Liz Truss sacrificed her Treasury Secretary and closest political ally just weeks into her tenure as Prime Minister to save her own skin.
On Friday morning, Britain’s Chancellor of the Exchequer, Kwasi Kwarteng, was summoned back to London from the United States a day early, straight to Downing Street, where he was relieved of his duties.
The move came three weeks after Kwarteng announced a controversial mini-budget packed with unfunded tax cuts that sent financial markets crashing. At one point, the pound fell to its lowest level against the dollar in decades.
Markets have calmed down somewhat since then, but only after major intervention by the Bank of England, which prompted rumors of the mini-budget abandonment and reports of Kwarteng’s sacking.
However, the fact that Kwarteng is gone does not mean that Truss is over the hill. The low-tax, market-economy policies announced by Kwarteng were just the thing for Truss to become prime minister.
The couple had previously written about their shared view of a low-tax, high-growth Britain in a 2012 book written by a group of Conservatives. Kwarteng and Truss were in step in their vision for Britain; His impeachment is a tacit acceptance that his economic plan has failed.
“The problem with their budget was never the numbers, it was much more about the credibility of the plan,” a former Conservative cabinet minister told CNN shortly after Truss sacked Kwarteng.
“You can reverse numbers and discard policies. Credibility cannot be reversed. She removed her lightning rod, but now she’s going to be struck by lightning.”
Truss concluded a remarkably short press conference at Downing Street on Friday afternoon, in which she defended her economic vision but declined to apologize to her party or the public for the turmoil caused by the mini-budget.
“We recognize that the current market issues require us to fulfill the mission in a different way,” Truss said. “And we are absolutely committed to that.”
Asked if she would apologize to her party’s lawmakers, some of whom have publicly denounced her economic agenda, she replied: “I am committed to fulfilling what I set out to do in my campaign as party leader. We need a high-growth economy, but we need to recognize that we face very difficult problems as a country.”
Truss quickly replaced Kwarteng with Jeremy Hunt, a multi-client former cabinet minister who has run twice for the leadership. She described him as “one of the most experienced and respected government ministers and parliamentarians”.
Opinions differ as to whether the new chancellor will have a stabilizing influence on the party or on Truss. Some Conservative MPs believe Hunt, who has served as health secretary, foreign secretary and culture, media and sport secretary under previous governments, will bring unity to a party still recovering from the summer’s bloody leadership battle.
Respected by both the left and right of the party, he has a calm, reassuring and familiar demeanor 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 or not the allegations are true, opposition leaders could say that as Health Secretary he failed to adequately prepare the UK health service for the coronavirus pandemic.
And as a candidate for the leadership contest in the summer after Boris Johnson’s tumultuous premiership, Hunt had indeed committed to larger corporate tax cuts than Truss.
When asked why they believed Truss chose Hunt despite his apparent flaws, an influential Conservative MP told CNN that it was possible Downing Street looked at their leadership rivals from this summer’s competition and realized that Hunt was the nominee from the left of the party, who secured the fewest votes from MPs. Less of a threat than promoting other competitors who gave Truss more competition.
Hunt will now address the nation on October 31 to present the country with a fiscal policy that explains how the government plans to balance the books when it borrows money to help people pay their energy bills over the next two years to pay.
The reversal of the tax cuts will bring in £18billion, according to Truss. And it’s not out of the realm of possibility that further savings will be made as Kwarteng’s budget is a distant memory.
What worries Conservative MPs most is that Truss’s credibility has been destroyed and her authority gone. She has appointed a chancellor whom she cannot blame for future hiccups and now looks seriously weak in the face of a resurgent opposition Labor party soaring in the opinion polls.
What’s next? The next general election is constitutionally not required to be held until January 2025, though no one is suggesting Truss will survive anywhere near that long. But getting rid of the party’s fourth leader on short notice in just over six years would be difficult, even if things continue to go downhill.
Under party rules, Truss is protected from a leadership challenge in the first year of her term. It’s possible their MPs could rewrite the rules, but even if they do, there’s no certainty their replacement would reverse the polls.
One Conservative lawmaker even suggested that removing Truss would be a good outcome so a new leader could try to turn things around just enough to save the opposition from a landslide in the next election.
Some of its lawmakers fear that crowning another leader without consulting the public – just months after Boris Johnson was similarly replaced – could make the party look even worse in the eyes of the public.
All of this means Truss and her group are stuck for now. And unable to enact major reforms without key allies and reaching beyond party lines for unity, the Truss government risks looking like an interim government simply waiting for someone else to take over.
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