“There hasn’t been a coup”

By the time Kwasi Kwarteng landed in London on Friday morning – on an emergency flight back from the US – his plane was the most tracked in the world. 

By lunch time… he’d been sacked, and the prime minister had performed her second u-turn on his mini-budget in the space of two weeks… by announcing that corporation tax would, in fact, rise.

“It is clear that parts of our mini budget went further and faster than markets were expecting, so the way we are delivering our mission right now has to change. We need to act now to reassure the markets of our fiscal discipline. 

Liz Truss

At a short press conference where Liz Truss tried, and failed, to steady the ship, she announced Kwasi Kwarteng’s replacement… 

“Jeremy Hunt as chancellor is somebody who shares my desire for a high growth, low tax economy, but we recognise that because of current market issues we have to deliver the mission in a different way.”

Liz Truss

Hiring Jeremy Hunt was an attempt to reassure the financial markets, which had taken fright after her government announced plans to slash taxes without a plan to pay for it. 

The longest serving health secretary and former foreign secretary is seen by many Conservatives as a safe pair of hands.

And he comes from a different wing of the party to Liz Truss and Kwasi Kwarteng. He supported Rishi Sunak in the recent leadership contest – and brings a Sunak-ite emphasis on balancing the books. 

His appointment marked a clear shift in direction. 

And over the weekend it became clear just how significant that shift would be.

***

“But there were mistakes. It was a mistake when we are going be asking for difficult decisions across the board on tax and spending to cut the rate of tax paid by the very wealthiest.

It was a mistake to fly blind and to do these forecasts without giving people the confidence of the office for budget responsibility, saying that the sums add up. The prime minister recognises that. That’s why I’m here.”

Jeremy Hunt

Less than a day into his new job the chancellor signalled that he’d do whatever it took to give the markets the reassurance they needed about the UK’s finances… and a day later, in an interview with the BBC’s Laura Kuennsberg, he faced a question that had become inescapable

LK: Who’s in charge? You or her?

Hunt: The PM’s in charge. And I think it’s important when you talk about ditching things, the biggest element of that mini-budget was the energy price guarantee… 

BBC News

By Monday… the prime minister’s position looked even less credible. Tory MPs were publicly calling for her to go. Letters of no-confidence were said to be in double digits. And the markets remained on a knife-edge.

Before dawn the Treasury confirmed that the chancellor would make a statement to MPs, and he appeared on television, with union jacks behind him, to address the British public…

“The government has today decided to make further changes to the mini budget and to reduce unhelpful speculation about what they are. We’ve decided to announce these ahead of the medium-term fiscal plan, which happens in two weeks.”

Jeremy Hunt

He shredded most of the mini-budget…

“We will reverse almost all the tax measures announced in the growth plan three weeks ago that have not started parliamentary legislation.”

Jeremy Hunt

It’s an extraordinary row-back. And the prime minister… seemed to go into hiding. 

Penny Mordaunt, a woman who ran against her in the leadership contest and has been talked about as a possible replacement, stood in for Liz Truss…

“Well, the Prime Minister is not under a desk.”

Penny Mordaunt

And then it was Jeremy Hunt’s turn to set out, in full, how he would dismantle Liz Truss’s entire political project.

“We are a country that funds our  promises and pays our debts – and when that is questions this government will take the difficult decisions to make sure there is trust in our national finances. That means decisions of eye-watering difficulty.” 

Jeremy Hunt

So where does it leave Liz Truss?

***

To understand how we got here – and what it means – I spoke to Tortoise’s political editor, Cat Neilan

Cat: It’s quite easy to forget that she’s only been Prime Minister for just over 40 days, given the sheer volume of things that have happened in that time. But of course a lot of this was sign posted throughout the leadership contest because she was talking about taking on the Treasury orthodoxy throughout that period. You know, she went into her leadership saying, ‘Look, I’m not the most polished performer, but I will make unpopular decisions and I will stick to them. ‘ She hasn’t done, that. I mean, as we’ve seen today, Trussonomics is dead. Her economic policy was really the only thing that people voted for her. Or the basis of, and that is now completely in tatters. So the question is, why would she stay?

Claudia: And can you just underline why the measures from Jeremy Hunt, the measures that have just been announced, are also significant? How much has actually changed?

Cat: Well you could look at obviously the sort of details of all the different announcements he’s made, but if you take a step back and say, What is this telling us about the direction that the party is going in? I think it is looking much more like a party shaped by Rishi Sunak’s vision than by Liz Truss’s vision. Truss was all about growth and tax cuts and what Jeremy Hunt has delivered is much more in the sort of Rishi Sunak George Osborne vision of balancing the books; austerity; cutting to be able to pay for things. I think that’s what we will see now for the next 18 months, regardless of who becomes Prime Minister.

The problem for Liz Truss is that her economic vision, the one she built her entire leadership campaign on, has tanked the economy… and she’s now been forced into a full on retreat.

A political problem that was summed up neatly by Labour’s shadow chancellor Rachel Reeves

“The survival of this government now depends on smashing to smithereens everything she stands for. It is not just impossible. It is absurd. The Prime Minister is barely in office and she is certainly not in power.”

Rachel Reeves

Claudia: Cat, It’s looking difficult for Liz Trust right now, to say the least. Where does she go?

Cat: The rationale for making her Prime Minister was that she was going to go in and cut taxes. Now that that’s not happening, and she is sitting next to the Chancellor, while he is completely undoing every single policy, bar a handful of very, you know, minor ones, completely overturning her vision of what we should be doing. People are wondering what’s the point?

This episode was written by Lewis Vickers and Claudia Williams and mixed by Ella Hill.

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