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My most recent post discussed Liz Truss’s commitment to libertarianism and the part she played in her own downfall.

At the end, I mused whether she would still be in office were she a man. Having thought about it some more, I do believe that would have been the case. Truss has better morals than Boris Johnson and more integrity than Rishi Sunak. Furthermore, she is far more trustworthy than our de facto Prime Minister, Chancellor Jeremy Hunt. She has flaws. They have flaws.

It is curious that all of them, men, are given a pass. Truss, an honest woman, was not afforded that opportunity.

Let us look at who was out to finish Liz Truss’s premiership.

The media

During the summer Conservative Party leadership campaign, most papers — right and left — came out in favour of Rishi Sunak.

Only the Daily Mail and The Telegraph consistently supported Truss. Truss also saw The Sun as a friendly paper, particularly its political editor Harry Cole.

Broadcast media also largely favoured Sunak. Only GB News supported Truss for the most part.

Why that was is unclear.

One could point to Truss’s U-turns, evident as soon as the leadership campaign for Party members’ votes started, but most of the media — print and broadcast — were already in the tank for Sunak when Conservative MPs were still voting in July.

On November 16, veteran columnist Andrew Gimson wrote about the media outlets covering Parliament, known as the ‘lobby’: ‘Lobby journalism holds power to account. But it’s often cruel, trivial — and unfair’.

Guido Fawkes liked what he had to say:

Gimson’s article for ConservativeHome discussed the attacks on other Conservative ministers in Rishi Sunak’s Cabinet. Suella Braverman, Home Secretary once again, is one of them and Justice Secretary/Deputy Prime Minister Dominic Raab is another.

Gimson says that journalists find their witch hunts as exhiliarating as blood sports (emphases mine):

Hunting is reckoned to improve the health of the fox population.

That is not, however, why people want to hunt them. They yearn to do so because it is a wonderful, exhilarating sport.

Forget for a moment any impulse to moralise. High-minded theories are all very well. Politics as actually practised is a blood sport.

Dominic Raab, Gavin Williamson and Suella Braverman are or were the most recent quarry, closely preceded by Liz Truss and Kwasi Kwarteng, before which a blond beast rampaged across the political landscape for three years with excited members of the Westminster lobby in close pursuit.

Four of the six were hunted down, while Raab and Braverman have so far (with intermissions) survived, but might at any moment find themselves once more in mortal danger.

The lobby is trained and ready at a moment’s notice to follow any scent, no matter how faint, rival correspondents for different newspapers acting as a pack of hounds, each leaping at whichever politician is the hunted animal, drawing blood and emboldening the others to fresh frenzies of aggression …

It is impossible, if one is a lobby correspondent at Westminster, to stand aside from the full-blown crisis which rages, and any case, few experiences are more exhilarating than to be in at the death of a Prime Minister.

Every journalist, indeed everyone in the slightest bit interested in politics, will remember the first time he or she witnessed such a drama: in my case I was lucky enough in November 1990 to be in the Press Gallery to watch the fatal resignation speech delivered by Sir Geoffrey Howe, and 19 days later was in the crammed Committee Corridor on the evening it was announced amid almost unbearable excitement that Margaret Thatcher had fallen four votes – four votes! – short of beating Michael Heseltine by the necessary margin in the first round.

Such crises becomes all-consuming. You surrender yourself to the experience, and nothing else seems to matter. If you are a reporter, your news editor and editor demand constant reports from the front, and you want to distinguish yourself by revealing dramatic new charges, whether solid or flimsy, against the embattled minister, rather than just repeating what your rivals have said.

Such work requires the ruthless expertise to spot in an instant the two or three words in some dreary speech or answer which can be held to constitute a new development. The lobby are brilliant at this: they see the new angle, the incriminating admission, where a normal person would notice nothing.

News becomes an artificial commodity, an esoteric language only comprehensible to highly intelligent and practised correspondents, who translate it into the latest thrilling episode of a story which is intelligible to the dimmest of us, for it is as old as history: will the ruler live or die?

This question of life and death simplifies everything, and lends it a personal flavour. Does one like the look of whichever minister is just then being hunted, and hope he or she will get away? Or would one much rather see him or her bumped off?

The tyranny of the story extends to the comment pages. Leading articles and columns are written for or against the hunted person, most likely against, for it is much easier to write a vivid piece denouncing a politician for being disreputable than to compose a vivid defence.

In order to purify public life, the offending minister must be drummed out of it. Nothing which might serve this noble end is too cruel to be said; too piffling to be taken down and repeated.

Let the victim and his or her family cope as best they can. It would be wrong to spare them the full blast of public disgust. We find ourselves in a primitive world where human sacrifice is demanded; not in a rational one where events can be weighed and assigned their due importance, or unimportance

There is a deep satisfaction to be derived from getting rid of a Prime Minister, so deep that we have in recent years got rid of three. For a short time, very short in the case of Liz Truss, we allow them to triumph, before restoring equality, for which all democracies have a deep yearning, by dragging them down with brutal abruptness to our own level …

What the lobby does, or helps Conservative politicians to do, is the modern version of an ancient and savage tradition. All else is forgotten while the tribe slays its chief.

And no tribe is better at slaying its chiefs than the Conservative Party.

Afterwards, some enemies of the prey express their empathy for the slain, such as Jenny Murray did for Truss on October 27 in The Mail. Murray’s headline read ‘I never expected to feel sorry for Liz Truss’ and, upon closer inspection, she doesn’t really feel sorry at all. She uses the piece to lick her own wounds after retiring from the BBC at the age of 70:

I was not sorry to see her go. Her short time in power was a disaster.

I’d known her professionally for a good few years and had often found her a bit weird with her oddly truncated speech patterns, bizarre facial expressions and apparent lack of emotional intelligence. She was no public speaker and I certainly never saw her as Prime Ministerial material.

In that I was right, but despite her self-serving, unapologetic final speech and her typically arrogant and selfish, ‘Well at least I’ve been Prime Minister!’ goodbye, I can’t help sympathising with what she has to face next.

As an ordinary constituency MP, she’ll join what I have dubbed, from bitter personal experience, the ‘Once I Was Hot, But Now I’m Not,’ club. I know she’ll be asking herself, ‘Who am I now?’

It’s two years since I left the job that defined me for 33 years. I was Jenni Murray, presenter of Radio 4’s Woman’s Hour.

It had been my greatest ambition since childhood. I’d presented Newsnight and Today, but the moment I heard the announcer first say on Monday, September 14, 1987, ‘And now Woman’s Hour, with Jenni Murray’ remains the most thrilling of my life.

I loved every minute of those 33 years and, unlike Liz Truss, I was not forced out of my position (though even when you leave a top job of your own volition, it doesn’t stop others speculating). I made the choice to leave as my 70th birthday came and went.

So, nothing like Liz Truss after all. The rest of Murray’s lengthy column is all about herself. Sickening.

On a positive note, I was surprised to read that Andrew Neil, normally a supporter of the status quo, supported Truss and Kwarteng’s mini-budget just after it was announced in Parliament:

After 12 years of Tory government we finally get a Tory budget. Yesterday’s not-so-mini-budget was a watershed event, taking the country in a new economic direction and creating clear blue water between government and opposition.

The Tory faithful couldn’t quite believe it. Labour struggled to grapple with its implications. The political dividing lines will now be starker and fiercer than they’ve been for a generation.

No more tax rises by stealth (or, more recently, in plain sight). Or endless, futile tinkering with the minutiae of spending and taxation to give voters a false impression of constructive activity. Or the relentless doling out of taxpayers’ dosh to whatever fashionable vested interests managed to catch ministers’ attention.

Instead, Prime Minister Liz Truss and her Chancellor, Kwasi Kwarteng, junked all of that in favour of one overriding economic priority: higher economic growth. Many of the verities of Britain’s economic establishment have been slaughtered in the process

Scrapping next April’s planned rise in corporation tax (on businesses’ profits) won’t win any popularity contests outside company boardrooms. But an essential part of Britain’s post-Brexit future is surely to be a magnet for foreign investment. Whacking up the country’s key business tax was a strange way of going about it

New ways require new justifications. The Treasury estimates that abolishing the 45 per cent top rate of income tax will cost £2 billion a year.

This is a typically static official calculation. If it results in more top earners declaring their income in Britain, then it could soon more than pay for itself.

Ditto bankers’ bonuses. The cap is a relic of EU regulation. Banks simply increased pay to compensate for reduced bonuses, thereby making their compensation costs more fixed and less flexible.

Frankfurt, Paris and Amsterdam have tried hard to lure our financial services away from the City since Brexit, with only limited success. Bonuses in those centres are still capped. London now has the advantage.

And, remember, with the new top rate of tax at an internationally competitive 40 per cent, every £1 million banker’s bonus is £400,000 more for schools and hospitals

for more than a decade now I’ve watched chancellors take tough, painful decisions on tax and spending based on OBR borrowing forecasts that turned out to be huge over-estimates, so much so that in retrospect neither the tax rises nor spending cuts were necessary.

Indeed, as Truss attempts to take the country in a new, less orthodox direction, I’d argue that it’s a blessing that she’s been able to do so unencumbered by the OBR’s dubious forecasting.

We’ll get the OBR’s latest workings in two months anyway, when it might have a better idea of what 2023 will look like. Nor are we entirely in the dark. The Treasury says the tax cuts and energy price cap measures will increase borrowing this year from £162 billion to £234 billion — an extra £72 billion.

The IFS thinks we’ll still be borrowing £100 billion a year through the middle years of the decade.

These figures have spooked the markets. The pound continued its decline against the dollar after Kwarteng’s statement and the yield (or interest rate) on short-term government debt rose to close to 4 per cent, making it a lot more expensive to borrow than only two years ago, when it was 0.4 per cent.

These are real constraints on the Government’s ability to borrow even more. A falling pound merely fuels inflation, especially when it comes to imported energy, which is priced in dollars.

Interest rates are already rising. If excessive government borrowing forces them even higher, that will merely choke off the economic growth the Government so desperately seeks.

There’s another factor at work here. The global currency and debt markets have had a ‘down’ on Britain for some time. It’s not clear why. Britain’s debt-to-GDP ratio is among the lowest in the G7 club of big economies. Our budget deficit is on a par with many other major economies. Economic growth is anaemic — as it is everywhere, from the Eurozone to America to China.

I suspect it’s a Brexit hangover. The publications global market players read most closely include the New York Times, the Economist, the Financial Times and leading European papers such as Le Monde and the Frankfurter Allgemeine Zeitung. All — and others like them — have been relentlessly negative about Britain since the 2016 referendum

It is said she’s taking a great gamble. That’s true. But sticking with the failed policies of the recent past was probably an even a bigger gamble. The stakes are certainly high.

If by this time next year the economy is still in the doldrums, then it’s not just Truss who will be finished. So will any prospect of the Tories winning the next election.

Read it and weep. We are back to square one.

There is much that the media didn’t tell us about the global picture of economic pandemonium.

Early in the week following Kwarteng’s mini-budget, US mortgage rates went up to 7%:

The EU’s average deficit is worse than the UK’s:

https://image.vuukle.com/9b30bb2c-838f-44c2-bf35-a8380d75711b-80a8ed1b-f697-4bc1-bc25-d18521aa563f

At the end of October, by which time Truss had gone, inflation in the Euro zone increased to 10.7% as growth slowed:

At the beginning of November, a Fed hike caused sterling to trade below £1.13 against the dollar:

And, finally, within three weeks of becoming Prime Minister, Rishi Sunak made new spending commitments, pledging billions to the world. This graphic appeared on November 7:

https://image.vuukle.com/afdabdfb-de55-452b-b000-43e4d45f1094-6f3d3b31-5e82-478e-b97c-3802370621e8

Objection from the media came none.

Conservative MPs

On October 20, in the immediate aftermath of Truss’s stoic resignation, The Sun gave us the reaction from three Conservative MPs:

Responding to today’s bombshell announcement, former minister and Red Wall poster boy Neil O’Brien tweeted: “The next PM must return to the national conservatism represented by our election winning 2019 manifesto and put us back on the side of normal working people.”

If anyone was going to have done that, it would have been Truss, for whom Party members voted in the majority. Sunak and Hunt certainly aren’t on the side of ‘normal working people’: tax ’em until the pips squeak.

Next up was Steve Baker, now an apologetic Northern Ireland Minister:

Brexit hardman Steve Baker urged colleagues that whatever the result, “we must accept and back the new Prime Minister”.

Millions of us wish he had shown the same allegiance towards Truss.

The only one to say anything complimentary was Greg Hands, who served as an International Trade Minister:

He said:

A dignified exit as Prime Minister from Liz Truss. A difficult day for the country, the Party and for Liz personally.

She wasn’t long as PM, but served at the Cabinet table longer than any of her three predecessors. She has long served the country – and I wish her very well.

At least Truss wasn’t removed from the top table Chinese-style:

On October 27, one week after Truss’s resignation, The Telegraph‘s Matthew Lynn said that backbench Conservatives just could not bring themselves to support Truss’s economic plan, which Kwasi Kwarteng fronted.

In other words, Conservative MPs shy away from libertarianism, even though I think it would do the UK a lot of good:

The timing, to put it mildly, was unfortunate. It was a difficult transformation to pull off at the best of times, but against the backdrop of rising inflation and an out-of-control dollar, it was doubly difficult. 

Truss’s programme did not have the necessary support within the Parliamentary Conservative Party either. Massive opposition from Labour, the Scottish Nationalists, and the Twitter mob was to be expected. 

But very few MPs were willing to support the plan, and without that backing it was always going to be hard to push through. Even before it got on to the genuinely difficult stuff – investment zones, planning reform, the green belt – the opposition was overwhelming. 

The Bank of England

Matthew Lynn points the finger of blame at the Bank of England (BoE):

the real failure of Trussonmics may well have been the fault of the Bank of England. As Narayana Kocherlakota, a former President of the Minneapolis Fed, and now Professor of Economics at New York’s Rochester University, argued in an opinion piece for Bloomberg this week, it was the Bank’s failure to support the gilt market that killed the plan

“The way the Truss government collapsed should concern all who support democracy,” he warned. 

In his Bloomberg article of October 26, Narayana Kocherlakota defended Truss and criticised the BoE:

Markets didn’t oust Truss, the Bank of England did — through poor financial regulation and highly subjective crisis management.

Truss won the leadership of the Conservative Party, which the UK electorate had voted into power, by promising a range of deep tax cuts and government spending increases. Whatever one might think of her policies, they were her mandate. I agree with the many observers who expected them to lead to higher inflation, higher interest rates and quite possibly higher unemployment. But such adverse outcomes take months and years to play out. Her government fell in a matter of weeks. How could this happen?

The common wisdom is that financial markets “punished” Truss’s government for its fiscal profligacy. But the chastisement was far from universal. Over the three days starting Sept. 23, when the Truss government announced its mini-budget, the pound fell by 2.2% relative to the euro, and the FTSE 100 stock index declined by 2.2% — notable movements, but hardly enough to bring a government to its knees.

The big change came in the price of 30-year UK government bonds, also known as gilts, which experienced a shocking 23% drop. Most of this decline had nothing to do with rational investors revising their beliefs about the UK’s long-run prospects. Rather, it stemmed from financial regulators’ failure to limit leverage in UK pension funds. These funds had bought long-term gilts with borrowed money and entered derivative contracts to the same effect — positions that generated huge collateral demands when prices fell and yields rose. To raise the necessary cash, they had to sell more gilts, creating a doom loop in which declining prices and forced selling compounded one another.

The Bank of England, as the entity responsible for overseeing the financial system, bears at least part of the blame for this catastrophe. As a result of its regulatory failure, it was forced into an emergency intervention, buying gilts to put a floor on prices. But it refused to extend its support beyond Oct. 14 — even though its purchases of long-term government bonds were fully indemnified by the Treasury. It’s hard to see how that decision aligned with the central bank’s financial-stability mandate, and easy to see how it contributed to the government’s demise.

The way the Truss government collapsed should concern all who support democracy. The prime minister was seeking to fulfill her campaign promises. She was thwarted not by markets, but by a hole in financial regulation — a hole that the Bank of England proved strangely unwilling to plug.

Two days before Truss resigned, Daniel Lacalle wrote an article for Mises Wire: ‘The Bank of England Made Liz Truss a Scapegoat’.

Lacalle points out that economic turmoil was worldwide, something not reported widely in the British media. No surprise there:

I find it astonishing that not one of the so-called experts that have immediately placed the cause of the British market volatility on Liz Truss’s budget have said anything about the collapse of the yen and the need for Bank of Japan intervention, which has been ongoing for two weeks.

Why did so many people assume the Truss minibudget was the cause of volatility when the euro, the yen, the Norwegian krone, and most emerging market currencies have suffered a similar or worse depreciation versus the US dollar this year? What about the bond market? This is the worst year since 1931 for bonds all over the world, and the collapse in prices of sovereign and private bonds in developed and emerging market economies is strikingly similar as those of the UK fixed income peers.

He blames British pension funds’ liability-driven investing (LDI) strategies on the abuse of quantitative easing (QE) over the years. Who was in charge of that? The BoE.

Lacalle wrote while Truss was still Prime Minister:

British pension funds are not selling sovereign bonds because of lack of trust in this or another government’s budget. They are selling negative-yielding sovereign bonds because they jumped wholeheartedly into the debt bubble created by artificially cheap money believing that central banks would keep fixed income prices elevated with constant repurchases.

British pension funds’ unfunded liabilities are not a problem caused by the mini budget nor solely a UK problem. It was an enormous problem in 2019–20 disguised by insane currency printing. Unfunded global liabilities for state pension funds in the US were already $783 billion in 2021 and rose to $1.3 trillion in 2022 according to Reason Foundation. The funded ratio of state pensions was just 85 percent in 2021 and has fallen below 75 percent in 2022.

What happened in the years of negative rates and massive currency printing? Pension funds used liability-driven investing (LDI) strategies. Most LDI mandates used derivatives to hedge inflation and interest rate risk. And what happens when inflation kicks in and rates rise? “As interest rates have risen, the notional value of some of the derivatives held in LDI portfolios has fallen. The result: increased collateral calls. The speed at which rates have risen means some pension plans have had to liquidate portfolios to meet collateral calls” according to the Investment Association’s latest report in September and Brian Croce at Pensions and Investment.

The total assets in LDI strategies almost quadrupled to £1.6 trillion ($1.8 trillion) in the ten years through 2021. Nearly two-thirds of Britain’s defined benefit pension schemes use LDI funds, according to TPR and Reuters. Liz Truss and Kwasi Kwarteng are not to blame for this insanity. The policy of negative real rates and massive liquidity injection of the Bank of England is. Kwarteng and Truss are only to blame for believing that the party of policies of spending and printing defended by almost all mainstream Keynesian economists should work even when the music stopped

Liz Truss and Kwasi Kwarteng are not to blame for the insanity of the past years or Rishi Sunak’s ultra-Keynesian budgets. They are only to blame for believing that another dose of Keynesian deficit insanity would not harm.

Mr. Kwarteng’s demise is just a casualty delivered by the modern monetary theory crowd and the monetary laughing gas city to justify that the problem was a ludicrous tax cut not years of currency printing and deficit increases.

What has happened in the UK or Japan is likely to happen soon in the eurozone, which accumulated more than twelve billion euro of negative-yielding bonds in the years of cheap money and reckless stimulus plans.

Liz Truss is not to blame for twenty years of monetary insanity and fiscal irresponsibility. She is to blame for a budget that increases spending without cutting unnecessary expenses.

The irony of it all is that the defenders of monster deficits and borrowing if it comes from bloating the size of government feel vindicated. It was the evil tax cuts!

The political analysis of the mini budget is astonishing. No one in the UK parliament sees any need to cut spending it seems, yet those expenses are consolidated and annualized, which means that any change in the economic cycle leads to larger fiscal imbalances as receipts are cyclical and, with it, more currency printing. The assumption that raising taxes will generate perennial annual increases in receipts no matter what happens to the economic cycle can only be defended by a bureaucrat.

