Liz Truss held a crunch meeting at No10 with members of her Cabinet as she tried to cling to power on Monday evening.
Five Tory MPs have publically called for her to resign after her former Chancellor’s disastrous mini-Budget caused widespread market turmoil.
Ms Truss swerved a House of Commons grilling on her decision to sack Kwasi Kwarteng and sent Penny Mordaunt instead.
The Commons Leader refused several times to say exactly where Ms Truss was that kept her from answering Labour’s Urgent Question - but it was later revealed she had been in a ‘pre-planned’ meeting with Graham Brady, chair of the 1922 Committee of backbench Tory MPs.
A Redfield & Wilton poll on Monday evening gave Labour a 36 point advantage (from 56% to 20%) over the Tories - the highest for any party since 1997.
Sir Charles Walker, Crispin Blunt, Jamie Wallis, Angela Richardson and Andrew Bridgen have all called for Ms Truss to step down just a few short weeks into her premiership.
Tory MP Simon Hoare said some of the errors from the Truss Government have been “schoolboyish” and “unforced”.
He told journalists following a meeting of the One Nation group of Conservative MPs: “Some of the errors have been schoolboyish, some of the errors have been unforced, some of the wounds have been self-inflicted. And that’s regrettable. But we are where we are.”
A meeting at Downing Street on Monday evening lasted roughly an hour - on the way in Jacob Rees-Mogg said Ms Truss was a ‘very good Prime Minister’.
The beleaguered leader did appear in the Commons as Penny Mordaunt finished deflecting a barrage of questions about the Prime Minister’s whereabouts but declined to say anything.
At roughly 5.30pm Jeremy Hunt set out to the House how he was scrapping swathes of Kwasi Kwarteng’s mini-Budget which wreaked chaos in the markets.
Mr Hunt dismantled almost all of the Liz Truss’s platform from headership victory: including the majority of her tax cuts, and even hinted a fresh windfall tax was in his sights, something the PM had previously ruled out.
The former Health Secretary also refused to rule out cuts to totemic Conservative pledges, including defence spending and the pensions triple lock.
Mr Hunt:
– Announced the plan to cap the cost of energy for all households for two years will now end in April, with targeted help beyond that for those most in need.
– Scrapped April’s planned 1p cut to the basic rate of income tax, which will now stay at 20p indefinitely, raising an extra £6 billion a year.
– Ditched a 1.25 percentage point cut in dividend tax planned for April, worth around £1 billion a year to the Exchequer.
– Dropped plans to ease IR35 rules for the self-employed, saving around £2 billion.
– Axed a new VAT-free shopping scheme for overseas tourists, which will save around £2 billion.
– Reversed a decision to freeze alcohol duty rates from February 2023, worth around £600 million a year.
The Government had already abandoned plans to scrap the 45p rate of income tax for top earners and had U-turned over a promise not to increase corporation tax.
The changes dramatically cut the cost of Mr Kwarteng’s £45 billion tax giveaway – reducing it by around £32 billion.
Mr Hunt told MPs: “We are a country that funds our promises and pays our debts and when that is questioned – as it has been – this Government will take the difficult decisions necessary to ensure there is trust and confidence in our national finances.
“That means decisions of eye-watering difficulty.”
He said “every one of those decisions, whether reductions in spending or increases in tax” would be shaped by “compassionate Conservative values”.
Financial markets, which had been spooked by the prospect of unfunded tax cuts on top of emergency interventions in the energy market and the cost of Covid-19 support, appeared reassured by Mr Hunt’s announcements.
The pound and UK Government bonds rallied in response to Mr Hunt’s measures, while economists suggested the Chancellor’s approach may reduce the need for dramatic interest rate rises.
Plans to cut national insurance contributions and a reduction in stamp duty, which are already going through Parliament, will continue.
Mr Hunt’s statement on Monday morning, fleshed out with more detail in the Commons with Ms Truss watching on, sounded the final death knell for the Prime Minister’s free market experiment – dubbed “Trussonomics” – to kick-start economic growth through a programme of swingeing tax cuts and radical de-regulation.
Ms Truss said the Government was taking action to “chart a new course for growth that supports and delivers for people across the United Kingdom”.
