Chequers mates? Chancellor Jeremy Hunt's crisis talks with PM Truss

2022-10-16

Chequers mates? Chancellor Jeremy Hunt leaves PM’s country retreat after crisis talks with ‘in charge’ Liz Truss having undone her economic plans saying she ‘went too far, too fast’ – while he braces Britain for looming spending cuts and tax rises

Jeremy Hunt has warned Britons of ‘very difficult decisions’ ahead as he attempts to restore trust in the Tories
He’s been accused of leading a ‘silent coup’ against Prime Minister Liz Truss on his first full day back in the job
He conceded the Government went ‘too far, too fast’ with its mini-budget and will delay 1p income tax cut
Former Health Minister said Ms Truss should now be seen as the chairman, while Mr Hunt is chief executive

Jeremy Hunt and Liz Truss met today to work out a plan to sort out the economic turmoil surrounding her premiership – after the new Chancellor binning most of her economic plan.

Mr Hunt was seen leaving talks with the Prime Minister at her Chequers country retreat in Buckinghamshire, hours after he had insisted she remains ‘in charge’ of the Government despite his warning that taxes were likely to rise and spending to fall.

Amid claims that Tories are still plotting to replace the Prime Minister, Mr Hunt is expected to follow Friday’s climbdown which saw her agree to raise Corporation Tax by axing the mini-Budget’s plan to cut the basic rate of income tax by 1p to 19p.

Within a day of taking the keys to No11 the new Chancellor’s actions – not denied in a media round today – mean none of the three main strands of the ‘Trussonomics’ package from just three weeks ago remains.

As well as Friday’s Corporation tax reversal – it will now rise from 19 per cent to 25 per cent next year – the decision to axe the 45p income tax rate for the highest earners was embarrassingly reversed during the Conservative Party Conference.

There are also suggestions that he Mr Hunt could also renege on plans to increase defence spending to 3 per cent of GDP, setting up a showdown with Defence Secretary and possible caretaker PM Ben Wallace.

Appearing on BBC One’s Sunday with Laura Kuenssberg, Mr Hunt said he wants to keep as many of Liz Truss’s tax cuts as he can but all options remain open.

Telling Sunday with Laura Kuenssberg that ‘the Prime Minister’s in charge’, he said: ‘We’re going to have to take some very difficult decisions both on spending and on tax. Spending is not going to increase by as much as people hoped … taxes are not going to go down as quickly as people thought and some taxes are going to go up,’ he said.

And he also said no Government department would be immune from ‘efficiency savings’, as he signalled spending cuts to come.

Asked if it was a return to the austerity brought in by the 2010 coalition, he said: ‘I don’t think we are going to have anything like that this time.’

Conservative MP Robert Halfon stopped short of calling on Liz Truss to quit as Prime Minister, but launched an extraordinary attack on her Government as he called for a ‘dramatic reset’ over the coming days.

New Chancellor Jeremy Hunt has warned Britons of ‘very difficult decisions’ ahead as he attempts to restore trust in the Tories and balance the books

Reports today suggest Ben Wallace, the respected Defence Secretary, is being lined up as a possible PM, with Rushi Sunak as chancellor.

Wallace v Sunak: Rebels urge Defence Secretary to stand for leader

When Ben Wallace pulled out of the Conservative leadership contest in July, he had already built a campaign team and secured the support of more than 25 MPs. But strains in his domestic life led him to conclude that the pressures of the job would have too great an impact on his family.

But friends say the Defence Secretary has now become much less categoric’ about not running, after being approached by colleagues to stand in any possible contest.

Mr Wallace, who regularly tops the rankings among Tory party members, is ‘rethinking’ his position because he believes that Rishi Sunak, the favourite to succeed Liz Truss, ‘cannot unite the party’.

‘Most of us now favour a coronation for Ben. He’s the best we’ve got,’ one plotter told the Sunday Mirror.

‘But he might need some persuading to take the job. And getting Rishi back would calm the bond markets and strengthen the pound.’

Mr Wallace’s potential change of heart comes as leaders of mutinous backbenchers told The Mail on Sunday that more than 100 Tory MPs are prepared to write to Sir Graham Brady, chairman of the 1922 Committee, submitting a motion of no confidence in Ms Truss.

Sir Graham is under pressure to change the rule which stops a leader being challenged for a year after their election – or risk being ousted as chairman.

The rebels, led by former Ministers Gavin Williamson, Grant Shapps and Julian Smith, are aiming for 125 names. Any contest is likely to be restricted to MPs because another vote by party members would take too long.