Well, Rishi Sunak and Jeremy Hunt are those bureaucrats.

There are global players in pension fund management, BlackRock being one of them, as The Conservative Woman revealed on October 27:

BlackRock is heavily involved in the charity sector, managing over £4.5billion for more than 3,000 UK charities alone. ‘Sustainability’, food security and renewable energy rank very highly in their priorities in that sector.

The role of BlackRock in the recent selling off of derivatives by UK pension funds, said to be behind the triggering of a fall in sterling following the ill-fated Kwasi Kwarteng mini-Budget, is an intriguing one. BlackRock executives would defend their actions by stating they were merely protecting clients who were financially overcommitted in that sector and that pension fund managers ought to have known the risks involved in leveraged investment strategies in the first place, and that there is far more to that type of riskier investment than just following trends. Either way the political fallout was profound, triggering a chain of events which led to the fall of Prime Minister Liz Truss. BlackRock executive defends pensions strategy that fuelled UK crisis

Interestingly, Jeremy Hunt has appointed a BlackRock executive who is pro-Net Zero and anti-Brexit as one of his chief advisers:

A business with the financial resources of BlackRock will naturally attract well-connected people to its payroll. People such as Rupert Harrison, chief of staff to Chancellor George Osborne from 2006 to 2015. An opponent of Brexit, he tweeted in July 2017 that ‘the rest of Europe is booming and we’re not’.

Intriguingly, Harrison is now one of new Chancellor Jeremy Hunt’s most senior advisers. On the surface, Hunt seemed to have been parachuted in from nowhere, having failed in two leadership elections and spending more than two years on the back benches, yet from the moment he was appointed he already had a highly expert team, including Harrison, ready to start at once and acting promptly with great self-assurance as though he knew he already had the backing of those who really matter.

However, Conservative Party members are unhappy with Hunt and Sunak’s economic policy based on higher taxes, which are, in reality, much higher than they read on paper. This poll is from November 29:

Guido Fawkes wrote (emphases his):

The Tory membership doesn’t support their own government’s economic policy, according to the latest Conservative Home panel poll. Opposition stands at 48.78% and support at 41.87%. 9.35% don’t know. 

It can’t come as much surprise. As Rishi’s supporters point out, he was warning of the consequences of Liz Truss’s policies during the summer contest, and the membership still voted for Liz’s low tax package. Support at 41.87 is actually 0.8% lower than Rishi received from the members during the summer…

Let us return to the BoE.

In the December 2022/January 2023 issue of The Critic, Jon Moynihan published ‘How the Bank broke the Government’, which refers to Narayana Kocherlakota’s aforementioned article for Bloomberg and expands on the use of LDIs in pension fund management:

Kocherlakota’s view was that the Bank of England was responsible for the crisis, through “poor financial regulation and highly subjective crisis management”. Outside the UK chatterati, this view is widely supported.

The beef against the mini-budget was that it spooked the market. But virtually all of the policy announcements made by Kwasi Kwarteng on the day were not new; they had been pledged during the Truss campaign or — in the case of the energy price guarantee — confirmed shortly after her arrival in Downing Street

Sure, the mini-budget stated that clarifying how all the spending/lowered tax revenue would be paid for was to be put off until the later financial statement, due some weeks later. But the only new thing was the change to the top rate of income tax from 45 per cent to 40 per cent

Given the well-known dynamic impact of lowered tax rates, this change would arguably have been revenue neutral or even beneficial; even without any dynamic benefit, it could have cost at most £2 billion in tax revenue. That is a rounding error compared to the amounts already absorbed by the market and a fraction of the costs Rishi Sunak has accepted at COP 27 — to which the markets have reacted entirely complacently. It is just not credible to blame the mini-budget for the market turmoil.

Moynihan explains more about how LDIs work:

The prime obligation of a pension fund is to match its assets (the money it uses to make payments) to its liabilities (the payments it expects make to its pensioners over the years). For a fund to be as sure as it can that it will be able to pay its future pension liabilities, it buys assets whose coupons and maturity match its (actuarially expected) future pension payments.

So far, all well and good. The problem is with LDI funds. These, like so many pension funds these days, use gilts to accomplish that matching (in a popular meme of the past couple of decades, “gentlemen prefer bonds”). However, in addition the idea has been sold that they can goose up their returns a bit, to compensate for the low yields they are getting on their gilts

This little bit of extra profit is accomplished by borrowing some further money, short-term, and with it buying long, higher-yielding assets — either real assets, or derivatives. It’s a well-known and always risky bet on interest rate movements; in some markets it’s known as the “Carry Trade”; in the Japanese markets it’s known as the “Widow Maker”. It’s entirely inappropriate for “safe” pension funds. 

If rates move against the bet, the bet sours. To cover the risk they are taking, the funds are required to give over their other assets (the gilts) as collateral to the bank that lent them the money. 

When the bet sours, the bank that lent them the money “calls the collateral”, selling off the gilts in order to repay the borrowing a wave of such sales can destabilise the gilts market and create a disorderly environment, as happened in late September 2022.

Some would say that the Bank of England should have known all of this and not allowed such risk to be taken by this huge market in LDI funds. Some would raise an eyebrow at the news that until the middle of 2022, the Bank of England itself held 100 per cent of its £5 billion pension fund in just one single LDI Fund, and therefore blithely seemed to believe it was OK for such risks to be taken (their 100 per cent recently was reduced to a scarcely less concerning 82 per cent).

For whatever reason, the Bank and other regulators did allow LDI funds to become more and more the fashionThe total value of liabilities hedged with LDI strategies was $1.8 trillion in 2021, around half of the total of LDI funds in the world, a sure sign that the Bank Of England had been far too lenient in allowing LDIs to flourish in the UK. That is Strike One.

Why then did the LDI funds start collapsing specifically in late September? It starts with the rapid appearance this year of inflation, caused in no small part — as the Bank has finally admitted — by the bank’s excessive growth of the money supply in recent years. As inflation consequently shot up, so, all year, did gilt yields rise, putting increasing pressure on those rickety LDI funds. That is Strike Two against the BoE for its role in worsening inflation in the UK, leading to this instability.

Two days before Kwarteng delivered his mini-budget, Saxo Bank and Deutsche Bank correctly predicted a fall in sterling.

Saxo predicted:

“If the BoE fails to hike 75 basis points, let’s shield our eyes for what is going to happen to the pound here.” (They were predicting a fall in sterling, which duly happened. Low sterling leads to higher inflation leads to higher gilt yields.) 

Deutsche Bank said that the BoE needed a ‘hawkish response’. It never materialised.

In the end:

Both Deutsche and Saxo were right. Only days after the Bank failed to step up to the 75 basis points mark, sterling momentarily dropped to $1.04, just as Deutsche had predictedyet for reasons that remain to be explained, the drop was blamed on the mini-budget, not on the Bank’s failure to sufficiently raise rates. The failure to raise rates enough, two days before the mini-budget, is Strike Three.

In addition, the BoE announced a fortnight-long programme of selling £40 billion of gilts, which ended in mid-October.

In other words, it moved from QE to QT, quantitative tightening.

Reuters noted the BoE was the first central bank to do that, at least in recent years. Bloomberg called the move ‘historic’ for the same reason:

In 2013, all it had taken was the Fed to announce it was doing less QE — not stopping, just doing less — for the markets to go into a “Taper Tantrum”.

Ever since, most central banks have been cautious not to move too fast in shutting down their QE. But not the BoE. Why did it see itself as in a position to be the first in the world to take this very risky step, aware as they were that the mini-budget was about to be announced?

Not surprisingly, the markets responded:

market participants move fast to get ahead: they quickly sell their own bonds before their value is hammered by the BoE sales. Yields immediately go up and the price of bonds immediately falls. Which is why it was — Strike Fourstupid for the central bank to announce its moves ahead of time: it’s like the time that Gordon Brown announced he was selling all our gold, and the price collapsed so he made much less from the sale. But now the LDI pension funds started to get really hammered: as the market moved to dump gilts, the price of gilts fell and fell — this is still before the mini-budget — and collateral calls began to come thick and fast on the LDI funds.

The doom loop began:

And even more collateral calls then came in, and we were in an accelerating doom loop. All this was happening as the mini-budget was announced, and the lazy financial press, not seeing what had happened earlier, blamed the rout in the gilts market on the mini-budget. But it was started by the Bank of England’s earlier decision to go full tonto QT. Strike Five.

Cue the headlines that Liz Truss ‘crashed the economy’, to borrow Labour’s words, which they are still using in Parliament:

The Prime Minister is accused the following day of destroying the economy.

The BoE backtracked immediately, announcing it would move from QT back to QE:

The Bank of England, of course, immediately announces that it is not after all going to sell £40 billion of gilts — it is going to buy £60 billion of them — back from QT to QE in a blink of the eye. 

Of course, by then, it was too late for Truss and Kwarteng. Their collective goose was well and truly cooked:

… by now the gods of havoc have been unleashed. Truss’s enemies in the Conservative party get to work, using the mini-budget narrative to undo the mini-budget, to oust the Chancellor, and finally to oust the Prime Minister herself. Job Done

The BoE defended its actions:

The post-mortem speech by the Bank’s director for financial stability, entitled “Risks from leverage: how did a small corner of the financial industry threaten financial stability?” makes for interesting reading; in this telling, the Bank staved off a crisis from what, for anyone, would have been an unexpected direction, dealing more than adequately with the non-bank sector. If anything, the director claims, the UK was ahead of the curve!

As for the current Sunak-Hunt government, Jon Moynihan has also noted the presence of David Cameron’s Chancellor and the former BlackRock executive:

George Osborne and Rupert Harrison, late of BlackRock, the UK’s second largest provider of LDI funds, are now advising the new government.

Moynihan ends his article by pointing out that the BoE’s governor, Andrew Bailey, has the nickname of ‘Lullaby’ because he tended to doze off during meetings in a prior position:

As head of the Financial Conduct Authority from 2016 to 2020, he saw first-hand the sort of shenanigans firms and funds will get up to if, pressed by smooth talking salesmen, they are given the freedom to act as they will.

It has been alleged that while in that role, Bailey “dozed off” during meetings over a pensions scandal. Now, the organisation he runs is accused of being asleep at the wheel on LDI pension funds, not to mention on inflation, the currency, the stability of markets.

It looks like the BoE’s laxity led to the fall of a government:

All that led to the end of a government, in a way that will continue to reverberate, to the detriment of many people’s view of democracy in this country, for decades to come.

What the British think

Only last week, on November 23, IPSOS published a poll saying that politicians are the least trustworthy of working Britons. Pictured alongside Rishi is a very young Piers Morgan when he edited The Mirror. Journalists have a trustworthiness rating of 29%, compared to politicians in general at 12%:

Guido has the full chart of occupations participants were asked to rank in order of trustworthiness:

Hardly unsurprisingly, public trust in politicians to tell the truth has fallen to its lowest level ever, according to the latest Ipsos poll. Just 12% of the public now trusts politicians to tell the truth, lower than advertising executives (14%) and government ministers (16%).

Unfortunately for journalists they don’t fare much better, at just 29% – one percent above estate agents…

Nurses and doctors ranked the highest at 89% and 85%, respectively.

Television news readers ranked at 58%, above clergy/priests and the man in the street, both of which tied on 55%.

Conclusion

On November 22, roughly one month after Truss resigned, Dan Wootton did a follow up on GB News.

Nigel Farage told him:

Hunt was the coup. Sunak is little more than a puppet.

Wootton also interviewed Ranil Jayawardena, who served as Secretary of State for DEFRA, the Department of Environment, Food and Rural Affairs. He was very gracious and didn’t want to get into any controversies. Wootton, who was a big Truss supporter, wanted to know how both of them were faring. He said that they were fine.

I’m including the nine-minute interview here just so you can hear Ranil Jayawardena’s voice. He should record audio books in his retirement. Someone in the comments to the video said that he sounds like Boris. He sounds a thousand times better than Boris. This is received pronunciation, rarely heard today in such mellifluous tones:

The Liz Truss saga ends here.

I fear the worst, for the Conservative Party and for the British.

End of series

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My most recent post on Liz Truss left off with the beginning of the end in her final week as Conservative Party leader.

Friday, October 14

Her sacking of Kwasi Kwarteng and installation of Jeremy Hunt as Chancellor on Friday, October 14, meant only one thing — her end was nigh:

Liz Truss’s first Chancellor Kwasi Kwarteng: what he expected, what he got instead (October 13, 14)

Liz Truss and Kwasi Kwarteng illustrate that one DAY is a long time in politics (October 13, 14)

The Times‘s headline on the morning of the 14th said that Conservative MPs were already plotting to install Rishi Sunak and Penny Mordaunt in Truss’s place. One of them would be Prime Minister and the other would be Chancellor or Foreign Secretary:

The article also said (purple emphases mine):

Truss and Kwasi Kwarteng, the chancellor, are expected within days to make a humiliating climbdown over corporation tax in an effort to calm the markets and see off a mounting revolt.

Indeed, that is what Truss announced at her disastrous press conference that afternoon. By then, Jeremy Hunt was already Chancellor:

It was hard to believe, especially as Ireland’s corporation tax is half that: 12.5%. What is to stop businesses in Northern Ireland from moving south of the border?

Liz prefaced the announcement with:

This is difficult.

Guido Fawkes has the video and another quote preceding her announcement about corporation tax:

It is clear that parts of our mini-Budget went further and faster than markets were expecting… so the way we are delivering has to change…

He concluded (emphases his):

The mother of all U-turns…

Later in the afternoon, Wendy Morton, the Chief Whip, summoned Conservative MPs to an online call with the Deputy Prime Minister Thérèse Coffey.

One hundred of them dialled in. Coffey allegedly kept staring at her notes:

Saturday, October 15

Saturday’s papers were scathing.

The Daily Mail asked, ‘How much more can she (and the rest of us) take?’

The i paper led with ‘Tory MPs tell Truss: “It’s over”‘:

The Telegraph‘s Tom Harris wrote about the symbiotic relationship between the Prime Minister and the Chancellor from Margaret Thatcher’s time to Truss’s.

When that relationship goes wrong in a big way, it’s nearly always bad news for the PM, although there are exceptions:

When a prime minister loses a long-serving chancellor and ally – as Margaret Thatcher did when Nigel Lawson walked out of her government in 1989 – the political ramifications are enormous. In Thatcher’s case, that event signalled the beginning of her long defeat. When a prime minister loses a friend too, it becomes, as Liz Truss stated in her press conference, “not an easy” personal moment. 

Their closeness also makes it impossible for Truss to distance herself from the mess left at the Treasury. It is not clear which policy Kwarteng implemented that the prime minister was so unhappy with that she had to fire him. In 1989, Lawson resigned over his objection to the prime minister’s reliance on her economic adviser, Sir Alan Walters, but there were already disagreements between Numbers 10 and 11 over whether Britain should join the European Exchange Rate Mechanism. 

[John Major’s Norman] Lamont was fired over his handling of Britain’s departure from the same institution. Javid resigned over personnel issues. Rishi Sunak’s reasons for resigning were similar, though in his case the personnel issue involved the then prime minister himself.

In Jeremy Hunt, Liz Truss might be given a chance to form the kind of reassuring, mutually supportive – and, crucially, stable – relationship with her chancellor that good government demands. It would be foolish, however, to assume that when such a relationship breaks down, it is always the chancellor who is next to go.

The Telegraph‘s Camilla Tominey looked at the backbench Conservative MPs, wondering how Conservative they actually were. I was glad to see that she mentioned Alicia Kearns, who does not seem very Conservative to me.

Tominey’s article shows that a significant number of Conservative backbenchers do not hold traditional Conservative Party values:

Never underestimate the Conservative Party’s unparalleled ability to turn the gun on itself when coming under enemy fire. As the pot shots continued to rain thick and fast on Liz Truss’s troubled premiership, what did the Tories decide to do? With Labour’s help, they elected Alicia Kearns as chair of the Foreign Affairs Select Committee.

For those unfamiliar with Ms Kearns, she is the former Amnesty International activist who led the so-called “Pork Pie Plot” to oust Boris Johnson over partygate. Despite having been an MP for all of five minutes, the 34-year-old, who won the safe seat of Rutland and Melton in 2019 (hence the pork pie theme) decided that the Conservatives’ wisest move was to remove the man who secured the party’s biggest election win since 1987. Well, dip me in jellied pork stock and cover me in hot-crust pastry, that went swimmingly!

Having declared last year that she came into Parliament with “one legislative change I wanted to deliver, which was to ban conversion therapy”, inexperienced Kearns now occupies one of the most influential posts in the House of Commons.

Her first intervention? Following hot on the heels of her fellow chair, Mel Stride, of outspoken Treasury select committee fame, she used a radio interview on Thursday night to urge the Prime Minister to reverse the tax-cutting measures in the mini-Budget.

I’ve got nothing personally against Ms Kearns – she is clearly a thoughtful and intelligent woman. But if she isn’t for cutting tax, then what on earth is she doing in the Tory party, let alone now apparently in the running to enter a future Conservative Cabinet?

One former minister was this week quoted as saying: “Everything [the Government] are doing is everything that I don’t believe in.” Why, then, is that senior politician – apparently so opposed to spending controls and economic growth – not currently residing on Sir Keir Starmer’s shadow front bench or drinking Remaineraid with Sir Ed Davey?

As former Brexit negotiator Lord Frost put it on Thursday: “There are too many … social democrats operating under Conservative cover.”

It is one thing to be a broad church, but the Tories are currently taking on the mantle of a Blue Labour cult.

Not only are many of them perfectly comfortable with taxing people more, despite the tax burden being at its highest in 70 years, but they are also apparently as opposed to fracking as Ed Miliband. They seem to love the status quo and appear happy to watch Britain slowly sink into decline – along with their own party.

Tominey says that Liz Truss’s platform was clasically Conservative, and so was the one upon which Alicia Kearns was elected.

These are the MPs who will determine the outcome of Brexit and the next election. Both are in peril.

Tominey rightly lays the blame at the feet of former PM David Cameron, a wet who wanted a different type of Conservative MP:

David Cameron’s decision to introduce open primaries in the late 2000s, which saw wannabe MPs selected by non-members as well as members, was perhaps the most obvious mistake. The Conservatives ended up with “yellow” Tories in its ranks, such as Sarah Wollaston, who later defected to the Liberal Democrats.

Funnily enough, Sarah Wollaston is no longer an MP. Others like her, most of whom had the whip removed, were defeated or chose not to run in 2019.

This is the issue:

But more broadly, by inviting people with no background in Conservative politics to stand for Parliament, they ended up with people with no Tory backbone either. Holding successive snap elections only made the selection process less rigorous and open to people high on ambition and low on ideology.

This is a problem for the next general election. GEs depend upon local activists — party members — who are willing to canvass door-to-door:

We now have the Sunak squadders, calling for people to keep less of their wages, for businesses to pay more in corporation tax and for benefits to be linked to inflation, Corbyn-style …

Conservatives have become so detached from reality that they actually believe this will help them to win the next general election – even though it promises to prompt a mass walkout by the very grass-roots activists they rely on to run a campaign.

However, Tominey says that Rishi Sunak’s coronavirus handouts have also altered the public perception of the role of the state. We can but see how this will play in 2024 or early 2025 when the next GE comes along.

Monday, October 17

On Monday, October 17, Leader of the House Penny Mordaunt had to stand in for Truss during a debate. Opposition MPs accused Truss of hiding under a desk.

Mordaunt had to deny that more than once, saying that Truss had a ‘very genuine reason’ for not being present.

