When Liz Truss accidentally tweeted that she would be ready to “hit the ground” on day one of her premiership, most people saw the funny side of the typo.
In reality, it took 40 days for the new Prime Minister and her “Kami-Kwasi” mini-budget to disintegrate on impact. Having already junked one flagship measure – a hated tax cut for those earning more than £150,000 ($168,000) – the sharks were circling.
Faced with a tanking Pound and soaring cost of borrowing – for both homeowners and for the Treasury – something had to give.
Caught between the rock of mercenary traders in the City and the hard place of mutinous Tory MPs in Westminster, it began to dawn on the Prime Minister that her sticking to her plans risked her becoming the shortest ever serving PM.
But it was an email from the Office of Budget Responsibility to the Chancellor last Friday set in motion the most spectacular collapse in government authority in modern political history. The independent scrutineers of tax and spending were brutal in their assessment: A £60 billion ($67 billion) black hole in the nation’s finances was the direct result of Ms Truss and Kwasi Kwarteng’s mini-Budget.
The scale of the spending cuts that would be needed just to stop debt interest bankrupting the country were not just eye-watering but politically impossible to even a strong government. But having junked the 45p rate, Truss was barely treading water as PM, let along one strong enough to take a toxic axe to the size of the state.
The extra £18 billion ($18 billion) Britain will be paying in interest on government borrowing alone was more than the entire Home Office budget.
With the NHS budget untouchable, a massive spending increase on the energy bills freeze and a promise to hike defence spending, the PM had snookered herself.
And when she claimed at PMQs on Wednesday there would be no cut to public spending, the clock was ticking on a spectacular U-turn. Even as she told the MPs that a rise to corporation tax “would be wrong at a time when we are trying to attract investment into our country”, privately work was underway to do just that.
The PM began to make preparations to climb down on Wednesday evening, as her Chancellor – her closest friend and ally in politics – flew to Washington to meet global financial watchdog the IMF. While he was there they openly criticised the government’s plans in a humiliating dressing down on the world stage.
With inflation rampant, the global experts held up Britain as an example of how not to handle it.
“We were becoming a laughing stock,” one minister admits. “You can live with sniping from Mel Stride [the chair of the Treasury select committee] but you can’t really ignore the IMF making you a poster boy for disaster.”
With Kwarteng out of the country, Simon Case the Cabinet Secretary and James Bowler, the new head of the Treasury, turned the screw on Ms Truss to jettison the plans. And the news was grim from political advisers, too.
They could see no path for the PM to pass her budget through Parliament – if panicking Tory MPs even gave her long enough in office to try pass a finance bill.
Away on holiday, the all-powerful boss of the backbench 1922 Committee, Sir Graham Brady, made his disquiet known in a number of calls with Ms Truss on Wednesday and Thursday.
Just as he came to visit Truss during Tory conference to warn the 45p rate had to be scrapped if she wanted to survive, Sir Graham warned the PM the knives were out for the Chancellor and Kwarteng may need to be offered up as a sacrifice if her administration were to remain in any way credible.
“He had lost the markets and he lost the party,” a source said. “No one rated him, smart guy, nice guy, but totally cocked up the outreach on all sides,” another MP added.
Deputy PM Therese Coffey was also “determined to get Kwasi” according to one senior government source. “She put the knife through his shoulder blades while he was still in the departure lounge.”
Ms Truss also briefly considered firing the Chief Whip Wendy Morton, who MPs consider a lightweight totally unable to herd the various factions of the Tory MPs publicly machine gunning each other.
The U-turn on corporation tax was cemented when news of it leaked to the Sun and others on Thursday afternoon — the Pound rallied and the cost of long-term government borrowing fell. To U-turn on the mooted U-turn risked plunging the country into fresh financial turmoil, just as the Bank of England was due to stop buying up vast amounts of debt to ease the pain.
But the PM wanted to sleep on the decision to finally fire Kwarteng. With the Chancellor on the overnight flight from DC, his fate was sealed first thing on Friday morning.
“He had an inkling it was coming and didn’t put up much of a fight,” one source said. But it is hard to overstate just what a serious blow to Truss and her entire project the decision was.
Her closest friend in politics, this was their budget written together, at times in secret, away from advisers, aides and spin doctors. When she U-turned on the 45 per cent rate, she misleadingly blamed it on a “decision the Chancellor had made.”
Now in U-turning on corporation tax she has thrown that fireguard away – leaving the PM the only target left now. Weakened and defenceless, when interviewed at yesterday’s disastrous press conference why the PM should remain in office, she could barely muster an answer.
After taking just four questions from reporters, she rushed for the exit – barely eight minutes in. Last night No.10 were scrambling to simply survive in office.
“Tax cuts were meant to be the easy part”, a minister claims.
The rest of the growth plan is still yet to be set out, but includes controversial changes to planning, childcare and workers’ rights. All of these are going to be massive battles with a party that is now all even more ungovernable than it was just a week ago. What is saving Truss, for now, is the total lack of unity amongst MPs over what could come next.
“If there was someone who was ready to take over, she would be out by Monday morning,” one Cabinet minister admitted.
The spectre of a General Election looms heavily on Tory MPs given the polls point to a rout of historic proportions. Truss’s only strong card left is the threat of going to the country if party discipline is not brought under control.
Both Philip Hammond and Nadine Dorries have publicly stated it would be politically impossible for there to be a third PM appointed without going to the country. But despite this there are ex-Sunak supporters who are considering a “coronation” of a new leader without a vote of the Tory membership.
As a Tory grandee from the right of the party says, there is a “a genuine chance the Conservative Party splits irrevocably” if that is pursued as it would be fiercely resisted by Brexiteers and Truss supporters. And even senior Sunak supporters are doubtful the party could come together around a candidate.
“The Tory party cannot agree on anything without a debate, on where to meet for lunch let alone anything else,” one laments.
With Jeremy Hunt’s biggest supporter Steve Brine claiming the new Chancellor is now the CEO to the PM as chairman, Truss is also under threat from No.11. If Hunt were to walk out it really would be curtains, making him an incredibly powerful figure who can temper Ms Truss’s right-wing instincts and set the agenda from the Treasury.
While Kwarteng was eyeing a cut in the Foreign Aid budget to try help make the sums add up, Hunt as a former Foreign Secretary is committed to it. There are big battles looming between No.10 and No.11.
The danger facing Ms Truss is of historic proportions, less than six weeks into the job. Biographer of countless PMs, Sir Anthony Seldon, said last night, “There’s never been anything like this in the 300 years of the Prime Minister. We use the word too much, but this is unprecedented.”
And he said the blame for that lay solely with Ms Truss and her ousted friend.
- The Sun / Tell report