Ms Truss tried to save her faltering Premiership on Friday by sacking Chancellor Kwasi Kwarteng, following weeks of economic turmoil in the wake of the tax-cutting mini-budget he unveiled in September.

But Mr Kwarteng’s replacement, Jeremy Hunt, was accused of mounting a ‘silent coup’ yesterday after effectively ripping up Ms Truss’s policy platform by saying taxes will have to rise and ‘efficiencies’ would be needed in an effort to balance the books.

The Chancellor, who spent Saturday also meeting with Treasury officials, had earlier insisted that he and the Prime Minister were a ‘team’ – but said she and sacked former Chancellor Kwasi Kwarteng went ‘too far, too fast’ with their mini-Budget.

Some MPs backed the PM to go on today, saying a change in policy was needed more than a change in leader. But other suggested Hunt’s appointment and decisions could be the final nail in the coffin for Ms Truss’s short period in power.

Speaking on Sky News’ Sophy Ridge on Sunday, Mr Halfon said: ‘I worry that over the past few weeks, the Government has looked like libertarian jihadists and treated the whole country as kind of laboratory mice on which to carry out ultra, ultra free market experiments.

‘And this is not where the country is. There’s been one horror story after another.’

Asked if Ms Truss should lead his party into the next election, he said: ‘At this time, I’m not calling for the Prime Minister to go. I worry about further political instability, but even more economic instability. But things have to improve.

‘Because if things don’t change, I just think that perhaps things may not be able to carry on in the way that they have been.’

Urging a ‘dramatic reset’, he said the Government needs to apologise for the chaos of recent weeks.

But another senior Tory MP who backed Truss said: ‘Appointing him (Hunt) is like putting up the white flag outside the door.

‘She’s swapped the job of Prime Minister for Foreign Secretary because that’s the only thing she’ll have any authority over.

‘Members will think, ”We voted for tax cuts. Now we’ve got tax rises and austerity.” What is the point of Liz Truss if her policies are reversed? It’s not like she’s a good communicator.’

Mr Hunt is expected to delay the 1p income tax cut by 12 months in a bid to save the Treasury £5 billion a year. The plan to reduce the basic rate of income tax from 20 per cent to 19 per cent was due to roll out in April next year and will save 31 million taxpayers up to £360 annually.

Asked about his designs on the top job, he told the BBC today: ‘I think having run two leadership campaigns, and by the way failed in both of them, the desire to be leader has been clinically excised from me.

‘I want to be a good Chancellor. It’s going to be very, very difficult. But that’s what I’m focusing on.’

Reports today suggest Ben Wallace, the respected Defence Secretary, is being lined up as a possible PM, with Rushi Sunak as chancellor.

Mr Hunt – a former leadership contender who backed Rishi Sunak after failing to make the ballot – is now the most powerful figure in Government following his appointment on Friday.

Joe Biden has appeared to join in the chorus of criticism against Prime Minister Liz Truss and the disastrous start to her leadership during a visit to an ice cream parlour.

The President of the United States said on Saturday he, like so many others, was shocked by the mini-budget and her overall economic vision.

‘I wasn’t the only one who thought it was a mistake,’ he told reporters, adding the subsequent outcome was ‘predictable’.

When asked about Ms Truss’s original economic strategy, President Biden said he disagreed with the plan.

But he acknowledged it was not his place to comment, instead saying it was up to the British people to come to their own conclusions.

Mr Biden also dismissed concerns about the strength of the dollar. He said: ‘The problem is the lack of economic growth and sound policy in other countries.’

The pair have famously had their differences over the course of their time in public office.

Last year, the PM told a fringe event at the Tory conference the relationship between the UK and US was ‘special but not exclusive’, adding Britain should not be ‘worried like some teenage girl at a party if we’re not considered to be good enough’.

With Ms Truss too weak to sack him, he said he had been given a ‘clean slate’ on which to draw up a new fiscal statement to reassure the market by the end of the month.

In a statement released late on Saturday, he said: ‘My focus is on growth underpinned by stability. The drive on growing the economy is right – it means more people can get good jobs, new businesses can thrive and we can secure world class public services. But we went too far, too fast.

‘We have to be honest with people and we are going to have to take some very difficult decisions both on spending and on tax to get debt falling, but at the top of our minds when making these decisions will be how to protect and help struggling families, businesses and people.

‘I will set out clear and robust plans to make sure Government spending is as efficient as possible, ensure taxpayer money is well spent and that we have rigorous control over our public finances.’

There are suggestions the economic outlook is far more dire than Mr Hunt predicted. Even after U-turns already made on corporation tax and income tax, the Treasury is still likely to have a shortfall worth up to £52 billion.

