LAST UPDATE | 14 Oct 2022
KWASI KWARTENG HAS been sacked as the UK Chancellor, just three weeks after a controversial mini-budget that caused turmoil in the money markets.
Former foreign secretary and Conservative leadership contender Jeremy Hunt has been named Chancellor, Downing Street has said.
Prime Minister Liz Truss has confirmed a u-turn on many of the elements of that mini-budget, which had delayed planned corporation tax increases and also cut taxes for high earners.
Truss held a press conference in Downing Street this afternoon, during which she said she is reversing her policy to scrap the planned rise in corporation tax from 19% to 25%.
The conference was relatively short, and she took just four questions from the press following her speech.
There was much speculation this morning that Kwarteng was to be sacked from his role as he flew back to London today for crisis talks after cutting short a visit to the International Monetary Fund’s annual meeting in Washington.
He confirmed those reports shortly after 1pm when he published his letter to Truss confirming his resignation.
In his letter to Liz Truss, Kwasi Kwarteng wrote:
“Dear Prime Minster, You have asked me to stand aside as your Chancellor. I have accepted.
“When you asked me to serve as your Chancellor, I did so in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices. However, your vision of optimism, growth and change was right.
“As I have said many times in the past weeks, following the status quo was simply not an option. For too long this country has been dogged by low growth rates and high taxation — that must still change if this country is to succeed.
“The economic environment has changed rapidly since we set out the Growth Plan on 23 September. In response, together with the Bank of England and excellent officials at the Treasury we have responded to those events, and I commend my officials for their dedication.
“It is important now as we move forward to emphasise your government’s commitment to fiscal discipline. The Medium-Term Fiscal Plan is crucial to this end, and I look forward to supporting you and my successor to achieve that from the backbenches.
“We have been colleagues and friends for many years. In that time, I have seen your dedication and determination. I believe your vision is the right one. It has been an honour to serve as your first Chancellor.
“Your success is this country’s success and I wish you well.”
— Kwasi Kwarteng (@KwasiKwarteng) October 14, 2022
His sacking comes after a dramatic month in UK politics.
On 3 October, Truss and Kwarteng abandoned their plan to scrap the 45% rate for earnings over £150,000 to stave off a Tory revolt.
The U-turn, which came a little over a week after the tax cut was announced in the mini-budget and just a month into Truss’s premiership, was a massive blow to their authority.
Earlier today, UK trade minister Greg Hands brushed off suggestions Truss could be forced to sacrifice Kwarteng to save her job, insisting his position is “totally safe”.
“I know the Prime Minister has got total confidence in Kwasi Kwarteng,” he told Sky News, calling the Chancellor “an incredibly capable person, a very, very bright person who makes good judgment calls”.
Before he left the US, Kwarteng answered “absolutely 100%” when asked if he will be in office in a month, adding: “I’m not going anywhere.”
He published his resignation letter to the Prime Minister just after 1pm.
The pound has dropped back after the UK Chancellor confirmed his departure from Liz Truss’s Government.
Sterling started the day in positive territory as traders welcomed speculation that the UK Government could step back from plans to reverse an increase in corporation tax next year.
However, it has now fallen by 1.06% to 1.12 against the US dollar as the departure of Kwasi Kwarteng presented the markets with more potential uncertainty.
Meanwhile, yields on UK Government bonds known as gilts have stabilised at around 4.3%.
Kwarteng was videoed leaving Downing Street moments after publishing his resignation letter.
Kwasi Kwarteng leaves Downing Street moments after sharing his resignation letter, in which he confirms that he was asked to "stand aside" by Prime Minister Liz Truss.https://t.co/Xd0uRqHoUR
— Sky News (@SkyNews) October 14, 2022
📺 Sky 501, Virgin 602, Freeview 233 and YouTube pic.twitter.com/hugovv7lZg
Truss has told Kwarteng that she is “sorry” to lose him as Chancellor, adding that: “You have put the national interest first.”
In her letter to Kwarteng, Truss wrote:
“Thank you for your letter. As a long-standing friend and colleague, I am deeply sorry to lose you from the Government.
“We share the same vision for our country and the same firm conviction to go for growth.
“You have been Chancellor in extraordinarily challenging times in the face of severe global headwinds.
“The Energy Price Guarantee and the Energy Bill Relief scheme, which made up the largest part of the mini budget, will stand as one of the most significant fiscal interventions in modern times.
“Thanks to your intervention, families will be able to heat their homes this winter and thousands of jobs and livelihoods will be saved.
“You have cut taxes for working people by legislating this week to scrap the increase in National Insurance Contributions.
“You have set in train an ambitious set of supply side reforms that this Government will proudly take forward. These include new investment zones to unleash the potential of parts of our country that have been held back for too long and the removal of EU regulations to help British businesses succeed in the global economy.
“I deeply respect the decision you have taken today. You have put the national interest first.
“I know that you will continue to support the mission that we share to deliver a low tax, high wage, high growth economy that can transform the prosperity of our country for generations to come.
“Thank you for your service to this country and your huge friendship and support. I have no doubt you will continue to make a major contribution to public life in the years ahead.”
BREAKING: Former foreign secretary and Conservative leadership contender Jeremy Hunt has been named Chancellor, Downing Street has said.
The Rt Hon Jeremy Hunt MP @Jeremy_Hunt has been appointed Chancellor of the Exchequer @HMTreasury. pic.twitter.com/bldKWr3crG
— UK Prime Minister (@10DowningStreet) October 14, 2022
Chris Philp has been appointed Paymaster General, swapping jobs with Edward Argar who becomes Chief Secretary to the Treasury, Downing Street has said.
