister.

She tweeted: “They agitated to remove Boris Johnson and now they will continue plotting until they get their way. It’s a plot not to remove a PM but to overturn democracy.”

Labour leader Sir Keir Starmer said the whole Government – and not just Mr Kwarteng – needed to go.

“Changing the Chancellor doesn’t undo the damage made in Downing Street,” he tweeted.

“Liz Truss’ reckless approach has crashed the economy, causing mortgages to skyrocket, and has undermined Britain’s standing on the world stage. We need a change in Government.”