I don’t often feel sorry for Penny Mordaunt, but I did that day:

However, one Labour MP, Andrew Gwynne, tweeted that Liz Truss was the victim of a ‘coup’ — his word — and that Jeremy Hunt was the acting PM:

https://image.vuukle.com/f6a3e1ae-5984-48dd-8fe4-cb0a5368b71b-404bcb3a-bd15-43df-b0b6-f4920edde5c7

On Tuesday, October 18, The Times explained why Truss did not turn up at the despatch box the day before:

For much of the day Truss was conspicuous by her absence. She refused to respond to a question by Sir Keir Starmer in the Commons, prompting accusations from Labour that she was “frit”. Penny Mordaunt, the leader of the Commons, answered questions in her stead. She said that the prime minister had “a very good reason” for her absence but refused to explain further, prompting misplaced speculation that Truss had resigned.

That reason for her absence turned out to be a meeting with Sir Graham Brady, the chairman of the backbench 1922 Committee. Sources said that the meeting was routine and had been arranged before Kwarteng’s dismissal. But the issue of her leadership, and a potential revolt by Tory MPs, was said to have been discussed.

One source on the committee said there were a “number of views” on the way ahead but that there were concerns that an immediate move to defenestrate the prime minister could further destabilise the markets.

“The question is whether it is more damaging to create further uncertainty by getting rid of the prime minister when the chancellor [Hunt] appears to have settled the markets,” said an MP on the committee.

Some Tory MPs believe that with the unravelling of her tax-cutting agenda and signature energy policy she is finished politically. Sir Charles Walker became the fifth Conservative MP to publicly call for her to go, saying her position was “untenable”.

A senior Conservative source added: “It’s the biggest unforced humiliation for a British government since Suez. Eden did the decent thing and resigned.”

“The trouble is there is no consensus for who should replace her,” said one former backer of Rishi Sunak. “And the last thing we need now is to be seen to be causing more uncertainty on the financial markets.”

Monday night was grim.

On the subject of a coup, Nigel Farage agreed that Jeremy Hunt was in charge, and that this was a ‘globalist coup’:

https://image.vuukle.com/f9d07d03-d334-4051-8724-6f4fa2ddda17-ae8bf94e-7f5a-4ffd-9a52-0e6022d7356a

On his GB News show that night, Dan Wootton also said that there had been a coup. He agreed that the unpopular Hunt was in charge and that no one liked him, except for the Establishment. He said that if the Conservatives allowed this to continue, then they deserve to lose the next GE:

https://image.vuukle.com/f6a3e1ae-5984-48dd-8fe4-cb0a5368b71b-8e6e7a67-592c-457b-b72e-c0ac239a343b

Truss surfaced to give an interview to the BBC’s Chris Mason, wherein she apologised for the mini-budget. She said:

First of all, I do want to accept responsibility and say sorry for the mistakes that have been made. I wanted to act, to help people with their energy bills, to deal with the issue of high taxes, but we went too far and too fast. I have acknowledged that.

Tuesday, October 18

Tuesday’s headlines were deeply discouraging for her. Nearly all had photos of her alongside Hunt:

The new biography of Truss, Out of the Blue, was not even ready for publication. Someone photoshopped the cover with a remainder sticker on it, saying, ‘Reduced for quick sale — please just take it’:

https://image.vuukle.com/98cdcb40-7d3c-4d74-8d23-f9daebdfd1a1-93607ebf-9abe-4f09-a639-03c36aff8641

The Sun‘s political editor, Harry Cole, one of the book’s co-authors, posted an article about the MPs plotting against her:

TORY plotters dubbed the “Balti Bandits” carved up Liz Truss’s future last night over a korma and bhuna feast, The Sun reveals.

Leading rebel Mel Stride hosted more than a dozen “miserable” Conservative MPs in his large House of Commons office for an Indian takeaway – with the PM’s fate also on the table.

Ex-Ministers John Glen, Nick Gibb, Mark Garnier and Shailesh Vara tucked into “lashings of curry and naan” ordered in by Mr Stride, alongside outspoken backbencher Simon Hoare. 

2019 intake MPs Angela Richardson and Simon Baynes were also said to have joined the “poppadum plot” – but sources say the meeting ended with “no credible solution” to their woes

Contenders include ex-Chancellor Rishi Sunak, Defence Secretary Ben Wallace, new Chancellor Jeremy Hunt and Commons Leader Penny Mordaunt – but given the party is deeply split, the plotters admitted the chances of a rapid “coronation” of a new PM were “almost zero.”

One attendee told The Sun: “the vast majority of attendees were Rishi Sunak supporters, but there were Penny people too. It was not a Rishi thing.” 

On Tuesday evening, Truss had another group angry with her — her own supporters in the European Research Group, the pro-Brexit group of backbench Conservative MPs.

The Telegraph‘s Tim Stanley wrote about it, as he was there in the corridor for Truss’s meeting with them:

Liz Truss launched her fightback at 6pm in Committee Room 11. The meeting was actually set for 5pm; Commons voting ran late so Mark Francois advised us hacks to go away and come back later, but I hung around on the suspicion that the moment we left, Liz would slip out of her hiding place in the roof of the lift and jog, unseen, into the Room …

These are the true believers: if they’re angry at Liz for anything, it’s for not keeping the mini-Budget

What we saw of her on TV on Monday night, interviewed by Chris Mason, did not spark confidence as she uttered that dread word “sorry”, thus accepting personal responsibility for blunders past and future. It is the mark of an “honest politician”, she said, to admit mistakes. That’s true, but it’s also a dead giveaway for a not-very-good one, trying to turn a repeated error into a display of moral virtue. As Samuel Johnson might have said, “Honesty is the last refuge of the incompetent”.

She bobbed into view in a dark blue dress and black tights – fresh-faced, one suspects, from a good night’s sleep. Instinctively, I stood: she might be a PM, but she’s still a lady. I earnt a cheeky nod. Those who can’t fathom the rise of Ms Truss haven’t met her. She has a way of compromising you, of making you think you’re on her side, and it’s the most fun side of the room to be on.

The ERG roared as she entered. She entertained them behind a closed door for about 45 minutes. Then she left, followed by Mr Francois who told us it was “a very positive meeting”.

The PM evidently spoke about Northern Ireland and her commitment to raising defence spending by the end of the decade, which is ambitious for a woman who could be out of office by Friday. And he noted that David Canzini, the clever political operative, was with her, an eminence so grise, none of us had noticed he’d gone in.

No 10 confirmed it: he was hired as of that morning.

Too little too late. That might have been Canzini’s shortest job.

Wednesday, October 19

On Wednesday, October 19, Guido Fawkes posted that the Reform Party — formerly the Brexit Party — was climbing in the polls. The photo shows their chairman, businessman Richard Tice:

Guido’s post said, in part:

Guido can reveal that in the 48 hours before close of play yesterday afternoon, the old Brexit Party received almost 1000 new £25 membership sign-ups. That new five-figure cash boost was joined by 300 members registering a new interest in standing as a party candidate at the next election. The first time the Tories dipped below Labour in the polls – September 2021 – Reform saw one in 10 Tory voters switching to them. Can they continue capitalising on Liz’s woes?

It’s not just Reform benefitting from the dire state of No. 10. Last night the LibDems revealed five new donors, each giving £50,000 to the party, one of whom is a former Tory donor. While the last 36 hours have been calmer for Truss, it does feel like the ship has sprung one too many leaks to be repaired by a strong PMQs performance…

Wednesday was another fateful day. Home Secretary Suella Braverman resigned, then a confusing scene took place in the voting lobby over a division (vote) on fracking, which resulted in more chaos when it was unclear whether Wendy Morton had resigned as Chief Whip:

Liz Truss’s final 24 hours: Suella Braverman’s resignation, question over Whips’ resignations (October 19)

Truss appointed Grant Shapps, former Transport Secretary, in Braverman’s place:

Holy mole, guacamole!

Nigel Farage repeated ‘coup’ in his tweet about the news:

As with Hunt, Truss had to scrape the barrel.

The Telegraph reported that, like Hunt, Shapps was not a Truss supporter:

It is a remarkable turnaround for Mr Shapps, the transport secretary under Boris Johnson who went on to become a prominent supporter of Ms Truss’s leadership rival Rishi Sunak.

Only on Monday night, Mr Shapps was telling a theatre audience that he believed Ms Truss had a “Mount Everest to climb” to remain in power.

“I don’t think there’s any secret she has a mountain, a Mount Everest to climb,” he told Matt Forde’s podcast. “What she needs to do is like threading the eye of a needle with the lights off.”

Now he is one of her most senior ministers – and another example of the way a weakened Ms Truss is being forced to offer olive branches to the Sunak supporters she had previously shunned.

Not only was Mr Shapps questioning her chances of success until as early as this week – he was working proactively to get rid of her.

Mr Shapps has been viewed in Westminster as one of the leaders of the opposition to Truss’s libertarian policies.

He spoke up at the Tory party conference in Birmingham earlier this month against her plans to scrap the 45p rate of income tax, and warned that Ms Truss had “10 days” to turn things around or MPs “might as well roll the dice and elect a new leader”.

This is what the aforementioned Camilla Tominey was lamenting in Conservative MPs. Some of the recent ones have no appreciation of or allegiance to Conservative values. Shapps was a Cameronian MP.

The article also discussed Shapps’s famous spreadsheets which appear to work as well as the 1922 Committee in making or breaking a Prime Minister:

The veteran MP – known by some as the “Duracell Bunny” for his enthusiasm – is also well-known for his “Star Wars” spreadsheet, with which he has spent the past few weeks recording the views of MPs on Ms Truss and her plans.

Mr Shapps used an earlier version of his famous spreadsheet to lead a rebellion against Theresa May, and also utilised its information to help guide Boris Johnson into Downing Street.

The spreadsheet is said to contain more than 6,000 historical “data points” from previous conversations with MPs.

It was rumoured that he had been in contact with Mr Johnson and Mr Sunak to see if they would join an effort to oust Ms Truss. And some rebel MPs claimed he had even offered himself up as a caretaker prime minister.

Let us not forget that Shapps himself is hardly a paragon of virtue:

… unfortunately for Mr Shapps, some elements of his past may make a shot at No 10 less than likely – not least the Michael Green saga.

This was an alter-ego he employed to enable him to run a series of get-rich-quick schemes on the internet while he was an MP.

Mr Shapps originally denied he had a second job, and threatened legal action against a constituent who said he had. But he was forced to admit practising business under a pseudonym in March 2015.

All this happened while he was Tory chairman, in charge of David Cameron’s efforts to win the 2015 election.

He was demoted soon after to aid minister, and resigned from that role after claims he had ignored repeated allegations of bullying involving the Tories’ youth organiser. It was said the alleged bullying, which took place on the party’s RoadTrip 2015 campaign, may have caused one party member to commit suicide.

On Wednesday evening, Camilla Tominey reprised her warning about un-Conservative MPs and their takeover of the Government. She, too, used the word ‘coup’:

the departure of Suella Braverman as home secretary speaks to a bigger problem for Liz Truss than sheer optics.

In sacking two key allies on the Right, only for them to be replaced by opponents more to the Left of the party, the Prime Minister is increasingly looking like the victim of a Conservative coup.

It is certainly ironic that the former home secretary, in post for just 43 days, first used that word to describe those who plotted against Ms Truss’s original plan to link benefit to wages rather than inflation

With that, and most of her mini-Budget up in flames thanks to a rebellion by the moderates, Jeremy Hunt now appears to be the de facto Prime Minister.

He will now be joined by his fellow Sunakite Grant Shapps, who despite being rejected from Ms Truss’s original cabinet, has now been appointed to replace Mrs Braverman at the Home Office.

Braverman, at one point, had headed the aforementioned European Research Group:

her swift exit from one of the highest posts in public office will anger her European Research Group supporters.

It was only on Tuesday evening that Ms Truss was said to have charmed the backbench group of Eurosceptics with her honest, straight-talking approach.

They are unlikely to take kindly to their former chairman, a darling of the grassroots, being ejected in such unseemly fashion.

Mrs Braverman, a Conservative leadership candidate herself over the summer, received the longest standing ovation at the Tory Party conference two weeks ago.

Fortunately, Rishi Sunak re-appointed Braverman as Home Secretary. He probably realised he had to, in order to keep Party members on side.

Returning to Wednesday, October 19, The Telegraph posted an article stating that Conservative backbenchers were asking Labour for help in ousting Truss. Unbelievable:

Rebel Tories have been asking Labour MPs to help them overthrow Liz Truss, The Telegraph has been told.

Conservative backbenchers are growing increasingly frustrated with the Prime Minister’s leadership, but currently lack any mechanisms to remove her given the one-year immunity she has from a no confidence vote.

As things stand, the only way to oust Ms Truss would be to change the rules – which is a decision that only the executive of the 1922 committee of backbenchers can make – or if she resigns of her own volition.

One Labour MP told The Telegraph: “Tories are speaking to us saying ‘this is a complete nightmare and there is no way out’. We are being asked ‘can’t you do something about her?’”

The MP, who said their colleagues have reported similar experiences, said they were approached by one Red Wall MP whose constituency was in the north and another MP who is a member of the One Nation group of moderates …

A Labour source said: “There is very little Labour can do. Even a vote of no confidence doesn’t have the constitutional standing that it used to. The Tory party are the ones that elected her, they need to get rid of her.”

The paper’s Michael Deacon wrote that Conservative MPs were entirely to blame for the mess. Furthermore, he said, they risked angering Party members, the campaigning activists, if they pushed ahead with a rule change saying that the members would no longer be able to vote for future Party leaders. The members elected Truss over Sunak in August:

This week, The Telegraph reported that Tory MPs want to bar members from voting in future leadership elections. Supposedly the reason is to speed up the process of choosing a leader. But this is blatantly a smokescreen. Quite plainly, MPs just want to prevent the members from landing them with another turkey like Truss.

Many members are appalled by this suggestion. And so they should be. Such a plan is not just arrogant and undemocratic, it’s delusional. Because party members aren’t to blame for the current mess.

Tory MPs are.

After all, who put Truss on the ballot paper in the first place? Tory MPs. No fewer than 113 of them, in fact. A third of the parliamentary party. Out of an initial field of 11 candidates for the leadership, Truss was the MPs’ second favourite.

Unlike the MPs, however, the party members weren’t allowed to choose between the initial field of 11. If they had been, it’s extremely unlikely that they would have chosen Truss. They’d have been far more likely to choose Penny Mordaunt or Kemi Badenoch, to name just two. In fact, if the MPs had deigned to ask them, I suspect that the greatest number of members would have wanted their leader to be Boris Johnson – the person they chose to be leader in the first place.

The truth is, the members voted for Truss simply because they didn’t want to vote for Rishi Sunak. In leadership contests, they’re only ever given two candidates to choose from. And why? Because Tory MPs don’t trust them. They fear that, if presented with a wide-open field, party members will choose the “wrong” candidate. Funny how things turn out.

All things considered, then, it seems clear that, if anyone should be barred from voting in leadership contests, it should be Tory MPs. In future, just leave it to the wiser judgment of the members instead.

That night, The Telegraph posted an article by Lord Frost saying that the Party was moving towards a status quo, if not anti-Brexit, stance, going all the way back to David Cameron’s time as Prime Minister, with George Osborne as Chancellor and Philip Hammond in the same post under Theresa May:

… the Government is implementing neither the programme Liz Truss originally advocated nor the 2019 manifesto. It is going in a completely different direction. We are back to Osbornomics, the continuity Hammond view of the world. There is no shred of a mandate for this. It’s only happening because the Truss Government messed things up more badly than anyone could have imagined, and enabled a hostile takeover by its opponents …

… the correct account of the past few weeks is the simplest. Truss tried to deliver worthwhile reforms and set the country onto a much-needed new direction. I supported this policy direction and still do. But it was rushed and bungled. The markets were spooked. The mistakes were opportunistically seized on by her opponents to undermine her leadership, to blame Brexit, and to stop the party getting out of the social democratic tractor beam of the past few years. And now, under pressure, the Prime Minister has reversed tack completely.

The risk now is that we lose for a generation the opportunity to do anything better. Every time the PM defends her approach, she denounces the policies on which she was chosen. The danger is that necessary and correct reforms are discredited.

Frost held that Truss was ultimately responsible for her own downfall.

As such, she had to go:

We are where we are. I am very sorry about it, because I had such high hopes. Whatever happens to her ministers or the stability of the Government in the next few days, Truss just can’t stay in office for one very obvious reason: she campaigned against the policies she is now implementing. However masterfully she now implements them – and it doesn’t seem that it will be very masterfully – it just won’t do. She said she wouldn’t U-turn, and then she did. Her fate is to be the Henry VI of modern politics – a weak figurehead, unable to control the forces around her, occasionally humiliated, and disposed of when she has become inconvenient. Better to go now.

As for her successor and the Party:

Then the party must do two things: avoid making the economic situation even worse by repeating the policies of the Cameron government in totally different circumstances; and recover some political legitimacy for carrying on – because in our system legitimacy does matter.

Thursday, October 20

After 44 days, Liz Truss resigned as Conservative Party leader on Thursday, October 20.

She served as Prime Minister for 50 days, beating George Canning’s record of 118 days. Also a Conservative, he died of tuberculosis in 1827.

She remained PM until Rishi Sunak succeeded her:

Liz Truss’s final 24 hours: Suella Braverman’s resignation, question over Whips’ resignations (October 19)

Liz Truss’s final 24 hours: fallout over Braverman and Morton, no tears in exit speech (October 19, 20)

Rishi Sunak becomes Prime Minister: a momentous morning of historic significance (October 24, 25)

How Rishi Sunak won the Conservative Party leadership contest — part 1 (October 20, 21, 25)

How Rishi Sunak won the Conservative Party leadership contest — part 2 (October 21, 26, 27)

How Rishi Sunak won the Conservative Party leadership contest — part 3 (October 22-24, 27, 28)

On Thursday morning, The Telegraph posted a Planet Normal podcast in which Lord Frost said he could see Brexit being reversed:

In the wide-ranging discussion, Lord Frost also said that he could see a future where Brexit is reversed. 

“Brexit was about giving us the power to do things ourselves and to give responsibility back to British ministers, British governments. And they’ve shown that many of them are not up to the job in the last year or two.”

“I can easily see a situation where Keir Starmer gets in. We drift back closer into the single market and go back into the Customs Union. And then everyone says why are we in these things where we don’t get a say in them? Wouldn’t it be better to be a member? So I can easily see how it could happen. And the way you stop it happening is to prove, while we have the levers of power, that we can do things differently and better. And at the moment we’re not making a very good job of that, unfortunately.”

Little did Truss know that, the day before, she had stood at the despatch box for her last PMQs:

She resigned early on Thursday afternoon. Thankfully, she didn’t cry, unlike Theresa May, who broke down at the podium (Guido has the video):

Sterling began surging the second Truss finished her announcement:

In less than 24 hours, the Conservative Party website deleted her presence from their home page (Guido has the before and after screenshots):

It was a sad ending to a sad episode of British parliamentary history.

Next week, I will look at who, besides Truss herself, was also responsible for it.

Truss is currently spending time in her own constituency and has not yet appeared on the backbenches, an alien place for someone who had been a minister of state for most of her career.

My most recent post on Liz Truss examined her first two weeks in office as Conservative Party leader and Prime Minister, from September 6th through the 16th.

Things had started out so well. Ironically, Jeremy Hunt, who is now Chancellor, told ITV’s political editor Robert Peston on September 7 that Truss would be ‘formidable’. An amazing endorsement from someone who was her natural ally:

Hmm. Did he know anything at that point? We’ll probably never know.

On September 20, The Sun‘s political editor Harry Cole was delighted to announce his and James Heale’s book on Truss, Out of the Blue, which later had to have hastily written chapters added to it:

Yes, it is still coming out by Christmas — November 24, to be precise:

King Charles and COP27

Liz saw King Charles on Sunday, September 18, the day before the Queen’s funeral. It was not their usual day to meet, but the Royal Family went into private mourning until the end of September:

On Saturday, October 1, The Times reported that Liz had asked the King not to attend COP27, which ran between November 6 and 18, despite an invitation from the organisers.

