‘It’s a sh-- show’: how Truss blindsided her know-it-all Chancellor

For a man colleagues say considered himself ‘cleverer than everyone’ Britain’s Chancellor Kwasi Kwarteng had no idea it was coming. In just 16 minutes, he was on the scrapheap.

Dismissed UK Chancellor Kwasi Kwarteng was gone in 16 minutes.

Kwasi Kwarteng had no idea it was coming. After a seven-hour overnight flight from Washington he emerged from Heathrow smiling for the cameras before his meeting with Liz Truss.

Sixteen minutes later he was sitting in his ministerial car on the way back to London when The Times broke the news that he was about to be sacked. He arrived in Downing Street shortly after noon, by then cutting a glum figure.

The prime minister told him that despite their decade-long friendship and shared economic vision, she had no choice but to sack him. He had lost the confidence of the markets and the parliamentary party and had to go. In a single, brutal stroke she sacrificed one of her oldest political allies for expediency and in the hope of survival.

Kwarteng was sanguine but is said privately to believe the decision will buy her only a few more weeks. “He thinks the wagons are circling,” a source said.

Truss, friends say, found it incredibly painful but decided it had to be done. She believes the combination of the sacking and reversing her pledge to freeze corporation tax will be enough to convince markets that the government is serious about fiscal restraint.

In fact, the sacking was even more brutal than it appeared. Truss decided to dismiss Kwarteng hours earlier, contacting his successor, Jeremy Hunt, at 9.30am to offer him the job while he was on holiday with his wife in Belgium.

New UK Chancellor Jeremy Hunt walks from the Foreign & Commonwealth Office.

Hunt asked for a moment to think about it before calling back and accepting. Truss said she wanted their relationship to be similar to that of David Cameron and George Osborne, based on trust and mutual respect. Hunt said that was the only way it could work.

Hunt took a Eurostar back to London, arriving on British soil shortly after 1pm. He met Truss to formally cement his role just after 4pm.

The genesis of Friday’s extraordinary sequence of events and the sacking of Kwarteng lies in the draft forecasts of the Office for Budget Responsibility, which were handed to the government on Friday last week. They are said to be “dire” and suggest there will be a £60 billion black hole in public finances by 2026-27.

With the markets already in turmoil, 10 and 11 Downing Street accepted that the forecasts could be enough to finish off Truss. The chancellor was advised by No 10 not to attend the International Monetary Fund’s meeting in the US but decided he had to go.

While he was away, No 10 began urgent work on the corporation tax U-turn. The first Kwarteng knew about it was on Thursday morning, when The Times disclosed that senior officials were advising Truss to raise corporation tax to try to balance the books.

Kwarteng was blindsided. In conversations with Truss that day it became clear that the U-turn was inevitable. That the markets had priced it in gave the government no room whatsoever for manoeuvre.

Kwarteng initially resisted, highlighting the political gravity of reversing one of the prime minister’s central pledges, but accepted that there was no choice. Alternative options — deep cuts to public services — were deemed unpalatable.

The decision not to cancel the planned rise in corporation tax to 25 per cent will only alleviate some of the pain. The government will still need public spending cuts of about pounds 40 billion to balance the books over the forecast period. The prime minister’s pledge that there will be no return to austerity looks increasingly untenable.

UK Prime Minister Liz Truss announces Kwarteng’s sacking.

In an effort to reassert a semblance of discipline, No 10 asked cabinet ministers to tweet their support for the prime minister with an accompanying picture of her. Most dutifully did so.

However, privately, they were expressing very different views. “The whole budget thing, the way it was done, was wrong, even if the intent was right,” one cabinet minister said. “Kwasi has always had this sort of he’s cleverer than everyone mentality, but Liz looked like she’s given up. It’s depressing.”

Another cabinet minister said: “It’s a shit show. I’m really worried that nothing can happen. We’re hitting a state of paralysis quite quickly.”

Even inside Downing Street, officials think the game is up and it is just a question of when. “Senior civil servants are now openly talking about her going,” one Whitehall source said. “They think she’s had it.”

Therese Coffey, the health secretary and deputy prime minister, held a difficult call with loyal ministers and MPs yesterday about the decision to sack Kwarteng and reverse the mini-budget.

Coffey was said to be downbeat, telling the MPs that Truss was “very sad” to lose her friend and political ally. She said, however, that the government was still going to go for growth and was determined to prove the “flipping OBR” - the fiscal watchdog - wrong.

