Jeremy Hunt has two weeks to salvage mini-budget

Truss ‘absolutely determined' to see through economic policies

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The ex-foreign secretary, who just a few months ago went up against Liz Truss for the premiership, was propelled into No 11 in a move that sent shockwaves through Westminster. Ms Truss admitted it had been “difficult” to sack her close friend and drop key parts of her tax-cutting plan but insisted she was acting in the national interest.

Mr Hunt becomes the fourth Chancellor in four months and now faces the task of making the sums add up on the growth plan before the financial statement on October 31 setting out how the government will bring down debt. 

Ms Truss said: “He is one of the most experienced and widely respected government ministers and parliamentarians and he shares my convictions and ambitions for our country.

“He will deliver the medium term fiscal plan at the end of this month.

“He will see through the support we are providing to help families and businesses including our energy price guarantee that’s protecting people from higher energy bills this winter.”

The Prime Minister, who drew up the growth strategy in “lockstep” with her once closest ally, said she was “incredibly sorry to lose” Mr Kwarteng from the role.

“He is a great friend and he shares my vision to set this country on the path to growth,” she said.

Mr Kwarteng, who lasted just 38 days in the job, was told he was being replaced soon after he landed back in the country after cutting short a trip to Washington.

In a formal letter to the PM he wrote: “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.”

Ms Truss also announced that she was going against her original plan by increasing corporation tax will increase to 25 per cent from April next year.

The move will raise about £18 billion a year and act as a “down payment” on its plans to bring down debt in the next few years.

She said that invasion of Ukraine and debt amassed during the Covid pandemic had hit the economy.

But the PM admitted it was “clear that parts of our mini budget went further and faster than markets were expecting”.

“We need to act now to reassure the markets of our fiscal discipline,” she added.

“I have therefore decided to keep the increase in corporation tax that was planned by the previous government.”

Ms Truss also warned that despite insisting earlier this week that public spending would not be cut it will “grow less rapidly than previously planned”.

“We will control the size of the state to ensure that taxpayers’ money is always well spent,” she said. 

“Our public sector will become more efficient to deliver world-class services for the British people.”

Party chairman Jake Berry insisted the government was sticking to its overall principle of going for growth.

He said Mr Hunt was appointed to “deliver our plan for a low-tax, high wage and high-growth economy”.

“Together the Prime Minister and Chancellor will deliver this government’s Growth Plan and transform the prosperity of our country for generations to come,” he added.

Ms Truss also announced she was shifting Chris Philp from his role as chief secretary to the Treasury to paymaster general in a job swap with Edward Argar.

Conservative MP Sir John Redwood said the PM and the new Chancellor must show how the growth plan is “going to work”. 

“They have a lot of work to do,” he added. “It was a pity they launched the tax part package without the spending part and without the forecasts. 

“The sooner they get that information available the better, because I want the party to concentrate on making the economy better and looking after the people we represent rather than a perpetual election machine within the party itself.”

Sir John reinforced his support for Ms Truss and urged fellow MPs to “give every support and some good advice” to her to get to a “winning economic policy as soon as possible”.

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