Kwasi has just arrived at No.10 for a showdown with Liz Truss. The FT, the Times, the Spectator and the Sun are all reporting he’s about to be sacked. A Boris-era insider texts Guido to say “It’s just getting silly now.” Liz is up in front of the cameras at 2pm. Will she have a new Chancellor by her side?
Overnight, Kwasi Kwarteng made a dramatic late-night dash from DC, where he was meant to be attending IMF meetings until Sunday. He will return for urgent discussions with Liz Truss as reports of a planned government U-turn on corporation tax swirl in SW1. Though one source quoted in the Financial Times claims “Almost everything in the Budget is now up for grabs”.
To everything there is a season – turn, turn, turn…
For those who enjoyed the excitement of tracking Priti Patel’s flight back to the UK ahead of her sacking by Theresa May, you can follow Kwasi’s flight in real time here. As coincidences would go Kwasi appears to be sharing his flight back with Johnny Marr’s drummer…
Mel Stride, Chair of the Treasury Select Committee, spoke on the Today Programme and welcomed a U-Turn. He called it a “powerful” signal to markets and added the government’s “fiscal credibility is now firmly back on the table”. He added the Conservative party should give the government “more time” and space to “rest”. How generous…
Sterling and bond markets had rallied following the first reports of a U-turn, which only adds on the pressure for more reversals. Elsewhere in the markets, today is the final day of the Bank of England’s gilt operations. Although gilt markets appeared steady this morning, the real test will come on Monday…
Meanwhile, DWP Secretary Chloe Smith was asked about the potential corporation tax u-turn and told reporters “I’m not in a position to answer your question this afternoon”…
What a difference 24 hours makes: this lunchtime The Sun broke the news that Truss “is considering raising Corporation Tax next year in spectacular mini-Budget U-turn”. A source tells Harry Cole that while the U-turn is being seriously considered, it wouldn’t be back up to the 25% proposed by Rishi before leaving the Treasury. In light of this news, Guido thought it was worth reflecting on what Liz herself said at yesterday’s PMQs…
“What we are doing is simply NOT putting up corporation tax. It’s not a tax cut, we’re just not raising corporation tax. And I feel that it would be wrong, in a time when we are trying to attract investment into our country, at a time of global economic slowdown, to be raising taxes. Because it will bring less revenue in. And the way that we are going to get the money to fund our National Health Service… is by having a strong economy with companies investing and creating jobs.”
Kwasi, meanwhile, is over in Washington for the IMF meeting. Channel 4 doorstepped him on his way in, where he said “I’ll be coming out with a statement on 31st October and I’m not going to pre-empt that.” As The Speccie’s James Forsyth points out, if the markets are now pricing in a U-turn, and the government decides against one, they’ll likely be in a worse position than they were 24 hours ago…
Those hoping to see the ripping, radical, paradigm-busting Chancellor must have felt something missing. The poor fellow has been mutilated by events. The markets have dismembered him. The interesting parts of his plan have been excised. He was only partly there. He was Quasi Kwarteng.
Mark Harper (Rishi Sunak backer) asked him if he agreed with the IFS’s assessment that to balance the books he’d need £62 billion of cuts in four years. It’s what they call “fiscal tightening”. The Chancellor replied that he wasn’t going to “prejudge” what he was going to say at the end of the month. No decisions have been made. (What, none?) Questions of that sort more usually come from the other side. They must have made the Chancellor slightly nauseous.
So, Queasy Quasi went on to answer several similar questions from behind him. Kevin Hollinrake (Rishi backer) suggested expressionlessly that it would be better if his region didn’t suffer from cuts.
Mel Stride (Rishi) made an even more ominous intervention. The Chancellor should “reach out” to his backbenchers “to be absolutely certain he can get his measures through this House.” Mel Stride is not no one. He chairs the Treasury select committee. It’s impossible to believe this thinly-veiled threat didn’t shake the Chancellor a little.
Quivering Queasy Quasi – so disconcerted was he by the sullen mutiny of his friends – found himself praising the Office of Budget Responsibility. He even said, “Its independence is to me is sacrosanct.” This hanging jury of relentless lefties (see earlier Guido personnel analysis) is the very organisation that has been charged with the first word on his “medium-term fiscal plan”. He had very sensibly excluded them from his mini-budget. Now they will be sitting in judgement on him and providing all the attack lines the Today programme could wish for.
As to what his medium-term plans are, he was not forthcoming. “I’m not going to prejudge,” he said. He wasn’t going to say what the plan was because he didn’t know, and no decisions had been made. Was Queasy Quasi quibbling? I think we can say he quibbled. It wasn’t great quibbling but enough to see him through the awkward hour.
He was able to tell us that he was going to make sure that the vulnerable didn’t suffer and that iron fiscal discipline would be maintained. He promised that magic chewing gum from the Simpsons. “It both cleans AND straightens your teeth!”
The next Treasury Questions outing will be next month, directly after the medium-term plan has been presented by the quivering, queasy, quibbling quasi-Kwarteng. Make sure it’s in your diary.
Kwasi Kwarteng has written to Treasury Select Committee Chair Mel Stride to confirm the inevitable: the Medium-Term Fiscal Plan, and the accompanying OBR forecast, will be published early, in an attempt to exorcise the demons released by his last announcements. They’re now set for 31st October, having initially been set for 23rd November – a potential Nightmare Before Christmas. Obviously he wasn’t content with spooking the markets just once…
Will Truss stick to her libertarian guns? Or will the event be more of a Blair Witch Project? You’ve heard of trickle-down, now get ready for trick-or-treat…