Mr Hunt is expected to pour over Mr Kwarteng’s fiscal statement in an attempt to find further ways to claw back money ahead of delivering a ‘proper budget’ on October 31.

Conservative MPs have described Ms Truss as being in office but not in power, noting the opposing viewpoints she and Mr Hunt have so publicly held.

Mr Hunt ran for the Conservative leadership this summer on a platform of slashing corporation tax to 15 per cent to boost growth.

A former Tory Minister said: ‘What’s the point of Liz Truss if she’s implementing an agenda cooked up by Jeremy that she doesn’t agree with?’

As Chancellor, he will now enact Mr Sunak’s plan to increase corporation tax from 19 to 25 per cent in April after Ms Truss U-turned on her reversal of the policy.

Mr Hunt also previously opposed cuts to personal levies such as National Insurance and Income Tax – moves which Ms Truss has not so far rowed back on.

Financial Secretary to the Treasury Andrew Griffith, who supported Liz Truss and Kwasi Kwarteng’s mini-budget, has admitted the Government made errors with those proposals.

Tory MP and former Health Minister Steve Brine said Ms Truss should now be seen as the chairman, while Mr Hunt is chief executive

Mr Hunt is expected to pour over Mr Kwarteng’s fiscal statement in an attempt to find further ways to claw back money ahead of delivering a ‘proper budget’ on October 31

‘The game is up’: Tory MP Crispin Blunt says Liz Truss is finished

A Tory MP went over the top and publicly declared that the ‘game is up’ for Liz Truss and it is now a question of how, not if, she is replaced at Prime Minister.

Former minister Crispin Blunt told Channel 4’s Andrew Neil Show that he does not think the Prime Minister can survive the current crisis.

While many Tories have said that the PM is on her way out behind the scenes he is the first to publicly say her days are numbered, despite axing chancellor Kwasi Kwarteng in a bit to keep hold of power.

The intervention by the Reigate MP – who is himself quitting the Commons at the next election – came as the Archbishop of Canterbury became the latest critic of her mini-Budget.

Speaking on a tour of Australia Justin Welby said plans to cut taxes for the rich and rely on trickle down economics were ‘immoral’.

Mr Blunt told Channel 4’s Andrew Neil Show that he does not think the Prime Minister can survive the current crisis.

‘I think the game is up and it’s now a question as to how the succession is managed,’ he said.

Asked how the party will get rid of her, he said: ‘If there is such a weight of opinion in the parliamentary party that we have to have a change, then it will be effected.

‘Exactly how it is done and exactly under what mechanism… but it will happen.’

Asked if the Prime Minister’s position is safe, he told Sky News: ‘Liz Truss has got the support of the Government – it’s really important at this time that we have stability.’

On whether they had got decisions wrong, Mr Griffith said: ‘Yeah for sure there’s things that everybody in Government would regret last week, and that’s why the Government has made changes.’

He then argued that the Government had got it right on the energy price guarantee and the focus on economic growth.

But pressed on exactly what ministers got wrong, he said: ‘The rate at which you could proceed and as the Chancellor said yesterday, not involving the OBR (Office for Budget Responsibility) in those conversations.

‘I think it was well meant to act as quickly as possible but obviously that has caused some of the turbulence.’

It came after Tory MP and former Health Minister Steve Brine said Ms Truss should now be seen as the chairman, while Mr Hunt is chief executive.

The Prime Minister’s decision to appoint Mr Hunt has unsettled many of those on the Tory Right who backed her pledge to reduce taxes.

Thatcherite Tory MP John Redwood offered an early warning to the new Chancellor, tweeting: ‘You cannot tax your way to higher growth.

‘If you tax too much you end up borrowing more as you have a worse slowdown.’

But most in the party described Mr Hunt as a ‘safe pair of hands’ and said his interviews yesterday morning were ‘self-assured’.

The Labour Party is looking to capitalise on the Government crisis with a series of new adverts as it gears up for the next general election.

They attack the Conservatives for damaging the UK’s standing on the world stage, hiking mortgages and crashing the economy.

It comes after a disastrous week for Prime Minister Liz Truss, whose authority has been left severely damaged by her decision to sack chancellor Kwasi Kwarteng and U-turn on planned tax cuts.

The new posters, first reported by the Sun, have been drawn up by Labour’s advertising agency Lucky Generals.

One accuses the Government of leaving ‘Britain’s reputation in tatters’ alongside a picture of a shredded Union Jack.

