Related: Kwasi Kwarteng refuses to comment on possible corporation tax U-turn
Liz Truss has appointed former Conservative leadership contender Jeremy Hunt as the new chancellor of the exchequer and performed a U-turn on corporation tax, signalling a major shift in policy direction after weeks of turmoil in the wake of Kwasi Kwarteng’s mini-Budget.
She vowed to see through her low-tax agenda after dramatically sacking Kwasi Kwarteng, who was summoned back from the International Monetary Fund’s annual meeting in Washington to be given the news, just 24 hours after insisting he would not be resigning.
The prime minister said her mission remained the pursuit of a “low-tax, high-wage, high-growth economy” but accepted parts of the mini-Budget last month went “further and faster” than markets had expected.
Admitting she had to change course, she reversed a key policy to scrap the planned rise in corporation tax from 19 per cent to 25 per cent.
As well as the U-turn on corporation tax, Ms Truss also signalled a squeeze on public spending, which would “grow less rapidly than previously planned”.
Of Mr Hunt, she said: “He shares my convictions and my ambitions for our country.”
Ms Truss needed to act to stem further market chaos as the Bank of England ended its emergency bond-purchasing scheme.
Watch again: I’m not resigning, insists Kwarteng
Watch again: Kwasi Kwarteng insisted on Thursday he “absolutely 100 per cent” would not quit his job.
Kwasi Kwarteng says he is ‘absolutely 100%’ not resigning as chancellor
Jane Dalton14 October 2022 16:17
Unrepentant Kwarteng urges Truss to continue free-market agenda
An unrepentant Kwasi Kwarteng confirmed his departure as chancellor in a letter that defended his radical growth agenda – and made clear that he expects her to press on with the agenda of free-market reforms, writes Andrew Woodcock:
Unrepentant Kwarteng urges Truss to continue with their free-market agenda
‘Your success is this country’s success and I wish you well’: Ex-chancellor promises support to PM
Jane Dalton14 October 2022 16:11
Veteran Tory questions Kwarteng sacking
A veteran Tory backbencher has questioned why Mr Kwarteng was sacked, when he was implementing the prime minister’s plans.
Sir Roger Gale wrote: “Hard to understand why the Prime Minister has sacked her Chancellor – a good man – for promoting the policies upon which she was elected.”
But he welcomed Jeremy Hunt’s appointment.
Jane Dalton14 October 2022 16:00
Hunt ‘briefly shuts wife out of house’
New chancellor Jeremy Hunt briefly shut his wife out of the house to avoid speaking to reporters as he arrived home, it’s been reported.
Mr Hunt arrived home in Pimlico, London, in a black cab with his wife, Lucia.
When asked what he hoped to achieve as Chancellor, he said: “We’ll have lots of chances to talk later.”
He did not reply when asked: “Do you think Liz Truss has any credibility?”
William James, from Reuters, said Mr Hunt had briefly closed the door on his wife.
Jane Dalton14 October 2022 15:47
Scottish leader urges Truss to quit
Scotland’s First Minister has called on the Prime Minister to stand down after she sacked her chancellor and U-turned on a key policy pledge.
Nicola Sturgeon urged the PM to quit, adding that if she refuses, her MPs should back an election.
“The best thing Liz Truss could do for economic stability now is resign,” she said.
“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.”
Scottish Labour leader Anas Sarwar said “11th hour U-turns and scapegoating” will not be enough to save Ms Truss.
“It’s not just Kwasi Kwarteng that needs to go. We need to remove all those that were involved in putting together this disastrous plan, and everyone that signed it off – not just the guy who read it out.
“It’s time to remove this economically illiterate and morally bankrupt Tory party from government.”
Jane Dalton14 October 2022 15:39
Inflation will erode public spending, says expert
The director of the Institute for Fiscal Studies said higher inflation meant public spending could not be increased much less quickly “without actually going down’’.
Paul Johnson tweeted: “Liz Truss just said she will ensure spending increases less quickly than previously planned. Higher inflation has already eaten into plans set out a year ago. Can’t increase much less quickly without actually going down.’’
Jane Dalton14 October 2022 15:35
Opinion: Yes, Labour is now on an election footing. Do you blame us?
There is a palpable sense – in the last month or so – of excitement, too, writes MP Jess Phillips.
This energy characterises the lead up to an election. It is not necessarily practical or tangible yet; but there is a feeling in the air of urgency and anticipation:
Yes, Labour is now on an election footing. Do you blame us? | Jess Phillips
The chancellor sacked, a U-turn on the mini-Budget expected – of course Labour is preparing to take office
Jane Dalton14 October 2022 15:25
Sacking chancellor does not undo the damage, says Starmer
Labour leader Sir Keir Starmer said Kwasi Kwarteng’s sacking did not “undo the damage” already inflicted.
He tweeted: “Changing the chancellor doesn’t undo the damage made in Downing Street.”
Jane Dalton14 October 2022 15:08
Public spending will still have to be cut by up to £40bn, says expert
An expert predicts the UK will still face up to £40bn of public spending cuts after Ms Truss’s corporation tax U-turn.
More than half of the planned tax cuts are still going ahead, said Torsten Bell, of the Resolution Foundation think tank.
He said he was “100% certain” a big cut to public investment was coming.
Previously, the black hole in public finances had been put at £60bn.
Jane Dalton14 October 2022 15:05
Truss refuses to apologise at 7-minute press conference
Liz Truss has refused to apologise for problems created by her economic policies, after making a U-turn on more of her mini-Budget.
The prime minister left a planned press conference after just seven minutes and four questions, reports Jon Stone:
Liz Truss refuses to apologise for tax cut debacle at 7 minute press conference
Liz Truss has refused to apologise for problems created by her economic policies, after U-turning on yet more of her budget.
Jane Dalton14 October 2022 15:04