This was a good move, in my opinion, as climate change, or whatever it’s being called this week, has turned highly political.

The article said (emphases mine):

The King, a passionate environmental campaigner, has abandoned plans to attend next month’s Cop27 climate change summit after Liz Truss told him to stay away.

He had intended to deliver a speech at the meeting of world leaders in Egypt.

Had she remained PM, Liz would not have attended, either:

Truss, who is also unlikely to attend the Sharm el-Sheikh gathering, objected to the King’s plans during a personal audience at Buckingham Palace last month.

There were no hard feelings between the Palace and No. 10:

… a Downing Street source claimed the audience had been cordial and there had “not been a row”.

No doubt he was expecting it:

A senior royal source said: “It is no mystery that the King was invited to go there. He had to think very carefully about what steps to take for his first overseas tour, and he is not going to be attending Cop.”

They said the decision was made on the government’s advice and was “entirely in the spirit of being ever-mindful as King that he acts on government advice”.

In the end, the King held a reception at Buckingham Palace for world leaders before they flew to the summit. In light of that, this was rather interesting:

Charles is still determined to make his presence felt there, and how he will do that is “under active discussion”. A senior royal source said: “Just because he is not in physical attendance, that doesn’t mean His Majesty won’t find other ways to support it.”

A source who knows Charles said he would be “personally disappointed” to miss it and was “all lined up to go”, with several engagements planned around his Sustainable Markets Initiative (SMI) which aims to persuade businesses to invest in environmentally friendly initiatives.

Public v parliamentary opinion

In late September, a poll showed that Truss was ahead of Labour’s Keir Starmer in Red Wall seats, boosting the Conservatives by eight points:

Admittedly, that was before Kwasi Kwarteng’s fiscal event, or mini-budget, of Friday, September 23.

That said, I will go out on a limb and say that most conservative voters thought that Kwarteng’s — Truss’s — plan was the right one. My better half and I thought it was refreshingly libertarian.

However, Conservative MPs vehemently disagreed with the public and started writing in to Sir Graham Brady, the chairman of the 1922 Committee, the all-powerful group that Margaret Thatcher dubbed ‘the men in grey suits’.

On September 26, the Northern Echo reported:

A former Tory minister MP has told Sky News the new Prime Minister is “f*****” and the party are already looking to bring her down following Friday’s mini-budget.

The MP said: “They are already putting letters in as they think she will crash the economy. The tax cuts don’t matter as all noise anyway – mainly reversing back to the status quo this year …

Another Tory MP told the broadcaster that Friday’s announcement – which included reversing a 1.25% hike in National Insurance – had been a “s***show”.

Note that MPs were siding with the Bank of England. Very establishmentarian of them:

“The issue is government fiscal policy is opposite to Bank of England monetary policy – so they are fighting each other. What Kwasi [Kwarteng] gives, the Bank takes away.”

The mood among Conservative ‘wets’, to borrow Thatcher’s name for such weaklings, only escalated.

At Liz’s one — and only — appearance before the 1922 Committee on Thursday, October 13, Robert Halfon, a wet, told Truss she had ‘trashed the past ten years’.

The Times had the story:

Liz Truss was accused by a senior MP of trashing “the last ten years” of Conservative government as her party turned on its new leader over the mini-budget.

Robert Halfon, a former minister who chairs the education select committee, unleashed a furious attack on her financial measures, saying they disproportionately benefited the wealthy and meant she had abandoned “workers’ conservatism”.

Anything but, however:

According to an MP present, Halfon told Truss in a meeting of the 1922 Committee of backbenchers — her first as prime minister — that “in the last ten years we had the living wage, a focus on apprenticeships and skills”, contrasting that with “bankers’ bonuses, benefits cuts and now cuts to affordable housing targets”.

His intervention came after Truss tried to assuage Conservative MPs by saying she had “shielded families and businesses from bills of up to £6,000 this winter and for the winter ahead, while Labour has no plan beyond the next six months”.

The meeting did not go well. Halfon seemed to voice other MPs’ concerns:

a Tory MP who has been in the Commons for more than a decade said: “It was the worst 1922 I’ve ever been to.” They added: “With each tough question she looked like she’d had the wind knocked out of herthe 31st of October could finish her off on the basis of the reception she got in that room.”

Halloween — who schedules these things? — was supposed to be the day Kwasi was going to set out more detail behind his fiscal event. Liz’s friend and neighbour in Greenwich was on hand to support her:

Thérèse Coffey, the deputy prime minister, told reporters outside the 1922 meeting that the chancellor would meet MPs before presenting his medium-term plan on Halloween, stressing that engagement was key.

In the event, Truss had to sack Kwarteng and appoint (ahem) the aforementioned Jeremy Hunt as Chancellor. He delivered his shocking budget on Thursday, November 17, to Prime Minister Rishi Sunak’s approval. Sunak nodded several times during the presentation.

Returning to The Times‘s article of October 13, what other wets said presaged the future:

Even those who back the prime minister expect some sort of climbdown. One MP said: “She will have to unwind everything fiscal in the statement. They have to backtrack. There is no alternative. They’ve done it on the 45p and they’ll have to do it on the rest.

“Then if we are still 20 points behind in the polls we will have to change leader. We are cold-blooded like that.”

Another admitted there was “definitely still a big split between her and the Rishi [Sunak] side of the party”. Asked if Truss would have to perform another U-turn, they said: “Ultimately, I suppose it depends if she’s leveraged into that position by our own party, but it’s all by those with 20,000 majorities.”

Hmm … Hmm.

However, one Rishi Sunak supporter — Esther McVey — is deeply unhappy over his Chancellor’s budget:

On Tuesday, November 22, McVey rightly tore the budget apart in ConservativeHome, saying that Hunt’s tax rises are ‘socialist measures’ that are ‘punishing Conservative voters’:

… It wasn’t helped by the Chancellor’s statement being such a pendulum swing from the Liz Truss / Kwasi Kwarteng mini budget. People went from thinking they were getting their taxes cut to seeing them hiked.

The Autumn Statement was clearly an over-correction to that mini-budget. Going from one extreme to the other is hardly reassuring for people. A middle ground was needed: an acceptance of Conservative principles, with a costed plan and the accompanying narrative to reassure the markets.

Instead, Hunt delivered his statement with a doom and gloom that would have appropriate were the country on the brink of financial collapse. However, despite some serious challenges, things are not so dire that we had to have such excessive medicine.

For instance, the ten-year gilt yield – the interest rate the Government must pay on a new decade-long loan – was 3.14 per cent, whereas, even before the notorious mini-Budget in late September, that same yield was much higher at 3.49 per cent.

Britain is no more indebted than other comparable countries. Our national debt (albeit too high) stands at 97 per cent of GDP,  whereas France, Canada and the US stands at 115 per cent, 116 per cent and 132 per cent respectively. Across the G7, only Germany has lower levels of government debt than the UK.

So when I stood up in the House of Commons at PMQs the day before the budget and said –

Given that we have the highest burden of taxation in living memory, it is clear that the Government’s financial difficulties are caused by overspending and not due to undertakings. Does the Deputy Prime Minster therefore agree, if the government has got enough money to proceed with HS2 at any cost then it has sufficient money not to increase taxes, if however, it has so little money it has to increase taxes (which is the last thing for a conservative government to do) then it doesn’t have sufficient money for HS2 [High Speed Rail 2]?

So can I gently urge the Deputy Prime Minister not to ask Conservative MPs to support any tax rises, unless and until, this unnecessary vanity project is scrapped, because I for one won’t support them.

– it was to remind everyone there are better choices for our Conservative government than hiking up taxes.

In fact, given that unprecedented tax burden, any self-respecting Conservative would instinctively know that the answer is to spend less. Dropping HS2  – an out-of-date white elephant, costing north of £150 billion which (as Andrew Gilligan revealed on my show on GB News) the Ministers themselves know will deliver less economic benefit than the cost of it – would have been an ideal place to start.  That would certainly have been more desirable than increasing taxes on hard-working families who are already feeling the severe pain of higher energy prices and increased mortgage payments.

If a Conservative government with a sizeable majority – in a time of financial pressure – won’t cut public expenditure to start living within our means, then when on earth will that ever happen?

Parliament is debating Jeremy Hunt’s budget this week. In Monday’s proceedings, a number of Conservative MPs spoke out against it.

Liz’s U-turn on windfall tax

On October 12, two days before she sacked her friend and neighbour Kwasi Kwarteng, she appeared to do a U-turn on ‘no new taxes’ by allowing an announcement for a new levy on green energy firms.

Her ally, then-Business (BEIS) Secretary Jacob Rees-Mogg, defended the move and claimed it was not a windfall tax:

Guido Fawkes reported (emphases his):

The government has announced a new plan to impose a multi-billion pound levy on green energy firms to fund support to consumers. Renewable and nuclear electricity generators in England and Wales will now have their revenues capped after windfall tax-hating Liz Truss seemingly bowed to pressure to limit profits. The announcement came from BEIS last night, which is calling the new policy a “Cost-Plus-Revenue Limit” and spinning that it isn’t in any way a windfall tax “as it will be applied to ‘excess revenues’ as opposed to profits”. If it walks like a tax, swims like a tax and quacks like a tax…

The latest backtracking on free market values by the government comes just 41 days after Liz Truss told party members at the London husting that they could read her lips, and there would be no new taxes under her leadership …

On Today this morning, Rees-Mogg tried performing a Jedi mind trick, saying “this is not a windfall tax…this is rationalising the market”…

Despite the government’s denial that the new revenue limit is a tax, the boss of RWE – the third biggest renewable power generator in Britain – has told The Times the move “is a de facto ‘windfall tax’ on low-carbon generators that, if not designed and implemented correctly, could have severe negative consequences for investment in the renewable and wider energy market and so for the energy transition.”

Guido warned that Labour’s support for the new levy is not a good sign:

Ed Miliband welcoming the policy with open arms should give the government sufficient pause for thought before it buys its own spin…

The mystery of Liz signing UK up to EU’s PESCO

Early in October, Liz did a strange thing, considering she is a staunch Brexit supporter.

She attended the first ever meeting of the European Political Community in Prague. The European Political Community is Emmanuel Macron’s brainchild.

This group is made up of EU member countries, yet, somehow Liz got an invitation. No one knows for certain.

However, she went.

She met with Macron on Thursday, October 6, in an effort to get the Channel dinghy crossing issue resolved.

GB News reported:

Liz Truss hailed Emmanuel Macron as a “friend” on Thursday, as the two countries signalled that a new agreement could be close to tackle small-boat crossings in the Channel.

The pair met at the first summit of the European Political Community in Prague, a gathering pushed for by the French president.

There, the pair said they looked forward to “an ambitious package of measures this autumn” to address issue of migration across the Channel.

And in a sign that Ms Truss hopes to improve relations with Mr Macron, she had no hesitation in labelling him a “friend”, just weeks after refusing to do so …

Mr Macron later suggested it was a “problem” if Britain could not call itself a friend of France.

But Prime Minister Ms Truss adopted a different tone ahead of a meeting with Mr Macron in Prague on Thursday.

She told broadcasters: “I work very, very closely with President Macron and the French government and what we’re talking about is how the UK and France can work more closely together to build more nuclear power stations and to make sure that both countries have energy security in the future.

“We’re both very clear the foe is Vladimir Putin, who has through his appalling war in Ukraine threatened freedom and democracy in Europe and pushed up energy prices which we’re now all having to deal with.”

Asked if he was then a friend, Ms Truss said: “He is a friend.”

The bi-lateral meeting between the two leaders, which took place towards the end of the day, appeared to signal some progress on the issues of migration and energy, both areas Ms Truss had raised as priorities ahead of the summit.

“Thank you for being here,” Mr Macron told the PM when they met.

It also emerged that the two countries have agreed to hold a joint summit next year to “take forward a renewed bilateral agenda”, in a further sign of the desire for warmer relations between the two countries.

On migration, a joint statement said the leaders “agreed to deepen cooperation on illegal migration within the bounds of international law, to tackle criminal groups trafficking people across Europe, ending in dangerous journeys across the Channel”.

But the big, and secret, news was that Liz had signed the UK up to the EU’s PESCO — Permanent Structured Co-operation — which is a military initiative.

Nigel Farage announced the move on his GB News show as soon as he had heard.

On Friday, October 7, The Express said that the move could affect British armed forces by dragging them into an EU army:

The Prime Minister has been warned not to allow the UK to be dragged into an EU Army by accident after she signed a military deal this week at Emmanuel Macron’s European Political Community (EPC) summit in Prague. The decision to go into part of the PESCO has alarmed some Brexiteers who fear it could undermine the UK’s sovereignty.

Former defence minister Sir Gerald Howarth, a leading Brexiteer has led the campaign to resist joining PESCO for many years.

He said: “This is very serious and we must be very careful. The issue around PESCO is that the structures are permanent.

“We must not sign up to anything which undermines our sovereignty and where we do not have a veto.

“Second, we must not do anything that undermines NATO. If we have learnt anything over the last few months is that we need NATO for the defence of western values and Europe against our enemies which at the moment is clearly Russia.”

Even if this has to do with Ukraine, and enables us to move troops and military equipment more easily, it still raises questions:

At the EPC meeting on Thursday, the EU member states voted unanimously to allow the UK to join the the mobility project that would allow the UK to move troops and military equipment more quickly.

The UK Government decided to enter the strand in case Britain is called upon as a NATO ally to defend the Baltic states from a Russian invasion.

However, staunch Brexiteer Mark Francois MP was relaxed about it:

One senior Brexiteer, former Armed Forces Minister, Mark Francois, who now chairs the powerful group of Tory Brexiteers the European Research Group (ERG), said he believes that the move was the right one.

He said: “As we are outside the EU, we can opt in to individual PESCO projects if they have merit and looking at how we could speed up reinforcing the Baltic States from the UK, across internal EU borders, may well have military advantages.

“However, it is NATO that remains the bedrock of our security, especially in deterring further Russian adventurism and we should never forget that.”

On October 9, David Kurten, a former London Assembly member and founder of the Heritage Party, said that signing the UK up to PESCO was a betrayal of Brexit:

One month ago, the aforementioned Sir George Howarth appeared on Farage to say that we still do not know what part of PESCO Liz signed us up to. He was clearly concerned, saying that the implications could be important, especially as none of the countries involved has a veto. The EU calls all the shots:

Today, one month on, we are none the wiser about our involvement in PESCO.

Someone must know what’s going on. In fact, a lot of people probably do know.

Liz’s final week

All of Liz’s opponents, whether on the right or the left, told us that Liz and Kwasi, joined at the hip politically, had to go.

Project Fear started as soon as Kwasi delivered his mini-budget on September 23.

On September 27, Bloomberg told us that UK markets had lost $500 billion in combined value since Liz Truss became PM. Really?

‘Investor confidence’ means international markets, ergo part of the Establishment.

Also at that time, former Conservative Chancellor George Osborne, who served under David Cameron, stuck the boot in.

On September 29, a comment from an UnHerd reader appeared in response to one of their articles, beginning with ‘Is this the end for Liz Truss?’:

https://image.vuukle.com/cd72018a-5f0a-4709-9803-e23f8e87646b-764e1fe1-a6f9-4692-939c-102335eb4ec9

Osborne features heavily in it. The reader quotes him saying, ‘The markets are punishing Liz Truss for failing to balance her budget’.

The UnHerd reader says:

Right.

Of all people, George Osborne knows full well that is not what is happening. We can be sure he knows this — and is therefore engaging in a bout of very useful political lying — because Mr Osborne also dropped higher rate taxes [the 50% rate], on a backdrop of media squealing … and yet the tax receipts after making those cuts … went up.

So Mr Osborne is a classic shill of the modern era …

As to whether Liz would have to go, the reader supplies the answer at the top of his message:

well, if the globalists and left-leaning power brokers who’ve comfortably controlled global affairs for the past few decades still retain control, then yesit is the end for Truss

It doesn’t matter if that thing is related to tax, or to immigration, or to frackingthat’s not the point. The chattering and Davos classes are used to being in charge and controlling the direction of travel no matter who we elect.

Speaking of such people, on Wednesday, October 12, King Charles greeted Liz with, ‘Dear, oh dear’, while the press were still there to record it for posterity:

What did he know and when?

The beginning of the end came two days later on Friday, October 14, when Liz sacked Kwasi and appointed (ahem) Jeremy Hunt as Chancellor. This was the shortest and most painful press conference — she only took four questions — in living memory. She looked like a rabbit in the headlamps or a hostage being forced at gunpoint to read out a message:

As soon as she announced it, we knew Hunt was, at that point, the de facto Prime Minister.

Hours later, The Telegraph reported:

Mr Hunt, a former foreign secretary, took the helm at the Treasury following the sacking of Kwasi Kwarteng over the mini-Budget fiasco. Ms Truss turned to him even though the pair have strongly disagreed on economic policy.

Mr Hunt, also an ex-health secretary, endorsed Rishi Sunak for the Tory leadership after being voted out of the race in July, saying: “This is the wrong time for populist crowd-pleasing and the right time for honesty.”

He will hold huge power over a weakened Prime Minister, raising the likelihood that much of her growth plan will now be axed. Allies said that he would act as her “chief executive”.

Mr Hunt ran for the Conservative leadership on a platform of slashing corporation tax to 15 per cent to boost growth but also opposed cuts to personal levies such National Insurance and income tax, with which Ms Truss still intends to press ahead.

His appointment was announced moments before the Prime Minister unveiled her U-turn on corporation tax at a press conference. She ditched what had been a core leadership pledge, meaning the rate companies pay on their profits will go up from 19 to 25 per cent in April. It means she has reverted to the plan put in place by Mr Sunak when he was chancellor.

Quelle surprise!

Conservative Party members had voted Liz Truss in largely on her economic policy.

The elites took out her Chancellor. Soon afterwards, they came for her in the form of Conservative MPs and the 1922 Committee. It was a grand game of political chess, not seen since Margaret Thatcher was removed from office in 1990.

To be continued on Friday.

While this is a change to the previous schedule of analysing Liz Truss’s premiership, more about which next week, there are references below as to why hers and Kwasi Kwarteng’s plan was the right one for the UK.

Chancellor Jeremy Hunt delivered his Autumn Statement — a Labourite Conservative budget — on Thursday, November 17, 2022.

Compared with Kwasi Kwarteng’s fiscal event of September 23, this will be a disaster for most middle class Britons.

It was clear that Hunt designed this budget to placate the all-hallowed — for whatever reason — OBR (Office for Budget Responsibility) and the markets. Stability is their watchword. Growth, regardless of what Hunt said yesterday, plays little part in our economy for the foreseeable future.

Unlike Kwarteng’s, which did focus on growth, Hunt’s statement had little to no consideration of the British taxpayer in a cost of living crisis.

What Hunt said

Before going into Hunt’s address, Guido Fawkes has a brief summary and the full detail from the Treasury, a 70-page document.

Below are excerpts from Hunt’s Autumn Statement to the House of Commons (emphases mine):

… today we deliver a plan to tackle the cost of living crisis and rebuild our economy. Our priorities are stability, growth and public services. We also protect the vulnerable, because to be British is to be compassionate and this is a compassionate Conservative Government.

Remember when then-Chancellor Rishi Sunak told us we did not have to worry about the cost of borrowing and borrowing itself during the pandemic? Well, now we have to worry:

Most countries are still dealing with the fallout from a once-in-a-century pandemic. The furlough scheme, the vaccine roll-out and the response of the NHS did our country proud, but they all have to be paid for.

Hunt paid homage to the Bank of England and had a poke at Kwarteng for not doing so:

So the Bank of England, which has done an outstanding job since its independence, now has my wholehearted support in its mission to defeat inflation and I today confirm we will not change its remit. But we need fiscal and monetary policy to work together, and that means the Government and the Bank working in lockstep.