An Extinction Rebellion protest is being held on Whitehall outside Downing Street.
The protesters cheered the news that Kwasi Kwarteng has been fired as chancellor.
#ExtinctionRebellion are outside Downing Street where people are burning their bills to protest #CostOfLivingCrises pic.twitter.com/XqKAKwZ9fE
— XR Writers Rebel (@XrRebel) October 14, 2022
UK Justice Secretary Brandon Lewis has congratulated Jeremy Hunt on his appointment as Chancellor.
“Congratulations Jeremy Hunt and look forward to working together to drive growth for everyone in the UK,” he tweeted.
“Legal services are a huge part of the UK economy delivering jobs in all parts of the country.”
Congratulations @Jeremy_Hunt and look forward to working together to drive growth for everyone in the UK, legal services are a huge part of the UK economy delivering jobs in all parts of the country. https://t.co/ZzZcxZQuFq
— Brandon Lewis (@BrandonLewis) October 14, 2022
Liz Truss’ press conference is due to begin shortly in the Downing Street briefing room.
We’ll bring you all the main lines from it.
Liz Truss is now speaking at her press conference.
In another major u-turn, Truss has confirmed she is reversing her policy to scrap the planned rise in corporation tax from 19% to 25%.
Truss tells the press conference she was elected by her party to deliver a “low tax, high wage, high growth economy” and “that mission remains”.
Truss says the new Chancellor Jeremy Hunt will drive her mission to “go for growth” and bring together the reforms the UK needs.
Asked whether she should resign, Truss says: “I am absolutely determined to see through what I have promised.”
Truss says she met the “former chancellor” Kwasi Kwarteng earlier today.
“I was incredibly sorry to lose him. He is a great friend and he shares my vision to set this country on the path to growth.”
She continued:
“Today, I have asked Jeremy Hunt to take over as Chancellor – he is one of the most experienced and widely respected Government ministers and parliamentarians.
“He shares my convictions and my ambitions for our country.”
Here’s a snippet from the press conference:
"This is difficult, but we will get through this storm."
— Sky News (@SkyNews) October 14, 2022
Liz Truss says she will "always act in the national interest" as prime minister, promising to deliver "strong and sustained growth".
Live updates: https://t.co/WUnquWwffN
📺 Sky 501, Virgin 602, Freeview 233 and YouTube pic.twitter.com/aVUbLgYZw7
Some more on what Truss said on the corporation tax u-turn…
She said the Government must “act now” to reassure the markets of “our fiscal discipline”, as she admitted its economic plan must change.
“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.
“I have therefore decided to keep the increase in corporation tax that was planned by the previous government.
“This will raise £18 billion per year. It will act as a down payment on our full medium-term fiscal plan which will be accompanied by a forecast from the independent OBR.
“We will do whatever is necessary to ensure debt is falling as a share of the economy in the medium term.”
Truss dodged a question on whether she has any “credibility” to continue as Prime Minister.
Taking a question from the BBC at a press conference, she said: “What I’ve done today is made sure that we have economic stability in this country.
“Jeremy Hunt as Chancellor is somebody who shares my desire for a high-growth, low-tax economy, but we recognise because of current market issues we have to deliver the mission in a different way.
“And that’s what we are absolutely committed to do – achieving that stability at what is a very difficult time globally.”
Insisting she is “determined to deliver” on her campaign pledges, Truss declined to apologise for the political turbulence in the wake of her economic policies.
Asked if she would apologise to her party, Truss said: “I am determined to deliver on what I set out when I campaigned to be party leader.
“We need to have a high-growth economy but we have to recognise that we are facing very difficult issues as a country.
“And it was right, in the national interest, that I made the decisions I’ve made today to restore that economic stability so we can deliver, first of all helping people through this winter and next winter with their energy bills, but also making sure that our country is on the long-term footing for sustainable economic growth.”
The pound has swung lower after Truss confirmed that the UK Government will reverse her policy to scrap the planned rise in corporation tax from 19% to 25%.
Sterling had pared back some of its early losses shortly before her speech but then dropped back, indicating that traders believe there is still more action to be taken.
The pound moved 1.2% lower at 1.119 against the US dollar after the update.
Meanwhile, yields on gilts – UK government bonds, which have come under severe pressure in recent weeks – also tipped higher to 4.5%, almost returning to levels from the market opening today.
Scotland’s First Minister Nicola Sturgeon said Liz Truss should resign as British Prime Minister to restore “economic stability” to the UK.
“The best thing Liz Truss could do for economic stability now is resign,” Sturgeon tweeted.
“Her decisions have crashed the economy and heaped misery on people already struggling with a cost of living crisis.
“The only decent thing for Tory MPs to do now is call time on her (Government) and allow an election.”
The best thing Liz Truss could do for economic stability now is resign. Her decisions have crashed the economy and heaped misery on people already struggling with a cost of living crisis.
— Nicola Sturgeon (@NicolaSturgeon) October 14, 2022
The onlydecent thing for Tory MPs to do now is call time on her govt and allow an election https://t.co/VYAISqLzPl
Labour leader Keir Starmer said Kwarteng’s sacking does not “undo the damage” already inflicted.
He tweeted: “Changing the chancellor doesn’t undo the damage made in Downing Street.
“Liz Truss’ reckless approach has crashed the economy, causing mortgages to skyrocket, and has undermined Britain’s standing on the world stage.
“We need a change in Government. With my leadership, Labour will secure Britain’s economy and get us out of this mess.”
We need a change in government.
— Keir Starmer (@Keir_Starmer) October 14, 2022
With my leadership, Labour will secure Britain’s economy and get us out of this mess. 2/2
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