Liz Truss sacrificed her Chancellor of the Exchequer and her closest political ally just weeks after becoming Prime Minister to save her own skin.
On Friday morning, Britain’s Chancellor of the Exchequer, Kwasi Kwarteng, was summoned a day earlier back to London from the United States straight to Downing Street, where he was relieved of his duties.
The move came three weeks after Kwarteng announced a controversial mini-budget filled with unfunded tax cuts that sent financial markets crashing. At one point, the pound sank to its lowest level against the dollar in decades.
Markets have somewhat settled since then, though only after major intervention from the Bank of England, rumors that the mini-budget would be abandoned and reports that Kwarteng would be sacked.
Just because Kwarteng is gone, however, doesn’t mean Truss is out of the woods. The low-tax, free-market policies announced by Kwarteng were the exact ticket on which Truss ran to become prime minister.
The pair had written about their shared vision of a low-tax, high-growth Britain in a book compiled by a Conservative group back in 2012. Kwarteng and Truss were on board with their vision of Britain. His removal from office is a tacit admission that her economic plan has failed.
“The problem with their budget was never the numbers, it was much more the credibility of the plan,” a former Conservative cabinet minister told CNN shortly after Truss was fired in Kwarteng.
“You can reverse the numbers and remove the policy. You can’t reverse credibility. She has removed her lightning rod, but now the lighting will strike her.”
Truss wrapped up a particularly brief press conference at Downing Street on Friday afternoon in which she defended her economic vision but refused to apologize to her party or the public for the turmoil caused by the mini-budget.
“We recognize that because of the current market issues we have to fulfill the mission in a different way,” Truss said. “And that’s what we’re absolutely committed to doing.”
Asked if she would apologize to her party’s lawmakers, some of whom have publicly blasted her economic agenda, she said: “I am determined to deliver what I set out to do when I campaigned for party leader. We need to have a high-growth economy, but we need to recognize that we are facing very difficult issues as a country.”
Truss quickly replaced Kwarteng with Jeremy Hunt, a former cabinet minister who has twice backed the leadership. He described him as “one of the government’s most experienced and widely respected ministers and MPs”.
Opinion is mixed on whether the new chancellor will be a stabilizing influence on either the party or Truss. Some Conservative MPs believe Hunt, who served as health, foreign affairs and culture, media and sport secretary under previous governments, will bring unity to a party still reeling from the summer’s bruising leadership contest.
He is respected by both the left and the right of the party and has a calm, reassuring and familiar nature that appeals to a certain type of Conservative.
However, it is also easy for the opposition Labor Party to attack. Hunt skeptics point out that his record in government is patchy. Whether the allegations are true or not, it would be possible for opposition leaders to say that as health secretary, he failed to adequately prepare Britain’s health services for the coronavirus pandemic.
And as a candidate in the summer leadership contest after Boris Johnson’s tumultuous prime ministership, Hunt had actually committed to bigger corporate tax cuts than Truss.
Asked why they believed Truss chose Hunt, despite his obvious flaws, an influential Conservative MP told CNN it was possible Downing Street had looked at its leadership rivals since the summer’s contest and realized Hunt was the candidate from the left of the party who secured the fewest votes of the deputies. Less of a threat than promoting other contenders who gave Truss more of a run for her money.
Hunt will now address the nation on October 31 to deliver a budget policy to the country that will explain how the government plans to balance the books as it borrows money to help people pay their energy bills over the next two years.
Reversing the tax cuts, Truss said, would deliver £18bn. And it is not beyond the realm of possibility that further savings will be made as the Kwarteng budget becomes a distant memory.
What Conservative MPs are most worried about is that the Trust’s credibility has been damaged and its authority has been lost. He appointed a chancellor whom he cannot blame for future hiccups and now looks seriously vulnerable to a renewed opposition Labor party, which is leading in the polls.
So what’s next? The next general election does not constitutionally have to be held until January 2025, although no one is suggesting Truss will survive that long. However, in the short term it would be difficult to get rid of the party’s fourth leader in just over six years, even if things continue to go south.
Under party rules, Truss is protected from a leadership challenge for her first year as prime minister. It’s possible her lawmakers could rewrite the rules, but even if they do, there’s no certainty her replacement will swing the polls.
One conservative lawmaker even suggested that a good outcome would be to remove Truss so that a new leader could try to turn things around enough to prevent the opposition from a landslide at the next election.
Some of its lawmakers fear that crowning another leader without consulting the public – just months after Boris Johnson was replaced in a similar fashion – could make the party look even worse in the eyes of the public.
All of which means that for now, Truss and her party are stuck. And unable to make major reforms, without key allies and to touch the party for the sake of unity, the Truss government risks looking like a caretaker government just waiting for someone else to take over.