He delivered a deeper attack on Kwarteng:

I understand the motivation of my predecessor’s mini-Budget and he was correct to identify growth as a priority, but unfunded tax cuts are as risky as unfunded spending, which is why we reversed the planned measures quickly. As a result, Government borrowing has fallen, the pound has strengthened and the OBR says today that the lower interest rates generated by the Government’s actions are already benefiting our economy and public finances. But credibility cannot be taken for granted and yesterday’s inflation figures show we must continue a relentless fight to bring it down, including a rock solid commitment to rebuild our public finances.

He bowed before the all-powerful OBR, whose forecasts have not been terribly accurate over the past few years. Let us see if these come true in the coming months:

Richard Hughes and his team at the OBR today lay out starkly the impact of global headwinds on the UK economy, and I am enormously grateful to him and his team for their thorough work. The OBR forecasts the UK’s inflation rate to be 9.1% this year and 7.4% next year. It confirms that our actions today help inflation to fall sharply from the middle of next year. It also judges that the UK, like other countries, is now in recession. Overall this year, the economy is still forecast to grow by 4.2%. GDP then falls in 2023 by 1.4%, before rising by 1.3%, 2.6% and 2.7% in the following three years. The OBR says higher energy prices explain the majority of the downward revision in cumulative growth since March. It also expects a rise in unemployment from 3.6% today to 4.9% in 2024, before falling to 4.1%.

This is Hunt’s strategy, with the blessing of the OBR and borrowing Sunak’s morality from the August leadership campaign about leaving debts to the next generation:

I also confirm two new fiscal rules. The first is that underlying debt must fall as a percentage of GDP by the fifth year of a rolling five-year period. The second is that public sector borrowing over the same period must be below 3% of GDP. The plan I am announcing today meets both rules.

Today’s statement delivers a consolidation of £55 billion, and means inflation and interest rates end up significantly lower. We achieve this in a balanced way. In the short term, as growth slows and unemployment rises, we will use fiscal policy to support the economy. The OBR confirms that, because of our plans, the recession is shallower and inflation is reduced. Unemployment is also lower, with about 70,000 jobs saved as a result of our decisions today. Then, once growth returns, we increase the pace of consolidation to get debt falling. This further reduces the pressure on the Bank to raise interest rates, because as Conservatives we do not leave our debts to the next generation.

So this is a balanced path to stability, tackling inflation to reduce the cost of living and protect pensioner savings, while supporting the economy on a path to growth. But it means taking difficult decisions.

Hunt then discussed the fiscal drag elements of the budget. Fiscal drag means drawing the unsuspecting into paying new and more tax:

I start with personal taxes. Asking more from those who have more means that the first difficult decision I take on tax is to reduce the threshold at which the 45p rate becomes payable from £150,000 to £125,140. Those earning £150,000 or more will pay just over £1,200 more in tax every year. We are also taking difficult decisions on tax-free allowances. I am maintaining at current levels the income tax personal allowance, higher rate threshold, main national insurance thresholds and the inheritance tax thresholds for a further two years, taking us to April 2028. Even after that, we will still have the most generous set of tax-free allowances of any G7 country.

I was amazed he could talk about 2028 with a straight face. By then, we will probably have a Labour government. Oh well, he’s done their work for them.

Continuing on tax rises, he said:

I am also reforming allowances on unearned income. The dividend allowance will be cut from £2,000 to £1,000 next year, and then to £500 from April 2024. The annual exempt amount for capital gains tax will be cut from £12,300 to £6,000 next year, and then £3,000 from April 2024. Those changes still leave us with more generous allowances than countries such as Germany, Ireland, France, and Canada.

Because the OBR forecasts that half of all new vehicles will be electric by 2025, to make our motoring tax system fairer, I have decided that from then electric vehicles will no longer be exempt from vehicle excise duty. Company car tax rates will remain lower for electric vehicles, and I have listened to industry bodies and will limit rate increases to 1 percentage point a year for three years from 2025.

At least he kept one thing from Kwarteng’s statement:

The OBR expects housing activity to slow over the next two years, so the stamp duty cuts announced in the mini-Budget will remain in place but only until 31 March 2025. After that, I will sunset the measure, creating an incentive to support the housing market, and the jobs associated with it, by boosting transaction during the period when the economy most needs it.

He won’t even be Chancellor then.

Moving on to businesses:

I now turn to business taxes. Although I have decided to freeze the employers national insurance contributions threshold until April 2028, we will retain the employment allowance at its new higher level of £5,000. That means that 40% of all businesses will pay no NICs at all. The VAT threshold is already more than twice as high as the EU and OECD averages. I will maintain it at that level until March 2026.

Then came the windfall tax:

Can I just say that any such tax should be temporary, not deter investment and recognise the cyclical nature of energy businesses? So, taking account of that, I have decided that from 1 January until March 2028 we will increase the energy profits levy from 25% to 35%. The structure of our energy market also creates windfall profits for low-carbon electricity generation, so we have decided to introduce, from 1 January, a new, temporary 45% levy on electricity generators. Together, those measures will raise £14 billion next year.

Business rates have been a thorn in the side of those enterprises on our high streets. Here, it would seem, Hunt offered some relief:

Finally, I turn to business rates. It is an important principle that bills should accurately reflect market values, so we will proceed with the revaluation of business properties from April 2023, but I will soften the blow on businesses with a nearly £14 billion tax cut over the next five years. Nearly two thirds of properties will not pay a penny more next year and thousands of pubs, restaurants and small high street shops will benefit. That will include a new Government-funded transitional relief scheme, as called for by the CBI, the British Retail Consortium, the Federation of Small Businesses and others, benefiting around 700,000 businesses.

Then he turned to people on benefits, proving that Sunak’s furlough scheme during the pandemic was more than adequate:

… I am proud to live in a country with one of the most comprehensive safety nets anywhere in the world. But I am also concerned that we have seen a sharp increase in economically inactive working-age adults of about 630,000 people since the start of the pandemic. Employment levels have yet to return to pre-pandemic levels, which is bad for businesses who cannot fill vacancies and bad for people missing out on the opportunity to do well for themselves and their families, so the Prime Minister has asked the Work and Pensions Secretary to do a thorough review of issues holding back workforce participation, to conclude early in the new year.

Alongside that, I am also committed to helping people already in work to raise their incomes, progress in work and become financially independent. So we will ask over 600,000 more people on universal credit to meet with a work coach so that they can get the support that they need to increase their hours or earnings. I have also decided to move back the managed transition of people from employment and support allowance on to universal credit to 2028, and will invest an extra £280 million in the DWP to crack down on benefit fraud and error over the next two years. The Government’s review of the state pension age will be published in early 2023.

He then discussed foreign spending:

… I salute the citizens of another country right on the frontline … the brave people of Ukraine. The United Kingdom has given them military support worth £2.3 billion since the start of Putin’s invasion, the second highest contribution in the world after the United States, which demonstrates that our commitment to democracy and open societies remains steadfast. In that context, the Prime Minister and I both recognise the need to increase defence spending. But before we make that commitment, it is necessary to revise and update the integrated review, written as it was before the Ukraine invasion. I have asked for that vital work to be completed ahead of the next Budget and today I confirm that we will continue to maintain the defence budget at at least 2% of GDP to be consistent with our NATO commitment.

I was pleased to hear that overseas aid will stay at 0.5%:

Another important international commitment is to overseas aid. The OBR’s forecasts show a significant shock to public finances, so it will not be possible to return to the 0.7% target until the fiscal situation allows. We remain fully committed to that target, and the plans I have set out today assume that official development assistance spending will remain around 0.5% for the forecast period. As a percentage of GNI, we were the third highest donor in the G7 last year, and I am proud that our aid commitment has saved thousands of lives around the world.

Net Zero is still going ahead:

I also confirm that, despite the economic pressures, we remain fully committed to the historic Glasgow climate pact agreed at COP26, including a 68% reduction in our own emissions by 2030.

He discussed schools, beginning with those in England:

we have risen nine places in the global league tables for maths and reading in the last seven years.

… as Chancellor I want to know the answer to one simple question: will every young person leave the education system with the skills they would get in Japan, Germany or Switzerland? So, I have appointed Sir Michael Barber to advise me and my right hon. Friend the Education Secretary on the implementation of our skills reform programme.

Some have suggested putting VAT on independent school fees as a way of increasing core funding for schools, which would raise about £1.7 billion. But according to certain estimates, that would result in up to 90,000 children from the independent sector switching to state schools, giving with one hand only to take away with another.

So instead of being ideological, I am going to be practical: because we want school standards to continue to rise for every single child, we are going to do more than protect the schools budget—we are going to increase it. I can announce today that next year and the year after, we will invest an extra £2.3 billion per annum in our schools.

He has asked a former Labour MP, Patricia Hewitt, to help him reform the NHS. Oh, my days:

I have asked the former Health Secretary and chair of the Norfolk and Waveney integrated care system, Patricia Hewitt, to help me and the Health Secretary to achieve that by advising us on how to make sure that the new integrated care boards, the local NHS bodies, operate efficiently and with appropriate autonomy and accountability. I have also had discussions with NHS England about the inflationary pressures on their budgets.

More money will be pumped into the system:

With £3.3 billion for the NHS and £4.7 billion for social care, there is a record £8 billion package for our health and care system. That is a Conservative Government putting the NHS first.

Barnett consequentials, which come from the hard-pressed English taxpayer, will also increase:

The NHS and schools in Scotland, Wales and Northern Ireland face equivalent pressures, so the Barnett consequentials of today’s decisions mean an extra £1.5 billion for the Scottish Government, £1.2 billion for the Welsh Government, and £650 million for the Northern Ireland Executive. That means more resources for the schools and hospitals in our devolved nations next year, the year after and every year thereafter.

A new energy strategy will be forthcoming from the Business Secretary.

These are Hunt’s infrastructure commitments:

… today I can announce that I am not cutting a penny from our capital budgets in the next two years, and I am maintaining them at that level in cash terms for the following three years. That means that although we are not growing our capital budget as planned, it will still increase from £63 billion four years ago to £114 billion next year and £115 billion the year after, and will remain at that level—more than double what it was under the last Labour Government.

Smart countries build on their long-term commitments rather than discarding them, so today I confirm that because of this decision, alongside Sizewell C, we will deliver the core Northern Powerhouse Rail, HS2 to Manchester, East West Rail, the new hospitals programme and gigabit broadband roll-out. All these and more will be funded as promised, with over £600 billion of investment over the next five years to connect our country and grow our economy.

Our national Conservative mission is to level up economic opportunity across the country. That, too, needs investment in infrastructure, so I will proceed with round 2 of the levelling-up fund, at least matching the £1.7 billion value of round 1. We will also drive growth across the UK by working with the Scottish Government on the feasibility study for the A75, supporting the advanced technology research centre in Wales and funding a trade and investment event in Northern Ireland next year.

He is bringing devolution to England in the form of mayoralties:

Our brilliant [Conservative] Mayors such as Andy Street and Ben Houchen have shown the power of civic entrepreneurship. We need more of this inspirational local leadership, so today I can announce a new devolution deal that will bring an elected Mayor to Suffolk, and deals to bring Mayors to Cornwall, Norfolk and an area in the north-east to follow shortly. We are also making progress towards trailblazer devolution deals with the Greater Manchester Combined Authority and the West Midlands Combined Authority, and soon over half of England will be covered by devolution deals. Taken together, that £600 billion investment in our future growth represents the largest investment in public works for 40 years, so our children and grandchildren can be confident that this Conservative Government are investing in their future.

Hunt is altering the Truss-Kwarteng investment zones to be more in line with Michael Gove’s aspirations for levelling up:

I will also change our approach to investment zones, which will now focus on leveraging our research strengths by being centred on universities in left-behind areas, to help to build clusters for our new growth industries. My right hon. Friend the Levelling Up Secretary will work with Mayors, devolved Administrations and local partners to achieve this, with the first decisions announced ahead of the spring Budget.

The Truss-Kwarteng energy support plan remains in place until the end of March 2023:

I pay tribute to my predecessor, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng), and to the former Prime Minister, my right hon. Friend the Member for South West Norfolk (Elizabeth Truss), for their leadership in this area. This winter, we will stick with their plan to spend £55 billion to help households and businesses with their energy bills—one of the largest support plans in Europe. From April, we will continue the energy price guarantee for a further 12 months at a higher level of £3,000 per year for the average household. With prices forecast to remain elevated throughout next year, this will mean an average of £500 of support for every household in the country.

There is more help for the most vulnerable:

At the same time, for the most vulnerable, we will introduce additional cost of living payments next year of £900 to households on means-tested benefits, £300 to pensioner households and £150 for individuals on disability benefit. We will also provide an additional £1 billion of funding to enable a further 12-month extension to the household support fund, helping local authorities to assist those who might otherwise fall through the cracks. For those households that use alternative fuels such as heating oil and liquefied petroleum gas to heat their homes, I am today doubling the support from £100 to £200, which will be delivered as soon as possible this winter. Before the end of this year, we will also bring forward a new targeted approach to support businesses from next April.

But I want to go further to support the people most exposed to high inflation. Around 4 million families live in the social rented sector—almost one fifth of households in England. Their rents are set at 1% above the September inflation rate, which means that on current plans they are set to see rent hikes next year of up to 11%. For many, that would just be unaffordable, so today I can announce that this Government will cap the increase in social rents at a maximum of 7% in 2023-24. Compared with current plans, that is a saving for the average tenant of £200 next year.

Labour started a commotion at this point. Hunt then announced a rise in the minimum wage:

This Government introduced—[Interruption.] I thought they cared about the most vulnerable! This Government introduced the national living wage, which has been a giant step in eliminating low pay, so today I am accepting the recommendation of the Low Pay Commission to increase it next year by 9.7%. This means that, from April 2023, the hourly rate will be £10.42, which represents an annual pay rise worth over £1,600 to a full-time worker. It is expected to benefit over 2 million of the lowest-paid workers in our country, and it keeps us on track for our target to reach two thirds of median earnings by 2024. It is the largest increase in the UK’s national living wage ever.

Benefits will increase by the rate of inflation:

today I commit to uprating such benefits by inflation, with an increase of 10.1%. That is an expensive commitment, costing £11 billion, but it means that 10 million working-age families will see a much-needed increase next year, which speaks to our priorities as a Government and our priorities as a nation. On average, a family on universal credit will benefit next year by around £600. To increase the number of households that can benefit from this decision, I will also exceptionally increase the benefit cap by inflation next year.

Finally, I have talked a lot about the British values of compassion, hard work, dignity and fairness, but there is no more British value than our commitment to protect and honour those who built the country we live in, so to support the poorest pensioners I have decided to increase pension credit by 10.1%, which is worth up to £1,470 for a couple and £960 for a single pensioner in our most vulnerable households, but the cost of living crisis is harming not just our poorest pensioners but all pensioners.

The triple-lock stays:

Because we have taken difficult decisions elsewhere today, I can also announce that we will fulfil our pledge to the country to protect the pension triple lock. In April, the state pension will increase in line with inflation, an £870 increase, which represents the biggest ever increase in the state pension. To the millions of pensioners who will benefit from this measure, I say: “Now and always, this Government are on your side.”

Hunt did not receive a jubilant reception from Conservative MPs, some of whom had concerns.

Dr Liam Fox asked about quantitative easing and interest rates:

I congratulate my right hon. Friend on a balanced and skilful statement prioritising fiscal stability. He will be aware that some of us believe that the Bank of England maintained monetary conditions that were too loose for too long, but that it would also be a mistake to maintain monetary conditions that are too tight for too long. Can he therefore confirm that the anti-inflationary measures that he has taken today will mean that the pressure to raise interest rates will be minimised, and that there is a much greater chance that they will fall earlier than would otherwise have been the case?

Hunt replied:

My right hon. Friend is absolutely right to focus on this issue, because every 1% increase in interest rates is about £850 more on the average mortgage, so it is hugely important to families up and down the country. The OBR has said that the measures that we have taken today will mean that inflation is lower than it would otherwise have been. That means that the Bank of England is under less pressure to increase interest rates, which for reasons that he knows are such a worry for so many families.

Sir William Cash was concerned about the ever-increasing costs of the HS2 rail project:

My right hon. Friend argued for sound money and sound foundations. Would he be good enough to explain how it is that High Speed 2 will continue beyond Birmingham at a verifiable cost of at least £40 billion, when every independent report on HS2 condemns the project and confirms that phase 2 will make rail services to all west coast destinations north of Birmingham much worse? I ask him to make a clear commitment to keep this matter under review at all costs; it is in the national interest.

Hunt said:

My hon. Friend is right that the increases in the budget for HS2 are disappointing, but a strong economy needs to have consistency of purpose, and that means saying we will make sure that we are a better connected country. The lack of those connections is one of the fundamental reasons for the differences in wealth between north and south, which we are so committed to addressing. There is a bigger issue about the way that we do infrastructure projects: it takes too long, and the budgets therefore get out of control. We are just not very good at it, and we have to sort it out.

Theresa Villiers rightly asked how soon we could move to a lower-tax economy if the forecasts are wrong. For me, this was the question of the day:

I thank the Chancellor for the announcement on schools funding, which, as he knows, is something that I raised with him as being crucial. Can he also confirm that, if current forecasts about economic recovery and inflation prove to be overly pessimistic, we will move more quickly than he has announced today towards delivering a lower-tax economy?

Hunt was non-committal:

My right hon. Friend is an immensely experienced colleague. She is right to point out that there is always inaccuracy in any forecast, and there is always variation from fiscal event to fiscal event, so we keep all those decisions under review in the round. I think it is still important to have forecasts—that is better than not to have them—but we keep all those decisions under review.

Virginia Crosbie from Ynys Môn in Wales asked how soon the new nuclear programme would begin:

This Government’s commitment to Sizewell C and large-scale nuclear is welcome, and it was noted that Labour’s shadow Chancellor failed to mention nuclear. When will the launch of Great British Nuclear be announced, and will its scope include large-scale gigawatt nuclear at sites such as Wylfa in my constituency, as well as small modular reactors?

Hunt was encouraging:

There is no more formidable advocate for big nuclear investment on Ynys Môn than my hon. Friend. Indeed, when I went on a family holiday to Ynys Môn this summer, she tried to persuade me to visit the potential site of a nuclear power station with my children. I apologise that I did not take her up on the offer, but it shows her commitment. My right hon. Friend the Business Secretary will be making an announcement soon on things such as the launch of Great British Nuclear—I hope before Christmas, but if not just afterwards—because we want to crack on with our nuclear programme.

Richard Drax was concerned about the burden on the taxpayer, another excellent question:

I have huge sympathy for my right hon. Friend. We are facing severe financial challenges for the reasons he explained so well, but Members on both sides of the House are promising to spend billions and billions more pounds. I remind the House that it is the private sector, and hardworking people through their taxes, who pay for Government expenditure. Does my right hon. Friend agree that raising taxes on both risks stifling the growth and productivity that he and I both want, and that would counter the recession we are now in?

Hunt defended his budget:

My hon. Friend is right to make the case for a lightly taxed dynamic economy, and I would like to bring taxes down from their current level. We are faced with the necessity of doing something fast to restore sound money and bring inflation down from 11%, which is why we have made difficult decisions today. But yes, my hon. Friend is absolutely right: there is no future for this country unless we get back on the path to being a lower taxed economy.

Mark Pawsey asked about small businesses:

My constituents in Rugby and Bulkington will not enjoy the tough decisions that the Chancellor has had to make today, but they will understand the need for sound finances after the huge expenditure that the country has made on the pandemic and supporting people with their energy costs as a consequence of the war in Ukraine. They will also want to know that businesses will continue to invest to grow and to create jobs. Will he speak about the incentives that still exist for businesses to do exactly that?

Hunt pledged his support:

I am happy to do that. My hon. Friend is quite right to raise those issues. We are doing a lot of short-term things, including help with energy bills as well as business rates. As we move to a new business rates system, we are freezing the levels at which business rates can increase and introducing a 75% discount next year for retail, hospitality and leisure businesses. Fundamentally, as a Conservative Government, we know that we cannot flourish as an economy without flourishing small businesses, and we will back them to the hilt.

