The clamour among Conservative MPs for a third U-turn by Liz Truss started the same as the others: one MP begins as an outrider, backed by some party veterans or ex-cabinet ministers, and the question catches alight across broadcasters who ask every MP they see. Soon enough, it is received wisdom.
Most MPs who are squeamish about deposing their third prime minister had hoped that they would see change in the markets and contrition from No 10 and 11 after the U-turn on the 45p rate. Over the course of the past week, it has been clear to them that will not happen.
It has also become evident to senior officials in No 10 they are now in too tight a corner to produce a medium-term plan on 31 October that gives a credible blueprint of how the unfunded tax cuts can be squared. Further cuts to departmental budgets are constrained by pledges to ringfence health and to increase defence spending.
Major supply-side reforms to boost growth must somehow be bold enough to have a material effect on growth but palatable enough to get through the parliamentary party. Workplace, environmental and planning changes have all already come under fire, been watered down or been torn up before being announced.
By Monday night, officials had begun making the case that the major borrowing commitments would need to be reviewed – at the very least. Corporation tax is the best plan to ditch to avoid charges of hitting working people again.
But reversing on corporation tax would be a significantly bigger humiliation for Truss than the 45p U-turn. This was not a random rabbit out of the hat. This was a key plank of her leadership pitch.
The chancellor, Kwasi Kwarteng, flew to Washington for the International Monetary Fund gathering, temporarily out of the fray. Several senior advisers to Truss are also away, having booked leave when this week was designated recess, many exhausted by a punishing few months. If revisions were to be made, it was hoped they could be explored in secrecy before 31 October.
But among MPs, the touch paper was quietly lit by the former health minister Stephen Hammond, who spoke to Sky News on Thursday, saying the previously unspeakable: that it was clear cuts to departments in order to protect businesses from tax rises was unpalatable.
Wednesday was perhaps the darkest day of Truss’s premiership so far, in terms of pure fury in the party. Backbenchers looked on in despair as she twice tried to begin a response: “I’m genuinely unclear …” to Labour cheers.
After the lacklustre PMQs, the lack of backbench support was obvious when the government benches were almost empty for an urgent question on the economy.
After just 10 Tory MPs had asked questions – few of those supportive – there were none left, leaving the Treasury minister Chris Philp to face only Labour, Lib Dem and SNP MPs. Outside SW1, the cost of government borrowing was soaring, with the price of 20-year UK bonds hitting new lows on Wednesday afternoon.
But in their exchanges, the chair of the Treasury select committee, Mel Stride, put some tinder on the fire. “There are many – myself included – who believe it is quite possible that [Kwarteng] will simply have to come forward with a further rowing back on the tax announcements that he made on 23 September,” he said, to nods from the smattering of colleagues around him.
Stride poured on petrol that afternoon, saying: “Credibility might now be swinging towards evidence of a clear change in tack rather than just coming up with other measures that try to square the fiscal circle.”
Sajid Javid and Kevin Hollinrake followed with public concerns about whether more measures in the mini-budget would need to be reviewed. Truss then spent a nightmare 45 minutes at the 1922 Committee of backbenchers, where some more mild-mannered MPs such as Robert Halfon and James Cartlidge let rip with their anger at the state of the party.
Most MPs speaking after that meeting conceded there was now a renewed push among Truss’s critics to remove her as prime minister, and most newspapers carried reports overnight that Truss would be forced into the new climbdown.
By Wednesday evening, a U-turn on more of the package was no longer a minority view, but the mainstream view of Conservative MPs. It was the same pattern as had preceded the 45p U-turn and the changing of the date of the fiscal statement – a moment where it became yet again untenable for No 10 to hold the line.
Cabinet ministers were clearly unsure of the state of play. On air on Thursday morning, the foreign secretary, James Cleverly, was refusing to commit to no further U-turns. “The package the chancellor put forward is pro-growth and is the right answer,” he said, but added that the next statement would give “a more holistic assessment of the public finances”.
Chloe Smith, the work and pensions secretary, was more open that she did not know the state of play. At a speech in Westminster, she said: “I think you know that I’m not in a position to answer your question this afternoon.”
Other MPs were advising each other not to accept offers to go on TV or radio, lest they defend a policy that was subsequently ditched.
At the regular lobby briefing in No 10, Truss’s official spokesperson doubled down. Asked if he could rule out a U-turn, he said: “Yes – as I said in answer to a number of questions on this yesterday, and the position has not changed from what I set out to you all then.”
But within an hour news started to leak out of No 10 that officials were reviewing the corporation tax cut. Markets were already beginning to react positively to the prospect of another U-turn.
Rumours swirled that the chancellor in Washington was not in the loop, or was even on his way out – fiercely denied by his officials.
Britain has been the talk of the annual IMF meetings in Washington – and not in a good way. Treasury officials have not denied reports that Janet Yellen, the US Treasury secretary, gave Kwarteng a kicking at a G7 meeting over the risk that his unfunded tax cuts pose to global financial stability.
Less than six weeks into the job, Kwarteng was having to stress he was “absolutely 100%” not resigning. In his delayed media clip, Kwarteng stuck to the line: “Our position hasn’t changed.”
But as one former special adviser observed: “That’s the classic pre-U-turn line. Of course the position hasn’t changed – until it changes.”
By the time he spoke to the Telegraph, even that had evolved to “let’s see”. In this political climate, that’s about as clear as confirmation gets.
