Liz Truss sacks Kwasi Kwarteng after Chancellor rushes back from US for crisis talks following disastrous mini Budget

14 October 2022, 11:12 | Updated: 14 October 2022, 13:21

Liz Truss has sacked Chancellor Kwasi Kwarteng after his disastrous mini Budget in a bid to save her premiership little more than a month after becoming Prime Minister.

Mr Kwarteng was seen going into Downing Street at around midday after rushing back from Washington a day early.

It was thought he was engaging in crisis talks with Ms Truss about the continual impact of their financial plans on the UK economy.

But just after 1pm he confirmed he has been given the sack after just 38 days, making him the second shortest-serving UK chancellor on record.

In a letter addressed to Ms Truss posted to Twitter, he said: "You have asked me to stand down as your Chancellor. I have accepted."

He said he took on the role "in full knowledge that the situation you faced was really difficult" but knowing "your vision of optimism, growth and change was right".

He conceded the "economic environment has changed rapidly" since he announced the mini Budget on September 23, and commended Treasury officials for their "dedication" in responding.

He then pledged his support to Ms Truss and the new Chancellor.

"It is important now as we move forward to emphasise your government's commitment to fiscal discipline.

"The Medium-Term Fiscal Plan is crucial to this end, and I look forward to supporting you and my successor to achieve that from the backbenches.

"We have been colleagues and friends for many years. In that time, I have seen your dedication and determination. I believe your vision is the right one. It has been na honour to serve as your first Chancellor.

"Your success is this country's success and I wish you well."

Only yesterday Mr Kwarteng insisted his job was safe, telling broadcasters: "I am not going anywhere."

And this morning trade minister Greg Hands insisted Ms Truss had "full confidence" in Mr Kwarteng.

Mr Kwarteng's number two Chris Philp could also be on the way out, according to reports.

Politics Home said that Truss wanted to "put clear water" between herself and the department by sacking both Mr Kwarteng and the chief secretary to the treasury.

The Prime Minister will hold a press conference later, in which she is widely tipped to bow to political and economic pressure to increase corporation tax in a further bid to revive her government's reputation in the eyes of the markets.

This massive U-turn would come despite the Prime Minister centring her leadership campaign around cancelling Rishi Sunak’s planned increase of the rate.

Trade minister Greg Hands told Nick Ferrari on LBC on Friday that "the government and the prime minister are absolutely determined to stick to the growth plan, to stick to the changes they outlined.

He added that there are "absolutely no plans to change anything".

The government has not yet confirmed a time for the press conference, but the Telegraph reported it is taking place at 2pm.

Liberal Democrat leader Sir Ed Davey has called for a general election in response to the reports Mr Kwarteng is being sacked.

"This mustn't just be the end of Kwarteng's disastrous chancellorship, it should be the death knell of the Conservatives' reckless mismanagement of our economy. It didn't suddenly start with Kwarteng but it must end now," he said.

"People are angry, fed up and worried about the future. Most of all they are furious that Conservative MPs seem to think this is an acceptable way to conduct the government of our country in these difficult times.

"Enough is enough. It started with Boris Johnson failing our country, and now Liz Truss has broken our economy, it is time for the people to have their say in a general election."

No change in plans for corporation tax

Mr Kwarteng arrived in the UK on Friday morning, after cutting short a trip to Washington where he held talks with the International Monetary Fund (IMF).

Mr Hands said ending a foreign trip early was not unusual for a government minister.

Downing Street on Thursday did not deny that there could be a reversal on the corporation tax policy.

Speculation was fuelled further when Mr Kwarteng only said "let's see" when asked about the expectation from financial markets that the Government could ditch its corporation tax promise.

Nick Ferrari questions Trade Minister Greg Hands

But despite the market turmoil and reports of u-turns, Mr Kwarteng is "totally" safe in his position as chancellor of the exchequer, Mr Hands said.

He said that Liz Truss has "total confidence" in Mr Kwarteng, despite the Prime Minister reportedly preparing to u-turn on her mini-Budget in a bid to stave off a Tory leadership plot.

Asked if Mr Kwarteng's position on Sky News, Mr Hands said on Friday: "Totally. I mean, Kwasi Kwarteng himself said yesterday he is 100% sure he will still be in position.

"I know the Prime Minister has got total confidence in Kwasi Kwarteng."

He added that Mr Kwarteng is "an incredibly capable person, a very, very bright person who makes good judgment calls".

And the trade minister added that he did not "recognise" reports that senior Conservative MPs were planning to install Penny Mordaunt and Mr Sunak to replace Ms Truss as well as Mr Kwarteng.

Despite Mr Kwarteng and Mr Hands' insistences that nothing is set to change, discussions are believed to be under way to replace Ms Truss with a "unity candidate".

One senior Tory told The Times: "A coronation won’t be that hard to arrange. In 2019 candidates needed eight MPs to get on the ballot paper. This year they needed 20.

"Next time it will be however high it needs to be for only one candidate to clear it.

"They predicted a pact between Mr Sunak and Ms Mordaunt, which would have the support of an overwhelming majority of Conservative MPs.

Around "20 to 30" former ministers and senior backbenchers are attempting to find a way for a "council of elders" to tell Truss to step down, it is understood.

Another MP told the paper: "Rishi’s people, Penny’s people and the sensible Truss supporters who realise she’s a disaster just need to sit down together and work out who the unity candidate is.

"It’s either Rishi as Prime Minister with Penny as his deputy and Foreign Secretary, or Penny as Prime Minister with Rishi as Chancellor.

"They would promise to lead a government of all the talents and most MPs would fall in behind that."