Greg Smith asked what Hunt was doing about reducing fuel duty:

I absolutely agree with my right hon. Friend when he talks about the inflationary pressures coming from the aftershocks of the pandemic and the war in Ukraine. We see that at the fuel pumps and, more significantly, our haulage and logistics sector sees it with the enormous level of taxation on diesel in particular driving inflation to get food and goods on to our shelves. As he prepares for the March Budget, will he look at the inflationary impact of fuel duty on top of the high cost of diesel and see whether we can reduce it?

Hunt said he was looking at the issue:

I assure my hon. Friend that I will absolutely do that. We have a little time, and I know that fuel duty is an important issue to him and many other colleagues.

March 2023 — fuel duty hike

Hunt’s answer to Greg Smith on the fuel duty hike sounded reassuring, but GB News’s economic editor Liam Halligan uncovered a planned fuel duty hike of 23% for March 2023 from the OBR forecast. It would be the first since 2011:

Here’s Liam Halligan talking about it:

Forbes noticed it, too, bringing the news to an even wider international audience:

https://image.vuukle.com/8d46442a-2514-45e7-9794-98dfc370ce1b-94c4922a-473b-4f2c-bf6c-332bb8ccac4e

Fiscal drag

The Times had an article on the upcoming fiscal drag following Hunt’s budget:

Disposable incomes, after adjusting for inflation, will fall by 4.3 per cent in 2022-23, which would be the largest fall since records began in the 1950s. It is set to be followed by the second largest fall — in 2023-24 — of 2.8 per cent.

… Despite the aspirations of Rishi Sunak to create a low-tax economy, Britain is on course for its biggest ever tax burden as hundreds of thousands of workers are dragged into higher income tax bands by the freezing of thresholds and allowances while businesses also face a jump in levies, including employment taxes.

The tax burden is set to rise to 37.5 per cent of GDP in the financial year ending 2025, reaching the highest level since records began shortly after the Second World War.

The level of taxation as a share of the national income will rise to 36.4 per cent of GDP this year and 37.4 per cent in the financial year ending 2024, breaking the previous record.

Recovery is not likely to begin until 2025, several months after the next general election. This is accurate only if Conservatives are still in power by then:

GDP is expected to rise by 4.2 per cent this year before falling by 1.4 per cent next year, only returning to pre-pandemic levels by the end of 2024. However, growth is expected to pick up to 2.6 per cent the following year and 2.7 per cent in 2026, following a recovery in real incomes, consumption and investment.

The Telegraph also had an article on fiscal drag:

Nearly a quarter of a million workers will be dragged into paying the 45p rate of income tax after Jeremy Hunt slashed the threshold at which it is charged.

The salary on which the additional rate is payable will be reduced from £150,000 to £125,140 effective next April, Chancellor Jeremy Hunt announced in the Autumn Statement, and frozen until 2028, forcing 232,000 workers into paying the top rate of tax for the first time and costing these quarter of a million taxpayers £620 on average, according to wealth manager Quilter.

The number of workers paying 45pc has more than doubled since the rate was first introduced in 2010 – rising from 236,000 to 629,000 today – as wage inflation has pushed more taxpayers into the highest income tax band.

Lowering the threshold will cost the 629,000 workers earning over £150,000 who are already impacted by the 45pc tax an additional £1,250 …

Just two months ago, then-Chancellor Kwasi Kwarteng promised that the top rate would be abolished altogether. But now the Government is hoping to earn £420m in 2023-24 by catching more taxpayers in the 45pc net, and almost double that – £855m – in 2027-28.

Neela Chauhan of accountancy firm UHY Hacker Young said the move was “a major attack” on higher earners.

She added: “It’s going to bring in people into the upper rate who feel that they are far from being rich.”

Tax firm RSM said that there are also unexpected consequences of slashing the additional-rate threshold and the Chancellor had opened the door to a new 67.5pc tax rate.

Taxpayers earning over £100,000 lose their personal allowance at a rate of £1 for every £2 of income.

This means for every £100 they earn between £100,000 and £125,140, a worker takes home just £40 – because £40 is lost to income tax and another £20 to the tapering of the personal allowance – creating a 60pc tax trap.

Dismal headlines

The Guardian has a breakdown of last Friday’s front pages, which were bleak.

The Telegraph noted the austerity of George Osborne, Chancellor when the Conservative-Lib Dem coalition took over from in 2010, and the Labourite policies of his predecessor Gordon Brown. At the bottom of the page is an analysis from Lord Frost:

Lord Frost’s analysis is pro-Truss/Kwarteng

Lord Frost points out that the OBR are predicting what Liz Truss did just a few weeks ago:

This was a very curious Autumn Statement. For the last month, we have been told that Britain needed to re-establish the confidence of the markets and put in place renewed fiscal discipline, supposedly so carelessly squandered by Liz Truss. “Eye-wateringly painful decisions” were coming for all of us …

… public spending will be at its highest since the 1970s and taxation the highest since the Second World War. Both only start to fall, gently, in the late 2020s, and then only because of some pretty heroic assumptions about growth. Indeed, under Liz Truss we were told that 2.5 per cent growth was impossible – yet the Office for Budget Responsibility (OBR) is predicting exactly that for 2025 and 2026.

How do we explain this?

To do so, I think, we have to go back to that extraordinary week in mid-October, when Truss’s government blew up on the launch pad

She was levered out of Downing Street with the argument that she had been careless about the public finances, casual about fiscal discipline and had lost market confidence. An emergency correction was needed – tax rises or spending cuts, and probably both.

Yet on taking office, our current government will have found – as the OBR has now acknowledged – that we were already into a deepening recession. Tightening fiscal policy with growth collapsing and interest rates increasing globally would clearly have been an insane policy, one at variance with what virtually every economist would suggest. But, having destroyed the Truss administration for being insufficiently fiscally disciplinarian, the Government could hardly overtly change course itself.

That is why we got what we got. Keep growing spending, raise taxes now on unpopular groups, defer deficit reduction and everything else until 2025, and meanwhile talk a lot about austerity and discipline to disguise the reality that this is likely a similar fiscal policy to what Truss’s would have been, just at higher levels of tax and spend. Then, after the election, if the Conservatives are still in power, it can all be looked at again …

… Taxes on business wreck investment and growth. Taxes on the (not very) rich destroy incentives. Britain’s hard-won reputation for being a low tax country is permanently lost. And we all have less of our own money and are less free.

Another defence of Trussonomics

The Mail reminds us that the Truss plan was to cap energy prices for two years. Hunt has reduced this to the end of March 2023:

Average energy bills will rise to £3,000 a year from April as Chancellor Jeremy Hunt confirmed he was scrapping previous Government plans.

In his Autumn Statement to the House of Commons, Mr Hunt revealed changes to the ‘Energy Price Guarantee’ would leave Britons facing higher gas and electricity payments next year.

When former prime minister Liz Truss first announced the cost of living support in September, she outlined how average energy bills would be frozen at £2,500 a year for the next two years

Delivering details of an altered plan today, Mr Hunt revealed the Energy Price Guarantee would now be set at a higher level of £3,000 a year for average households until April 2024.

Of course, those who use less energy at home might have less to pay:

The plan only caps the cost per unit that households pay, with actual bills still determined by how much is consumed.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said:

The fact that this comes on top of so many other price rises means life is going to get even tougher next spring.

More Trussonomics

The Spectator‘s editor Fraser Nelson wrote an analysis of the budget for The Telegraph, ‘This could turn out to be the week that the Tories lost the next election’.

I noted above that some of what Hunt said points far into the future.

Fraser Nelson also observed that fact:

Suspiciously, almost all of this austerity is due to take place after April 2025, after the election. The Tory benches were very quiet during Hunt’s speech, perhaps because they were piecing all this together. It was not just an Autumn Statement being written, but the next Conservative manifesto, too – with all the bad stuff saved for after the vote. Hardly the behaviour of a party expecting to win.

As one minister put it: “This was the day we lost the election.” This is how some Tories see the Autumn Statement: a suicide note, wrapping a poison pill for a Keir Starmer government to swallow.

This is the alarming rate of borrowing today. Factor in the previous QE and the generous Sunak pandemic programmes when he was Chancellor:

Even now, the Government is borrowing £485 million a day – or £20,000 by the time you finish this sentence. It all needs to be repaid. And the interest we all have to pay for such debt is, broadly, treble what it was a year ago.

The new forecasts show a UK Government expecting to pay £484 billion in debt interest over the next five years – almost £300 billion more than was expected this time last year. This year alone it’s £120 billion, twice last year’s sum.

This extra £60 billion has had to come from somewhere. It’s enough to double the size of the military, treble the police force or rebuild every school or hospital. But instead it is dead money, servicing an old debt – and things need to be squeezed to make room for it. For years, Tories wrote cheques, for HS2 and more, barely thinking about the cost. Now the bill has landed.

Nelson doesn’t mention the number of times long-serving Conservative backbenchers warned Sunak over the past two years that the bill would come due, but I saw them in parliamentary debates being duly ignored. To Sunak, those men were mere Thatcherites, so last century. Rishi told us we could borrow with little consequence. Not so.

He created a lot of our current problems and campaigned in August that he would be the candidate to get us out of this situation.

Now he is No. 10, just as he wanted to be from the beginning:

Sunak can’t be blamed for the debt interest. But he might have been expected to have better ideas of how to get out of the mess.

Of the Autumn Statement, Nelson writes:

Liz Truss said her message was “growth, growth, growth,” but Sunak’s seems to be “brace, brace, brace”. A massive fiscal impact lies ahead, he says – and our mission is to recognise it, make our peace with it, and accept that talk about a low-tax future is futile. So his Autumn Statement did not kick-start a recovery. It was, instead, a requiem for growth.

Of the August leadership campaign, he reminds us:

During the leadership debate, Truss was asked what advice she would give to Sunak. Don’t be so fatalistic, she told him. Don’t go along with narratives of decline. She had a point. Groundless optimism ended her premiership very quickly, but groundless pessimism can also be deeply damaging.

Nelson wonders how a government can so quickly discount its people:

A million more Brits, for example, are expected to join the 1.7 million already claiming disability or health-related benefits over the next five years. They will, in turn, join the 3.5 million others on out-of-work benefits. Was it so unreasonable to hope that this number might go down, with people helped back to work? We’ve been promised a review into all this, but not much else.

Another assumption is that most of the 400,000 who have dropped out of the economy since the pandemic started, citing long-term sickness, will never work again. It’s hard to find many other countries giving up so readily on such a stunningly large chunk of the population.

Is a uniquely British malady at work here? Or is the real problem a kind of Tory fatalism, where an exhausted governing party thinks the country is now too old, too sick or simply too workshy to get back to where it was in January 2020?

Many conservative voters said at the time that Rishi’s furlough scheme was a bit too helpful — and we were paying for it.

Now we are paying even more for it.

Nelson concludes:

the risk is that voters make up their mind now – and associate Toryism with chaos, broken promises and a general counsel of despair. Labour just needs to promise to do things better. As things stand, it’s not a very high bar.

Feeling fleeced yet?

The Telegraph‘s editorial warned, ‘Hard times ahead for British taxpayers’:

Unlike the tumultuous response to Kwasi Kwarteng’s unfunded growth measures in September, the market reaction was muted, which is precisely what Mr Hunt hoped for, even if the pound fell against the dollar amid forecasts of a year-long recession …

… benefits and the old age pension will rise in April by 10.1 per cent, the inflation rate in October.

This continues a trend of recent years whereby working people are expected to pay more in tax to protect social programmes that successive governments have been reluctant to reform. Although headline tax rates have not risen, the extended freeze on allowances at a time of double-digit inflation is a serious hit to the incomes of millions who will be dragged into higher bands. Some three million earners will pay income tax for the first time.

This year will see the sharpest fall in living standards on record, while the tax burden rises to its highest level as a share of GDP in decades. More than 47 per cent of national income will be spent in the public sector. In fact, spending will actually rise in real terms. The cuts are to planned budgets.

Rishi Sunak and Mr Hunt consider this social democratic approach to be fair and compassionate, closing off attack lines from Labour as a general election approaches. But there are consequences for the long-term well-being of the country if working people and businesses feel they are being fleeced to prop up failing public services and a benefit system in need of a drastic overhaul.

Essentially, the productive part of the economy is being squeezed to prop up the unproductive. The problem Mr Sunak faces is that, by 2024, the Conservatives will have been in office for 14 years and they need to offer voters a better slogan than “Labour will be worse”. In fact, Labour would support many of the measures in the Autumn Statement, from loading more tax on the wealthy to increasing windfall taxes on the energy companies.

ministers need to prepare for the worst and could proactively address the biggest drags on the economy, above all the NHS, social care and welfare benefits. The health service continues to soak up huge sums – with another £6 billion announced yesterday – and yet produces worse outcomes. Its shortcomings are causing problems throughout the economy, with treatment backlogs contributing to acute manpower shortages which the Government intends to fill by increasing immigration.

The Spectator‘s political editor James Forsyth, a close friend of Rishi Sunak’s, explained in The Times why this recession is different to previous ones and why we need more people in the workforce. I hope his friend pays attention to this:

One bright spot amid the gloom is the unemployment rate, which is just 3.6 per cent, down from 3.8 per cent this year. This is close to historic lows. But even this glimmer is tarnished. The low unemployment number disguises how many people have left the labour force: one in five working-age Brits are economically inactive, meaning they are neither in work nor looking for it. More than five million are claiming out-of-work benefits.

The recession may last a year, perhaps two — but it will be different. Unemployment, as formally defined, won’t exceed 5 per cent even during the worst of the downturn — in the 1980s it went into double digits. Seldom have there been more vacancies in the economy. It’s an odd form of recession where almost anyone who wants a job can find one, but that’s the situation we’re in. Almost every month, the number of those not looking for work grows: it jumped by 169,000 in the three months to August. That is more than the population of Oxford.

This has consequences. The OBR thinks the cost of health and disability benefits will rise by £7.5 billion — quite a sum. A shrinking labour market is also one of the reasons why the Bank of England thinks potential growth is now a mere 0.75 per cent even in 2024-25. The Tories desperately need to get back to moving people from welfare into work — not just to reduce the welfare bill but also to boost the economy

Alongside those not in work nor looking for it, there are 970,000 people on Universal Credit who are working very limited hours in an economy where employers are offering shifts. Hunt announced that about 600,000 of them will now be required to meet a work coach to try to increase their hours. This signals a return to Tory welfare reform …

to ensure taxes don’t need to keep going up indefinitely, two things are needed. The first is a renewed emphasis on public-sector reform. The Tory mantra used to be more for less from public services. But in recent years, it has felt like the opposite is the case. As the Institute for Fiscal Studies pointed out this week, the NHS has more money and more staff than it did before Covid yet is treating fewer people on the waiting list. This needs reversing if the tax burden is not to continue climbing ever higher.

The second is the economy needs to grow. Meat needs to be put on the bones of the growth agenda that Sunak and Hunt set out this week, with further incentives for businesses to invest.

After the debacle of the mini-budget, this autumn statement was always going to be about steadying the ship. Yet satisfying the markets is a necessary but not sufficient condition for a successful government. Sunak and Hunt must now deliver on public service reform, moving people from welfare into work and getting more out of the health and education budgets.

The Telegraph had more on the parlous state of the NHS, despite more taxpayer money being dumped into it, all for nought:

An analysis by the Institute for Fiscal Studies shows the health service in England carried out 600,000 fewer procedures in the first nine months of 2022, compared with the same period in 2019.

The NHS’s budget rose from £123.7 billion in 2019-20 to £151.8  billion in 2022-23, with the extra funding tied to a target of increasing elective hospital activity by 30 per cent compared with pre-pandemic levels. This will not only be missed but matters have worsened. Why is no one being held to account?

Record sums have been poured in for years, yet there is now a waiting list of more than seven million patients. Working practices remain stuck in the past, with consultants complaining that hospitals are “like the Mary Celeste” at weekends, while most GP surgeries are only open on weekdays, pushing patients to overstretched A&E services.

The NHS unions are not helping in their demands for more money.

The article concludes:

There is something fundamentally wrong with the NHS which politicians must confront before it crashes and brings the rest of the economy down with it.

Hunt puts economic hope in migrants

It seems the OBR, a quango started by the Conservative Chancellor George Osborne and staffed by Labourites, has convinced Jeremy Hunt that he should increase our already heavy migration levels to boost the economy.

That’s a left-wing idea that has never worked.

Home Secretary Suella Braverman will oppose that, but can she succeed? Only a few weeks ago, a 90-minute argument with Liz Truss and Hunt resulted in Braverman’s resignation. Her security violations were a likely smokescreen for what really happened.

The Telegraph reported:

Jeremy Hunt is relying on a surge in net migration to more than 200,000 people per year to help deliver economic growth as he oversees a sharp rise in the tax burden to its highest ever peacetime level.

The Office for Budget Responsibility (OBR) predicted net migration – the numbers entering the UK minus those leaving – will be 224,000 next year, before gently declining to settle at 205,000 a year from 2026 onwards.

This is dramatically higher than the OBR’s March estimate, when it predicted that net migration would be between 139,000 and 129,000 in the same years, some 80,000 lower.

It is also significantly higher than the long-term “ambition” of Suella Braverman, the Home Secretary, to reduce net migration to below 100,000 – similar to the target of Theresa May, one of her predecessors in the post.

The increase in migrant labour will help to buttress Britain’s economy as Mr Hunt imposes higher taxes on earnings, jobs and investment. The OBR said that an increase in migration would help add to the potential size of the economy.

However, rising costs from tax are creating “growing disincentives to work”, reduce business investment and depress wages, according to the OBR itself.

Business groups were even more damning. The Chancellor talked a lot about “hard work” and “fairness” in his Autumn Statement. But workers, entrepreneurs and businesses have been left to pick up the bill to keep Britain’s welfare state on the road.

The OBR are being deeply irresponsible in advocating city-sized populations coming from abroad each year.

Where will these people live? How is our infrastructure — medical facilities, schools, water supply — increase to meet this demand year upon year?

Anyone travelling by Tube can pick up a copy of the Evening Standard to read about how many British twenty-somethings in London cannot find a room to rent. In many cases, there are 100 of them chasing every available room. The Standard interviews them. Their stories are heart-breaking. These young people are signed up to every rental app, to no avail.

Council tax increasing

On top of all of this, The Times reported that Hunt has given the green light to councils to increase council tax:

… the chancellor announced “more council tax flexibilities”, enabling councils in England to raise council tax by 3 per cent a year (up from 2 per cent) from April 2023 and increase the adult social care precept by 2 per cent a year (up from 1 per cent) without having to hold a referendum — leaving councils free to raise the tax by up to 5 per cent next year.

Their article has charts of various council tax rates and offers this example:

If they decide to increase council tax by the full 5 per cent, council tax band D payments would rise by £115 from £2,300 to £2,415 a year in Rutland in the East Midlands — the local authority with the most expensive tax bills in England — while in Westminster in central London, the cheapest authority, they would increase by just £43 from £866 to £909 a year.

Short takes

The Telegraph has an article on winners and losers from the Autumn Statement. There are only two groups of winners: housebuyers and pensioners/benefits claimants.

The Guardian interviewed some of Hunt’s constituents in leafy South West Surrey. They are unhappy with him as MP and are equally unhappy with the Government.

Guido Fawkes’s sketchwriter summed up Hunt’s announcement as follows:

What was the job of the day? To persuade the markets that all was under control. That debt-to-GDP would fall in reasonable time, that things would get back to normal in his cool, technocratic, managerial hands.

It’s what we all need, to believe that someone knows how things work and that they know what they’re doing. That there is such a thing as “sound money”. That the great, communal hallucination of financial reality may be preserved.