Another has the slogan: ‘Your mortgage is going through the roof’ incorporated into an image of a massive hole in a roof.

A third poster shows Ms Truss and the new Chancellor Jeremy Hunt dressed up as clowns, alongside the message: ‘Send off the clowns.’

The Prime Minister and Mr Kwarteng’s heads have also been photoshopped onto dummies in a fourth poster, which says: ‘These dummies have crashed the economy.’

A Labour source told the PA news agency: ‘As the old saying goes, if you don’t laugh, you cry.

‘The fact the Tories have crashed the economy is deadly serious. Just look at the way the Tories have pushed up mortgage rates.’

Kwasi Kwarteng was ‘bounced’ into 45p tax fiasco by Liz Truss: Former Chancellor was told by PM to ‘go for’ contentious policy before sacking him

Kwasi Kwarteng argued against the Government’s disastrous plan to cut the top 45p rate of tax but was over-ruled by Liz Truss, sources have told The Mail on Sunday, Glen Owen writes.

The former Chancellor was sacked by the Prime Minister on Friday, after Ms Truss told him that he had to go in order to restore market confidence.

‘They are coming for me,’ Ms Truss said to Mr Kwarteng, referring to the plotters who want to oust the Prime Minister in the wake of the turmoil caused by his mini-budget.

Now sources have claimed that the most contentious policy, the proposed cut in the top rate to 40p, was effectively forced on Mr Kwarteng after he suggested to Ms Truss that it should be delayed until next year to avoid ‘doing too much at once’.

Former Chancellor Kwasi Kwarteng (pictured) was sacked by the Prime Minister on Friday. He served for just 38 days.

Sources claim the former Chancellor argued against the Government’s disastrous plan to cut the top 45p rate of tax but was over-ruled by Liz Truss (pictured)

Jeremy Hunt (pictured with Liz Truss) was quickly announced as Mr Kwarteng’s successor as Chancellor

The PM is understood to have said: ‘No – let’s go for it.’

When this newspaper asked Mr Kwarteng after the mini-budget whether Ms Truss had ‘bounced’ him into the cut, he paused before responding: ‘I think we were agreed on that.’

Ms Truss had to execute a humiliating U-turn on the plan at the Tory Party conference in Birmingham, and then also had to reverse her pledge to freeze corporation tax on Friday to reassure the markets that the measures had been costed.

Commentators have argued that if measures had been spaced out over a year the markets would not have been ‘spooked’ in the way that they were.

Mr Kwarteng was replaced by former Health Secretary Jeremy Hunt, a supporter of Rishi Sunak, who signalled that taxes would have to rise and public spending trimmed.

Separate sources have also claimed that Mr Kwarteng had agonised before deciding whether to back Ms Truss in the leadership contest earlier this year.

They say he confided that he was worried about her candidacy on the grounds that she was ‘a bit crazy’. Mr Kwarteng and Ms Truss have been close politically for over a decade, and live close to each other in Greenwich, South East London, where they have been seen ‘plotting’ in local pubs.

Some sources have also claimed that Mr Kwarteng had agonised before deciding whether to back Ms Truss in the leadership contest earlier this year

Ms Truss delivered the news to Mr Kwarteng about his position at a meeting on Friday after he flew back earlier than planned from talks at the International Monetary Fund in Washington

The sources say that Mr Kwarteng only endorsed Ms Truss after his preferred candidate, Ben Wallace, pulled out of the race – and only once Mr Kwarteng had been tacitly promised the Chancellorship. No 10 disputes this version of events, saying that Mr Kwarteng was an enthusiastic early supporter of Ms Truss.

An ally of Ms Truss said: ‘This was an immensely difficult decision for the PM, who told aides several times how painful she had found it to be. Liz and Kwasi had a warm meeting in the Cabinet Room and the PM felt deep personal sadness.’

The ally added that the Prime Minister had ‘little choice’ but to sack Mr Kwarteng because the whips office and senior party officials, including Sir Graham Brady, the chairman of the 1922 Committee, all thought that the Chancellor had to lose his job in order to stabilise both the party and the economy.

Ms Truss delivered the news to Mr Kwarteng at a meeting on Friday after he flew back earlier than planned from talks at the International Monetary Fund in Washington. He learnt from social media that he was being dismissed as he was being driven to Downing Street.

He became the second shortest-serving Chancellor, having served for just 38 days.

Despite this, Mr Kwarteng is understood to believe that Ms Truss has bought herself just ‘a few weeks’ by sacking him and reversing the budget because the ‘wagons are circling’.

Mr Kwarteng was not available for comment.

Source: Read Full Article