MPs on the call did not hold back. Craig MacKinlay, who represents South Thanet, vented his frustration at the decision to reverse the corporation tax rise. Alberto Costa, the MP for South Leicestershire, said he was embarrassed by the U-turns. Jackie Doyle-Price, a business minister, conveyed concerns about a lack of experience in No 10, and Paul Bristow, who represents Peterborough, said party discipline had “totally gone”.

One MP on the call told The Times: “It was miserable. Some people were very annoyed she abandoned the policies she got elected on. Therese was very downbeat and emotional. It was like being told that your mother has died.”

Truss loyalists in the cabinet insist that by acting decisively to allay market concerns the prime minister has bought herself time and can still turn her political fortunes around. They point to the fact that there is no real desire among MPs for yet another leadership election and claim that the appointment of Hunt was an astute move. “He is very capable and, critically, has support right across the parliamentary party,” one said. “He will bring stability, which is what we need. It is a very astute appointment.”

Asked if Truss should have sacked Kwarteng, they added: “What’s done is done” but suggested that the “febrile mood” in Westminster had made the ousted chancellor’s position untenable.

They also played down suggestions that Truss had made herself more vulnerable by jettisoning her friend. “No one in their right minds wants another leadership election,” they said.

Truss, however, has made clear to colleagues that she is determined to stay on to implement her vision. She told one ally that she would be willing to call a general election if it came to it - a suggestion rejected by No 10.

Another cabinet minister who believes that Truss can survive said she had been a victim of misogyny. “It’s a very strange place that we’re in, triggered by a lot of sour grapes from a bunch of misogynist men,” they said. “They’re delusional. They can’t take it that a woman has won and they’ve lost. It does them no favours at all. They just become more thuggish, which is sad.”

Tory MPs, however, are moving against her already. The Times disclosed this week that grandees are holding urgent talks about replacing her with a “unity” ticket of Penny Mordaunt and Rishi Sunak.

So far the rebels have been relatively disorganised but have still succeeded in forcing Truss to abandon the most contentious parts of the budget.

They are now urging colleagues to submit letters expressing no confidence in Truss to give Sir Graham Brady, chairman of the 1922 Committee of Tory backbenchers, a mandate to change the rules and allow a leadership challenge sooner than the year specified at present. MPs who know Brady well believe that if the mood continued to sour he would feel compelled to visit Truss and tell her to stand down or face defeat in a vote.

Events may move more quickly. One MP predicted a mass outpouring of Conservatives publicly demanding that Truss quit on Monday. Another said groups of MPs were arranging to meet this weekend to discuss the next steps. In a sign of whips’ concern about a mutiny, all “slips” - authorising MPs’ absences from parliament - have been rescinded for Monday.

One senior Tory backbencher said a number of meetings had been scheduled for next week “for colleagues to work out what to do. There isn’t anger like there was with Boris. It’s more like despair. We want her to succeed but a lot of people are asking if she can.”

Even before Kwarteng’s sacking, discontented Tories had begun to gather in secret. On Tuesday Mel Stride, chairman of the Treasury select committee, organised a dinner for more than a dozen Sunak supporters in which the central topic of conversation was how Truss might be forced out.

Having appointed Hunt and rowed back on corporation tax Truss may now lose support from the right of the party too. Their concerns - that she has in effect handed control of policy to the party’s One Nation wing - were fuelled yesterday (Friday) when Steve Brine, one of Hunt’s closest colleagues in politics, declared that the new chancellor was the government’s “chief executive” to Truss’s “chairman”.

Some Conservatives found humour in yesterday’s crisis too. One said that Truss’s press conference was “so wooden” that “getting rid of her wouldn’t be regicide, it would be deforestation”.

Michael Gove, the rebel ringleader fired off a series of pointed tweets, ostensibly about constituency issues but taken by many as barbs in Truss’s direction. In one he praised head teachers for “providing strong leadership”; in other he discussed “trip hazards”.

Other found hopelessness. Christopher Chope, the veteran rightwinger who on Thursday night had declared on television that Truss would not U-turn, said he believed that his party was a laughing stock, and that he was “in a state of despair and utter disbelief”.

Lord Hammond of Runnymede, the chancellor to whom Truss was chief secretary, said she had thrown away the Conservatives’ reputation for economic competence after years and years of painstaking work.

Not every Conservative is so merciless. “I actually feel sorry for her,” one MP who is plotting to overthrow Truss next week said. “Who among us hasn’t sought a job then found out we are not up to it? People projected on to her something that she wasn’t. The emperor has no clothes.”

(Additional reporting by George Grylls and Geraldine Scott)

The Times