In Guido’s view, the Chancellor did exactly that. (Pound crashes, housing market collapses, the global financial architecture disappears into the Pacific Trench)

The readers’ comments near the end of that post have to do with the raw deal Liz Truss got. Here’s the exchange:

I find it impossible to believe that Liz Truss did so much damage in a couple of weeks with a mini budget which was never even enacted to require today’s grotesque socialist budget. Hunt and Rishi must be following an ideological policy and using Truss as their excuse.

Yes, she’s been made a convenient scapegoat by the WEF shills, to cover all their earlier and current mistakes and wrongdoings.

She went too far too fast and, by doing so, gave the one nation Tories and SunakHunts the opportunity to bring her down. The real villains are Sunak and Bailey [Bank of England governor] with their money printing and inflation denial. We are paying for their mistakes.

She didn’t go too far too fast. That is the Conservative spin. The Socialist spin is that she crashed the economy. It was cautious and a promising start, a direction of travel being set, nothing more – except for that huge two year package on the gas bills which was pure socialism and not mentioned by anyone.

The true Conservative spin is that, as an experienced Cabinet minister, she didn’t scan the political and financial hinterlands and underestimated the faux Conservative forces ranged against her. Once she u-turned she was done for.

On another of Guido’s posts, a reader posited that this is all about reversing Brexit:

The champagne socialist billionaire Rishi Sunak and arch remainer narssisist Jeremy Hunt have nailed the final nails in the socialist party AKA as the Conservative party coffin. They will be wiped out at the next GE for a generation. They want to tank the economy and make everyone feel financial pain so they can say BREXIT didn’t work. They will then seem to come to the rescue with every excuse on the planet and join us up first to the single market and customs union. Then kicking and screaming back into the EU. Why do you think they staged this remainer coup and got rid of Truss? The Truss budget of low tax, high wages, high growth, low government spend and the scrapping of the 2300-3000 EU laws retained on the UK statue book would have taken advantage of BREXIT and boosted the economy. They could not allow that to happen. They want to ditch plans to scrap the EU laws as that will make it harder to leave. They have folded on the NI Protocol and leaving the Jurisdiction of the ECHR. Why? Because they want to rejoin. We now are having forced on us a low wage, high tax, low growth, high government spend economy that will cripple most people financially and small businesses. Who wants to invest in the UK now?

On that note, another reader posted a photo of Hunt and Sunak sharing a laugh, with this fictitious caption:

Hunt: Told you you didn’t need the support of the members.

Sunak: Yes, it was so easy to stab Truss in the back, too. Who needs democracy?

What taxpayers can do

All is not lost for taxpayers. There are ways to mitigate the effects from Hunt’s statement.

Anyone who needs to cut back on food costs, protein in particular, should start eating eggs, which are cheap and the best source of protein around. Supposedly, they’re in short supply, but I bought a dozen only yesterday.

The Telegraph has an excellent article on various egg preparations, whether sweet or savoury. It’s well worth reading.

The paper also has a helpful article about what taxpayers can do to mitigate Hunt’s raid on their money. Some will require advice from a financial planner. The most important tip is to get one’s capital gains in order and start liquidating shares or funds to put into an ISA — a process called ‘bed and ISA’ — without exceeding the CGT thresholds. This has to be started well before the end of the 2022-23 tax year in April, when the current capital gains threshold of £12,300 expires and becomes £6,000 for one year, then £3,000 the year after that.

Good luck!

On Thursday night, November 10, 2022, Liz Truss’s Chancellor, Kwasi Kwarteng, broke his silence in an interview with TalkTV’s Tom Newton Dunn on First Edition.

He and Truss disagreed on how quickly to move on the economy.

Background

Looking back at that period of mourning for the late Queen when Truss assumed office, the nation had been jittery over the cost of living crisis.

The Conservative leadership contest, which had lasted several weeks, put paid to any constructive solutions to the problem in the latter half of the summer.

Furthermore, Parliament had been in its customary weeks-long recess at that time.

During that period, energy prices were forecasted to be at a crippling high. Every news outlet was full of articles and broadcasts on the choice between food or fuel.

People wanted Parliament to be recalled because ‘something must be done’.

A general election is also coming up in two years’ time, therefore, Truss wanted to hit the ground running and make up for the two-and-a-half years lost with the pandemic.

Hence Truss’s ambitious and, to use her word, bold economic plan.

Kwasi explains

Tom Newton Dunn wrote up highlights in The Times of what Kwarteng told him (emphases mine):

In his first interview since being sacked as chancellor, Kwarteng told TalkTV that he had advised Truss to “slow down” and take a “methodical and strategic approach” to boosting growth as prime minister …

In the interview with First Edition, Kwarteng also revealed that Truss was “distressed and emotional” when she summoned him to be sacked days before she was forced from Downing Street.

He said he told her during their meeting that she was “mad” to fire him, adding: “People will ask, ‘If you sacked the person who was doing what you wanted, why are you still there?’”

Which is exactly what happened. The Sun‘s Harry Cole asked that very question at Truss’s press conference that fateful day, Friday, October 14. Truss thought that Cole would be more empathetic, as The Sun generally supports the Government.

Whilst unapologetic for his economic plan, the former Chancellor did say that lessons had been learned:

Kwarteng repeatedly refused to apologise for pursuing the principle of the pair’s economic agenda and warned Rishi Sunak that he could not “simply keep putting up taxes”.

He said that he had had reservations about the scale of the planned tax cuts in his mini-budget, especially as there were no accompanying plans to reduce government spending. “The prime minister was very much of the view that we needed to seize the opportunity and we hit the ground running,” he said. “She’s very dynamic, very forceful. That’s a great strength. But I think you had to have a measured approach, especially doing the things that were radical, that were bold. And that’s the lesson that we’ve learnt.”

Asked who controlled the timetable of the mini-budget, Kwarteng said that he bore “some responsibility for it” but added: “I think the prime minister was very much of the view that we needed to move things fast. But I think it was too quick. If you look at it, it was on the 23rd of September. We only got into the office on the 6th of September. And looking back I think a measured pace would have been much better.”

Kwarteng said that afterwards he confronted Truss and warned her the government could fall unless she slowed down. “After the mini-budget we were going at breakneck speed and I said, you know, we should slow down, slow down. She said, ‘Well, I’ve only got two years’ and I said, ‘You will have two months if you carry on like this’. And that is, I’m afraid, what happened.”

He also said:

She was very emotional. I can’t remember whether she was actually shedding tears but she was very emotional and it was a difficult thing to do. I think she genuinely thought that that was the right thing to buy her more time to set her premiership on the right path. I disagreed, obviously. I thought that if chancellors are sacked by the prime minister for doing what the prime minister campaigned on, that leaves the prime minister in a very weak position.

Kwarteng revealed that he found out he was being sacked by reading a tweet from a Times journalist:

… a tweet from The Times’ political editor as he drove to a meeting with Truss in Downing Street.

As King Charles said to Truss only a month ago — and just days before she sacked her Chancellor:

Dear, oh dear.

Kwarteng is supportive of Prime Minister Rishi Sunak but says that he and Chancellor Jeremy Hunt should not put the blame for a cratering economy on him and Truss:

Kwarteng praised Sunak as a “very credible prime minister” but said he and the new chancellor, Jeremy Hunt, should not attempt to blame him and Truss for all the government’s current problems. “The only thing that they could possibly blame us for is the interest rates and interest rates have come down and the gilt rates have come down. I mean, it wasn’t that the national debt was created by Liz Truss’s 44 days in government.”

He added that although he accepted that taxes would need to rise in the short term, the government still needed a growth strategy. “You’re not going to grow an economy or incentivise economic growth by putting up our taxes,” he said.

True. I wrote earlier this week about why the Truss-Kwarteng plan was the correct one for the UK.

Kwarteng and Truss have known each other for years and live near each other in Greenwich.

He says they are ‘still friends’, but:

he had still not returned a missed call from her two days ago. “I will call her back,” he said.

The BBC’s analysis

In an analysis of the interview, the BBC points out that, at the time of the mini-budget, Kwarteng promised more tax cuts to come:

During his time as chancellor, he repeatedly advocated measures of the sort set out in the mini-budget, and two days after delivering it told the BBC there was “more to come” in the way of tax cuts.

The comment, along with a decision to announce the mini-budget without publishing an assessment by the government’s fiscal watchdog, was later seen as key to convincing investors that the government did not have a credible plan to keep debt levels under control.

Did Kwarteng reveal too much in the interview?

He insists that he remains friends with Ms Truss. But in this interview he does reveal elements of private conversations during his sacking that Ms Truss may well have preferred had stayed within the walls of Downing Street.

He once toured TV studios insisting she would make a great prime minister. It doesn’t feel like they’re on as good terms now as they once were.

And what next for Mr Kwarteng? It doesn’t sound like he’s going to be an awkward backbencher: he’s pledging complete loyalty to Rishi Sunak.

There was lots of detail in this interview, but it’s important to remember that this is only one side of the events that took place as Ms Truss’s premiership began to crumble. When will she break her silence?

Jeremy Hunt’s tactful comments

On Friday, November 11, the new Chancellor reacted to Kwarteng’s interview.

The Guardian reported:

Good morning. We’ve got less than a week to go now until the autumn statement – in effect, the second budget of the autumn – and already a blame game has broken out in the Conservative party about who is responsible for the massive spending cuts and tax rises the nation is about to face.

Kwarteng had denied there is a black hole in the nation’s finances:

The national debt wasn’t radically changed by Liz Truss … There isn’t a black hole and the interest rates and the gilt rate funding the debt is exactly the same as it was before the mini-budget. So the black hole hasn’t been caused by the mini budget. It’s something that Jeremy and Rishi and their officials are going to have to tackle on their own regardless of what happened in the budget.

However, on Sky News, Jeremy Hunt pushed back on Kwarteng’s claim:

All I would say is that when we produced a fiscal statement that didn’t show how we were going to bring our debts down over the medium term, the markets reacted very badly and so we have learned that you can’t fund either spending or borrowing without showing how you are going to pay for it and that is what I will do.

The Guardian concludes:

Hunt did not engage with Kwarteng’s specific argument, but he was clearly implying that his predecessor was at fault.

The article includes a clip from Hunt’s interview:

Hunt was giving an interview to respond to this morning’s growth figures showing the economy shrank by 0.2% in the third quarter of the year.

The Bank of England admits QE wrong policy

But wait, there’s more.

On Tuesday, November 8, the Bank of England (BoE) finally admitted that QE — quantitative easing — was a mistake during the pandemic.

This is where the real problem lies. It has nothing to do with Kwarteng or Truss.

The Daily Mail reported that the BoE’s chief economist, Huw Pill, appeared before the House of Lords economic affairs committee, admitting:

the Bank played a part in driving up inflation through its massive money-printing programme.

Known as quantitative easing (QE), this pumped £450billion into the economy during 2020.

He had more to say on inflation:

Pill also blamed the huge mismatch between supply and demand in the aftermath of Covid lockdowns for pushing the price of goods ever higher.

Pill has only been in his job for a year, so no one can blame him, but:

The comments could make uncomfortable reading for Bank Governor Andrew Bailey, who oversaw the explosion in QE, and new Prime Minister Rishi Sunak, who as chancellor was at the heart of the Government’s response to Covid.

The Government has been fond of blaming the war in Ukraine for our current problems, however:

even before Russia’s invasion of Ukraine in February, which caused gas prices to spike, inflation was already at 6.2 per cent – more than three times the Bank’s target of 2 per cent.

Rishi and the BoE are to blame for this. As Chancellor, Rishi told MPs that we could borrow, borrow, borrow during the pandemic at little to no cost.

However, Huw Pill sees things differently:

Gas prices do not ‘explain all of the overshoot’ in inflation, said Pill. One factor, he said, was ‘developments in the past – including choices over monetary policy’.

Warning that ‘QE and the choices over QE may have contributed’ to the rise in the cost of living, Pill added: ‘I was not at the Bank two or three years ago when some of those rounds of QE were undertaken. Whether those would be chosen to do now is an open question.’

He also suggested that lockdowns – and the support offered to households and businesses through the pandemic such as the furlough scheme – played a part as they boosted demand at a time when the supply of goods and services was severely hit.

‘Looking back at the impact of the pandemic, I think one can say that destruction of demand was over-emphasised relative to the destruction of supply,’ he said.

‘The support coming from the macroeconomic side – both fiscal support and monetary support –was very profound.’

QE works in the UK as follows:

buying bonds from investors – mainly government bonds known as gilts – reducing borrowing costs and freeing up cash for those investors to plough into the economy.

During the pandemic:

this helped to fuel demand by propping up buying activity while ignoring the supply problems caused by lockdowns, when businesses were forced to shut their doors.

When economies reopened, there was a surge in demand that could not be met, driving up prices and causing workers to demand higher wages.

Other economists and financial experts sounded the alarm at the time:

Andy Haldane, Pill’s predecessor at the Bank, predicted as much when he began warning early last year that inflation could get out of hand.

Delaying efforts to tame inflation would be like ‘trying to catch a tiger by its tail’, Haldane said.

But other members of the Bank of England’s interest rate-setting committee remained adamant that inflation would be ‘transient’.

The Bank only began to raise interest rates in an attempt to get a grip on inflation in December last year and has now raised them from 0.1 per cent to 3 per cent.

Gerard Lyons, chief economist at investment firm Netwealth and former economic adviser to Boris Johnson during his time as mayor of London, accused the Bank of making a ‘major policy mistake’ with QE.

And Sir Paul Marshall, a hedge fund veteran, compared QE with a drug to which markets had become ‘addicted’.

One week ago, sterling slumped as the BoE raised interest rates to 3%.

The Daily Mail reported:

Sterling slid around 2 per cent towards $1.11 as Andrew Bailey said markets were wrong to believe rates would peak as high as 5.25 per cent next year. 

His comments came as the Bank raised rates by a mammoth 0.75 percentage points to 3 per cent, the largest hike in more than 30 years. But in a warning to traders who were expecting more bumper hikes, Bailey suggested the unprecedented speed of rate hikes would soon begin to slow

There is internal disagreement among the BoE’s ninestrong Monetary Policy Committee (MPC). A vote had to be taken on the interest rate rise:

More splits emerged at the Bank of England as two members of its ratesetting Monetary Policy Committee ( M P C ) opposed the hike to 3 per cent. Swati Dhingra argued that interest rates should be raised by 0.5 percentage points to 2.75 per cent and Silvana Tenreyro voted for an increase of just 0.25 percentage points to 2.5 per cent. They were outvoted by the other seven members, who opted for a 0.75 percentage point rise. The split exposed the difficulty the Bank is having in navigating Britain through the economic storm. Dhingra said that ‘a small rate increase was warranted to safeguard against creating a deeper and longer recession’ in Britain. Tenreyro, meanwhile, said the rate rises seen already would bring inflation back below 2 per cent in due course.

Sterling hadn’t been that low since Kwarteng was Chancellor one month ago:

The pound slid by more than 2 per cent. Yesterday’s [last week’s] clash with traders again pulled down the value of sterling, which would usually rise on news of higher rates as traders shift to a currency promising greater returns. It is now at its lowest point since before Kwasi Kwarteng was sacked in mid-October following a disastrous six-week stint as Chancellor.

The US Federal Reserve has also affected sterling:

The pound has also been dragged down by the US Federal Reserve, which has been more aggressive than the Bank in its fight against inflation. The Fed has hiked rates by the unusually high amount of 0.75 percentage points at its last four meetings, taking its base rate to a range of 3.75 to 4 per cent and causing traders to flock to the dollar. While the Bank of England said its own base rate was unlikely to hit 5.25 per cent, it conceded it was also unlikely to remain at 3 per cent

Bailey said: ‘Where the truth is between the two, we’re not giving guidance on that.’ 

Analysts pointed out that more uncertainty lies ahead of Jeremy Hunt’s budget next Thursday, November 17:

Analysts said Threadneedle Street [where the BoE is] would be worrying about what other unpleasant surprises could be in store – especially regarding gas prices, which have been a key driver behind rising prices.

Philip Shaw, an economist at Investec, said rate-setters also had little idea what Chancellor Jeremy Hunt would announce in his Autumn Statement later this month, and whether there would be any further help for households which could fuel inflation.

Other economic news

More economic news came to light this week.

London

On November 10, Mayor of London Sadiq Khan told Times Radio that he has never been so worried about the capital:

I’ve lived in London my entire life; including the 80s during Thatcher’s reign and the recession. I’ve never known it so bad.

Really?

I had the good fortune of being in London three times in the past week: once in the afternoon and twice at night.

I have not seen so many people on the streets in the evening since before the pandemic. The streets were filled, especially with 20-somethings, giggling as they made their way to their various destinations. I saw no unhappiness.

The restaurants were full. The one my better half and I ate at this week was already booked for the next several weeks. The one we ate at last week started filling up from 5:30 onwards. It had plenty of students dining there.

Furthermore, the Tube was heaving with passengers. Maybe Sadiq Khan (Labour) needs to take the Underground now and again rather than his motorcade to see what’s really going on in London.

NHS — eye-watering costs

The NHS always wants more money: billions and billions more.

No one has got the nerve to reform its bloated ways.

Today, The Guardian reported that agency fees are spiralling out of control, yet Labour wants to give the NHS even more money if/when they get into Government:

NHS trusts are paying as much as £2,500 for a single agency nursing shift, research by the Labour party has revealed.

The party produced the figures by submitting freedom of information requests, and it says the results show the need for a big investment in NHS recruitment – which is what Labour is promising.

… A BBC investigation on the same topic found that, even though pay rates for agency staff are supposedly capped, these limits are regularly ignored, on the grounds that patient safety would otherwise be at risk.

Hmm.

Yesterday, the Daily Mail reported that the NHS will be curbing procedures such as tummy tucks and liposuction in order to save money.

An excellent idea. This should have been done years ago:

Circumcisions, tummy tucks and liposuction are among 13 operations which will stop being funded by the NHS in a ‘crackdown’ on wasteful spending.

It is thought that stopping the state funding of these operations could save £2 billon a year, along with less wasteful prescribing methods.

Last week bosses of the ailing NHS said that they want billions more cash to keep key services running this winter as Rishi Sunak ruled out cutting its budget as part of the public spending squeeze.

The £152 billion-per-year health service is seeking an extra £7 billion this year — the equivalent of an extra five per cent of its budget — to counter the effects of sky-high inflation, pay rises and Covid costs.

Finance chiefs warned that vital cancer, mental health and GP services face being axed unless the Treasury stumps up the cash.

Somehow, though, past efforts have not been proven money-savers:

It follows years of plans being drawn up to cut NHS costs.

In 2018, plans to stop funding breast reductions, tonsillectomies, and varicose vein surgeries were estimated to save the NHS £439 million a year, but in 2019 the spending had only dropped by three per cent in these areas, the newspaper reported.

Two years ago, 31 procedures were complied in a list in a plan to limit funding, including imaging for lower back pain. It is estimated that around 2.7 million procedures on the list were being carried out each year prior to this.

The new list, which includes circumcisions, tummy tucks and liposuction is the third that the NHS has made a bid to reduce costs.

The NHS will fund procedures on the list only if specific criteria are met:

Created by NHS bosses and medics from the Academy of Medical Royal Colleges, the plan states that the procedures should only be performed via NHS funding if specific criteria have been met …

The right-wing think tank The Policy Exchange estimates that this new guidance could save the NHS up to £2 billion.

Chairman of the Academy of Medical Royal Colleges, Professor Dame Helen Stokes-Lampard, told the newspaper: ‘In short, this programme is about making sure we don’t waste money doing things that don’t work and we are instead redirecting that cash towards those things that are proven to be beneficial.’

MPs’ ‘golden goodbyes’

The UK’s parliamentary constituency boundaries are being redrawn prior to the next general election.

As such, some MPs will lose their current constituencies, meaning they will stand to gain from ‘loss of office’ payments, or LOOPs.

