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‘Kami-Kwasi’ Chancellor Out as Truss ‘Hunts’ for Unity

Staff writer Ben Evans discusses the latest, and most symbolic, of Liz Truss’ U-turns: her decision to sack Kwasi Kwarteng and appoint Jeremy Hunt as Chancellor in his place.

On Friday, Prime Minister Liz Truss faced an ultimatum; either compromise on her radical and failing economic reforms, or face the largest Conservative rebellion in three months. Her decision to sack her Chancellor Kwasi Kwarteng, and appoint former Foreign Secretary and ‘One-Nation’ figure Jeremy Hunt is indicative of her choice.

A House built on sand

Just over one month ago Liz Truss won the Conservative leadership race with 57.4% of the vote. The membership of the Tory party (who are hardly representative of the British public) were supported her radically neo-liberal programme of economic reforms – despite Sunak warning of ‘maxing out the country’s credit card’.

Liz Truss and her niche group of loyal allies may have won the support of the national Conservative Party, but in the Parliamentary party it has been quite different. With only 113 MPs supporting her in the final round of voting, less than a third of Tory MPs, it was evident from the start that Truss had to toe a fine line in order to maintain power. This is exactly what she didn’t do.

Despite the brief interlude for the death of her Majesty Queen Elizabeth II, the Truss government launched its programme of economic reforms with ruthless efficiency. It has only been three weeks since Kwarteng announced the now infamous ‘mini-Budget’.

Sold as the solution to the UK’s stagnant economic growth and our way out of the ‘cost of living’ emergency; instead the reforms pledged a reduction in the top rate of income tax from 45% to 40%, a reversal of the National Insurance (NI) and corporation tax increases, and a reduction in stamp duty (among others). This sent the markets into overdrive and the pound into free-fall.

From economic crisis to political storm

Overnight, the reforms created a potential £62bn ‘black hole’ in the UK’s finances, according to the IMF, and it sent UK gilt interest rates beyond 4.8%. To skip the economic jargon, this increased the cost of borrowing for the UK government to astronomical levels and added billions of pounds to the UK’s yearly debt repayments.

This naturally decimated confidence in the UK economy, which then saw the value of the pound plummet to its lowest level compared to the dollar since the 1980s. The knock-on effect of all of this for everyday people is the prospect of higher interest rates and high inflation in the short to medium term. Unsurprisingly there is little indication of any wealth ‘trickling down’.

The recent economic crisis has created a political storm for Liz Truss. Now the majority of Tory MPs (who never supported her) have the perfect leverage to apply significant political pressure. This brings us to the events of Friday October 14, when Truss’ conflict with economic forces and Tory MPs finally came to a head.

An average poll lead of 26 points for Labour (according to ‘Politico’s Poll of Polls’) and apocalyptic market predictions pushed Tory MPs into crisis mode. Rumours of a Sunak-Maudant ‘joint-ticket’ revolt to remove the Prime Minister seemed to be gaining traction, and Truss was fighting unstoppable political forces on all fronts.

Backtrack

The Prime Minister has been forced into retreat. The removal of arch-Thatcherite Kwasi Kwarteng was the first sign of a reversal. The majority of the disastrous ‘mini-Budget’ was labelled as his doing, with Truss of course neglecting her own in the disastrous policy-set.

His replacement, Jeremy Hunt, is one of last surviving elements of the Cameron years; he is perceived as pro-European, fiscally restrained, and some what respected (relatively speaking). However Hunt did advocate slashing corporate tax rates when he ran for Tory leader in 2019.

His appointment has so far has precipitated a reversal of the reduction in corporation tax, which was the most costly tax cut at approximately £18 billion. Hunt’s appointment is expressly designed to appeal to the ‘One-Nation’ side of the Conservative Party, as he supported Sunak in the leadership election. This is intended to create some much-needed unity within the government, and might just steady the ship.

However, the political costs of such a move are immense. Firstly, Truss is now severely limited in her pursuit of neo-liberal economic purity, as Hunt will undoubtedly focus on a balanced budget instead of tax cuts and deregulation. He has been ironically referred to as ‘Prime Minister Hunt’ by some commentators.

Secondly, she now has a strong rival next door in No.11. Many commentators had believed Hunt to be politically finished, but this promotion may just place him in an enviable position to demonstrate his leadership capabilities. These can only appear enhanced when compared to Truss’ evident ineptitude.

According to the Financial Times’ political editor Sebastian Payne, on the other side of the party Home Secretary Suella Braverman is also rumoured to be lining up a potential leadership bid to capitalise on Truss’ U-turn and perceived weakness by the Conservative Right. As the vultures circle, let the games begin.

‘Re-arranging deck chairs on the Titanic’

Truss’ desperate attempts are somewhat pointless and the reshuffle is like re-arranging deck chairs on the Titanic. Hunt is hardly a political rockstar. Granted, he may regain the Tories some support in the so-called ‘Blue Wall’ of southern and traditionally safe Conservative seats, but any return to austerity measures to recover the public finances will cripple Tory support everywhere else.

The majority of commentators, and even Tory MPs, now see the next election as a forgone conclusion. This desperate attempt to save Truss will be futile. The damage was done when mortgage repayments shot up, and when people were forced to use ‘warm banks’, in the choice between heating and eating. Crispin Blunt is the first Tory MP to publicly break rank and call for her to go.

This botched economic experiment has hurt all facets of society and the realistic prospect of electoral wipe-out is sending fear into the hearts of many Tory MPs. James Carville was correct when he said ‘It’s the economy stupid’ – the last dance of trickle-down economics has laid bare the failings of 12 years of Conservative rule, a point that will undoubtedly be stressed by Starmer’s Labour Party over the coming year.

The scars will run deep in the minds of many voters, despite the incoming barrage of apologies and U-turns. Truss may ‘hunt’ for party unity to save her skin, but it’s just papering over the cracks. She’s politically paralysed, and rapidly running out of time.

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