The Daily Mail reported:

Rules on ‘golden goodbyes’ for MPs could be made more generous after a swathe of constituencies had their boundaries overhauled for the next election.

The Commons watchdog is looking at changing the provisions for politicians who are ejected from the House after it emerged very few could be entitled to cash.

Under the existing rules, departing MPs are only eligible for ‘Loss of Office’ payments – LOOP – if they have served at least two years and stood for re-election in the ‘same seat’. 

However, the extent of the boundary review – due to be finalised in the coming months – means that all but a handful of constituencies have either been redrawn, had their names changed, or both

LOOP is equivalent to two or three weeks’ salary for every year served, depending on age. For an MP on the core wage of £84,000 with 10 years’ service that would be worth between £30,000 and £50,000.

Similar rules apply to ‘winding up’ payments, which are equivalent to a lump sum of two months’ salary after tax and NICs [National Insurance Contributions] roughly £10,000.

The turnover of MPs could be particularly high at the election – potentially in 2024 – with Labour riding high in the polls.

Conclusion

Various news outlets have reported that the UK is in for six years of austerity, beginning with Hunt’s budget next Thursday.

Despite that, Rishi Sunak has just pledged billions in foreign aid — climate reparations — this week at COP27:

What about the folks back home?

What about Kwarteng’s £50m notional ‘black hole’ that the media and Labour have been crying about?

On Monday, Guido Fawkes’s sketch writer wrote about Sunak’s new commitments to apologise for … the advances the Industrial Revolution brought the world:

Not only was Little Rishi backed up in the speaking queue behind Iraq, Mozambique, Kenya, Tonga and the Congo – he had to listen to Barbados telling him to up his giving game. Billions? That was last year. Trillions are the new billions.

Other speakers pointed out that we in the rich world had failed to make good on our pledges for £100 billion in climate finance. In the new world order, we will fail to make good on our trillion-pound pledges and they’ll be a thousand times better off. “I profoundly believe it is the right thing to do,” he said. He heard none of us who were shouting at the screen.

He went on to tell the COP that Britain had been the first major economy to legislate for Net Zero. He suggested that it was our leadership that had raised the proportion of countries going for zero emissions from one third to 90%. That we were going to reduce our emissions by 68% by 2030. Not a shred of shame did he allow himself for any of this.

Are we one of the rich countries anymore? It seems odd that the Treasury is agonising over a £50 billion hole in this year’s budget and Rishi stood there offering the world £11.6 billion because of something we started 250 years ago.

Lance Forman, who runs his family’s smoked salmon business and was a Brexit Party MEP, also points out the radio silence surrounding Rishi’s pronouncements:

I can’t figure it out, either.

It must have something to do with being on the correct side of the Establishment.

November 17, 2022 will be a day of doom for the UK as the Chancellor of the Exchequer, Jeremy Hunt, lays out his and Rishi Sunak’s new economic plan.

This plan is likely to increase taxes dramatically for the foreseeable future — years, rather than months.

When Kwasi Kwarteng was Chancellor I had hope for our economic future. Regardless of what Jeremy Hunt says next week, Kwasi’s plan will be proven in the years ahead to have been the right one for the UK.

An economist explains

In an October 16 article for the Telegraph, Liam Halligan, an economist, journalist and broadcaster, explains why the Truss-Kwarteng plan was good.

Its title is ‘The trashing of Truss’s mini-Budget is an economic tragedy’.

Excerpts follow, emphases mine:

The financial and political meltdown of recent weeks has seen Kwasi Kwarteng’s proposals dubbed “radical”, “libertarian” – even “grossly irresponsible”. But that’s demonstrably untrue.

Back in September, the then-Chancellor proposed lowering the top rate of income tax from 45pc to 40pc – the level it was for almost the entire period New Labour was in office under Tony Blair and then Gordon Brown – hardly “libertarian” Prime Ministers.

Kwarteng also pledged to reverse former Chancellor Rishi Sunak’s 1.25 percentage point rise in national insurance contributions – allowing 28m people to keep, on average, an extra £330 of their earnings each year. This largely non-controversial proposal was also endorsed by Keir Starmer’s Labour party.

His Majesty’s Opposition backed Kwarteng’s mini-Budget plan to cut the basic rate of income tax from 20p to 19p in the pound from 2023, a year earlier than Sunak proposed but, again, hardly a radical move.

That means Labour fully agreed with two of the three main measures tabled by Kwarteng, amounting to £24bn out of a tax-cutting package worth around £43bn. But Starmer’s party did oppose Tory plans to keep corporation tax at 19pc, rather than increasing it to 25pc next April – a rise previously enacted by Sunak.

So the only major “irresponsible Tory tax cut” Labour didn’t support wasn’t an actual cut, but a freeze in taxation. Yet that didn’t stop Starmer relentlessly referring to “a Tory crisis, a crisis made in Downing Street”. Labour’s Treasury team, in fact, having backed almost all Kwarteng’s main measures, now wants “this entire mini-budget to be reversed”.

Well, Labour got its wish.

Since mid-October, Labour have repeatedly accused Truss and Kwarteng of ‘crashing’ the economy.

Halligan readily accuses Truss and Kwarteng of poor communcation in presenting and defending their short-lived economic plan, which they called a ‘fiscal event’, as it was not a full budget. However, he says that the policies themselves were responsible.

Halligan says:

… what was a bold, but far from irresponsible set of policy proposals has – through a combination of bad timing and woeful communication – sparked serious financial turmoil, roiling the UK gilts market, pushing up broader borrowing costs and spreading mortgage and pension panic.

It’s vital to grasp, though, that this chaos was triggered by the Government’s inept handling of its policy measures, not the measures themselves.

He makes it clear that the fiscal event was not in itself the underlying cause of the economic turmoil which followed:

while the Truss government’s actions as a whole – the policies and their disastrously botched presentation – were the catalyst behind recent gyrations of sterling and the upward movement of borrowing costs, they were not the underlying cause. To suggest otherwise is politically disingenuous. It is also fundamentally to misunderstand what is happening across global markets and why.

This mini-Budget, in total, amounts to an attempt – after a two-decade upward trend of rising UK taxation – to lower the Government’s tax take from 36.5pc to 36pc GDP.

With the state’s share of national income heading for sustained levels not seen in the 70 years since World War Two, Kwarteng and Truss were trying to put that tax share back where it was in 2021.

Halligan rightly blames the worldwide excess of QE, quantitative easing, so prevalent over the past 15 years:

What we’ve actually seen over recent weeks is just the latest stage in the long-term global shift away from a decade and more of ultra-low interest rates and excessive quantitative easing (QE). Many of the major economies, not least the UK and US, have indulged in irresponsibly loose monetary policy since the 2008 financial crisis. Initially necessary emergency measures were allowed to ossify into a lifestyle choice.

Endless QE juiced up stock and bond markets, making the rich richer while pushing the price of assets such as housing further out of reach for ordinary families. Such “extraordinary measures”, cheered on by groupthink economists, kept state borrowing costs low, paying for lockdown and allowing governments to gorge themselves on debt.

Now we are finally paying the piper for the always obvious excesses, dangers and utter stupidity of these policies. Interest rates are starting to spring back, with indebted governments, households and firms forced painfully to retrench.

Just days after Kwarteng said that the top tax rate of 45% — introduced by Gordon Brown around 20 years ago — would be removed, the media and ‘experts’ said it had to stay. Truss announced a U-turn just before the Conservative Party conference began:

That set up the chance of generating a lucrative “doom loop”, selling the pound short, then turning more profit as media outrage caused the currency to fall even more.

Halligan takes Kwarteng and Truss to task for not explaining where their economic growth would come from, which made matters worse. Recall the noise from their opponents about ‘unfunded tax cuts’.

Unfortunately, sterling is vulnerable at this time:

Britain has a big balance of payments deficit and is a significant energy importer with scant storage capacity at a time of geopolitical peril.

We have only to look at what then-Chancellor Rishi Sunak spent during the pandemic and the war in Ukraine which followed just as we thought we’d get a breather.

Halligan wrote his article the day after Truss sacked Kwarteng and replaced him with the Establishment-minded Jeremy Hunt, who immediately began rolling back Kwarteng’s reforms:

Jeremy Hunt’s tour of the TV studios on Saturday morning was a further attempt to pour oil on troubled waters as the new Chancellor raised the prospect of further tax increases and spending cuts. Its effectiveness remains to be seen.

It’s also alarming that the latest policy sacrifice has been to go ahead with a previously scrapped rise in corporation tax from 19pc to 25pc.

For tens of thousands of small and medium-sized enterprises, this is disastrous.

These companies account for over half of Britain’s GDP and two thirds of employment. They’re the engine of our economy. They were hammered during lockdown and Truss has just taken 6pc off their often thin profit margins. Many will struggle to survive.

By hiking corporation tax, Truss is harming the prospects of small businesses and alienating millions of them, many run by and employing natural Conservatives. She is also scuppering the best chance she has of rapidly achieving her “plan for growth”.

A ‘very British coup’

On Sunday, October 17, the Telegraph‘s Tim Stanley wrote ‘I resent this “very British coup”. Any Tory who welcomes it is a fool’.

Any true conservative should keep this in mind when they watch Hunt deliver his budget next week. Stanley’s subtitle reads:

Deviate from orthodoxy, and you’ll be crushed by the Remainer, ‘expert’-driven establishment

He is not wrong.

Although he did not approve of Kwarteng’s plan for its ‘policies and philosophy’, we face a perilous time ahead, especially with regard to Brexit:

Reputationally, the Conservatives are sunk. Labour will win the next election; Brexit is imperilled. Hitherto the argument against Brexit was emotional, but watch as it becomes technocratic: “in light of our political and economic turmoil”, the grey men will say, “it’s not something we can afford.”

Truss was made a whipping girl for what happened after Kwarteng’s fiscal event. Cast your minds back over the past month. What Stanley predicted happened:

… make no mistake, those hollow-men are back in charge. The imposition of Jeremy Hunt as chief executive to Truss’ chairman of the board – the language is theirs, not mine, and tells you everything you need to know about their ghastly worldview – is a reassertion of orthodoxy, revenge of the Remainers, capture by experts. British policy, you see, must always operate within certain parameters; anyone who dares to step an inch too far to the right or the left will feel the full force of the establishment. Not by sending in the army, that would be unBritish and, besides, we haven’t got an army to send – but by the removal of confidence, via the markets, the Bank, the IMF or our good friend, Uncle Sam.

Stanley rightly blames Andrew Bailey, who heads the Bank of England:

The Bank kept interest rates ridiculously low while pumping our economy with cheap money, fuelling an inflationary spiral that it now believes is the sole job of the Treasury to cure. It was Andrew Bailey, widely criticised for poor judgement, who finished off the arrogant Mr Kwarteng when, last Tuesday, he informed pension funds that he’d stop bailing them out on Friday.

Stanley perceives an anti-democratic trend that emerged in 2022:

After a few, bright years of grassroots activism and open debate – the essence of Brexit – there is pushback against democracy. This year, the Conservatives have kicked out a PM who won a landslide and then effectively imprisoned a second PM who, for all her faults, was at least elected by the members. Mr Hunt, by contrast, was beaten solidly by Boris in 2019 and didn’t even make it past the first round against Truss. He has no popular mandate.

… Comrades, we’re in for two years of painful austerity …

At least two years. I predict more.

Stanley concludes:

I am not saying there is a conspiracy afoot. There’s no need. Our system is ancient, sophisticated and surprisingly transparent. We have a way of doing things, old bean, and we make it gently inconceivable to do it any other way. This is the dictatorship of consensus.

The Establishment view

Writing for the Telegraph on the day that Truss sacked Kwarteng, October 15, Jeremy Warner said, ‘Project Fear was right all along’.

He began with this condemnation of Brexit:

Call it revenge of the Remainer Establishment, if you like. The revolution in the British economy promised by Leave campaigners six years ago finally seemed to go the way of all revolutionary movements this week: it ended up eating itself.

Downbeat predictions by the Treasury and others on the economic consequences of leaving the EU, contemptuously dismissed at the time by Brexit campaigners as “Project Fear”, have been on a long fuse, but they have turned out to be overwhelmingly correct, and if anything have underestimated both the calamitous loss of international standing and the scale of the damage that six years of policy confusion and ineptitude has imposed on the country …

Perhaps I exaggerate, but not since the humiliation of the International Monetary Fund bailout in 1976 have we seen an unravelling quite as spectacular. This too from a Tory Government with a substantial overall majority. It is scarcely believable.

Hmm …

Warner blamed ‘unfunded tax cuts’, saying that a cut in corporation tax was derisory and that, ultimately, Liz Truss would have to go:

… the fact is that Truss was in lockstep with Kwarteng in challenging “economic orthodoxy” and the institutions that were its standard bearers. On the campaign trail she was, if anything, even more of a zealot for economic radicalism than Kwarteng.

In any case, she plainly didn’t understand the sometimes destructive way markets interact with policy. It’s been a rude awakening.

Warner is grateful that Andrew Bailey intervened:

In the end, it was Andrew Bailey, Governor of the Bank of England, who brought matters to a head, by insisting that there would be no extension to the bond buying programme he had initiated to counter forced selling by UK pension funds.

This has been widely portrayed as another foot in mouth episode by a Governor with something of a reputation for gaffes. Having failed, despite all the warning signs, to see the surge in inflation coming, the Bank fully deserves whatever criticism is thrown at it. The Bank has failed to conduct itself well in recent times.

Even so, the Governor had little option but to say what he did. It makes no sense at all for a central bank, which is supposed to be tightening policy to fight inflation, to be simultaneously loosening it through resumed asset purchases …

By making the programme time-limited, the Bank was able just about to pass its intervention off as justified on financial stability grounds. It would have been game over had Bailey made the programme open ended.

Warner was clearly glad the Establishment was in charge again:

“Economic orthodoxy” is back in the saddle. But then it never really went away. Instead we had a brief aberration in which the Government, having dispensed with all sensible advice, thought bizarrely that it could defy gravity.

If it had been done differently it might have succeeded, but it was not. We’ll be paying the consequences in reduced standing and prosperity for years, if not decades, to come.

He blames Truss and Kwarteng for a short-lived plan that was never given a chance.

Note that he has nothing in his article about QE, which really will make us pay the consequences for many years to come.

The Bank of England gets revenge

The Bank of England was offended that Kwarteng never consulted them before his fiscal event.

He probably should have done so.

Perhaps he thought they would have said ‘no’.

On Thursday, October 20, The Times reported that Sir Jon Cunliffe, deputy governor for financial stability of the Bank of England, appeared before Parliament’s Treasury Select Committee:

Sir Jon Cunliffe told a hearing of MPs that Kwasi Kwarteng, the former chancellor, did not brief Bank officials before the September 23 fiscal statement, in which he announced more than £40 billion in tax cuts.

Cunliffe said the Bank had been aware of some measures that were pre-announced, but added: “We did not get the normal briefing we would get for a budget . . . This wasn’t a budget. The process was rather different.”

That’s the polite British way of saying that they were miffed.

Cunliffe also said that there were no figures from the OBR — the Office for Budget Responsibility — to back up Kwarteng’s plan. This is the same OBR that cannot predict anything accurately. The OBR were not due to make a projection until November, as I recall:

“When [the Treasury] briefs us normally on the budget, we see the Office for Budget Responsibility costings and that is what we take into account for monetary policy. But there were no OBR costings. It was a different sort of event in many respects,” he told the Treasury select committee.

However, all is well now that Jeremy Hunt is Chancellor:

Cunliffe said he expected the Bank to get a full briefing on the contents of the upcoming medium-term fiscal plan from Jeremy Hunt … The plan is expected to lay out new tax-raising measures, cuts to public spending and the government’s new fiscal rulebook, along with the OBR’s assessment …

It all sounds rather scary. This is a long-term plan to make the middle class poorer, make no mistake.

Meanwhile, global turmoil in world markets

When these articles were written, Western economies were in turmoil.

This had nothing to do with Kwasi Kwarteng or Brexit.

On Thursday, October 14, the Japanese yen had hit a 32-year low against the US dollar and mortgage rates were rising in the US:

On October 15, Germany’s inflation rate reached a 70-year high. We cannot blame Brexit, Kwarteng or Truss for that:

We are in for years of obfuscation ahead.

I am not looking forward to Jeremy Hunt, with his supercilious smile, mansplaining to us the ‘difficult decisions’ he will have to take. He is a successful businessman. He has no idea how ordinary Britons live.

Worst of all, he will lie and lie about the costs of Brexit, of this we can be sure.

As for Rishi? I don’t trust him an inch. He’s already promised billions in climate change reparations this week at COP27. Those won’t be one-off payments, either, even though they’ll be billed as such.

What about the British taxpayer? Answer there came none.

At midday on Wednesday, October 20, 2022, Liz Truss did a good job at Prime Minister’s Questions (PMQs).

She looked normal and bouncy, like the woman we saw in the Conservative Party leadership hustings only a few weeks ago. She was good at the despatch box, including against the leader of the Opposition, Labour’s Keir Starmer.

Afterwards, I thought, ‘Phew. Looks like a drama-free day for once’.

By mid-afternoon, all hell broke loose and continued into the evening.

Suella Braverman

Suella Braverman was doing a great job as Home Secretary.

Liz Truss appointed her on September 6.

Many outsiders do not know that Braverman is of mixed race, born to parents of Kenyan and Mauritian heritage.

On September 7, ice cream moguls Ben & Jerry were quick to criticise her plans to stem immigration:

The Telegraph reported (purple emphases mine):

Ice cream company Ben & Jerry’s is facing criticism for publishing a to-do list for Suella Braverman, the new Home Secretary, suggesting she should “scrap the Rwanda plan” and take dessert breaks.

The firm’s UK Twitter account tweeted a message of congratulations to Ms Braverman, accompanied with the image of a list including various objectives for her first day in the role on September 7, such as to “introduce safe routes to the UK for people seeking asylum” and “lift the ban and give people seeking asylum the right to work” …

It came as Ms Braverman made her first speech to Home Office staff on Wednesday, after which it was suggested that she could seek joint beach patrols with the French to help prevent Channel migrant crossings as part of any deal to continue UK funding …

On Wednesday in an address to a packed out atrium of Home Office staff, Ms Braverman said that tackling the Channel migrant crisis was going to be one of her “clear priorities” as she told them she was going to “develop some obsessions.”

“This is not just a manifesto pledge, people are dying,” she said, as she promised to take a “firmer line” against people traffickers. It was one of three priorities alongside making streets safer through a back-to-basics approach to crime with the extra 20,000 officers and counter-terrorism

Braverman, who is a barrister, has a brilliant mind but takes time out for mindless entertainment:

Asked on Wednesday by Home Office staff what she does to unwind, she said that other than spending time with her family, it’s “trash TV” and singles out Married at First Sight, Love Island and First Dates.

The Times had more:

Home Office officials appeared relaxed about Braverman’s appointment, with one source in the department telling the journalist Nicola Kelly: “Anyone — Suella included — would be better than what we’ve had.”

Braverman became the first practising Buddhist to be appointed to the Cabinet and took her oath of office when appointed an MP on the Dhammapada, one of the best known Buddhist scriptures.

The new home secretary, born Sue-Ellen Cassiana Fernandes to a mother from Mauritius and a father from Kenya, married Rael Braverman in 2018 in a ceremony in the House of Commons.

He said that she invited him to the Houses of Parliament as their first date and the couple have told how their shared love of politics is what “allowed their romance to blossom”.

They have two children, aged three and one, and Braverman became the first cabinet minister to go on maternity leave.

It was a huge deal. I remember watching her in Parliament on the day before she went on maternity leave. She was grateful for that opportunity:

As Attorney General, she banned diversity training in her department when she returned from maternity leave.

On August 4, 2022, the Mail reported:

Mrs Braverman, the Government’s chief legal adviser, has scrapped diversity and inclusion training in her department having discovered that hundreds of her lawyers spent 1,900 hours on the woke lectures last year.

Speaking to Talk TV yesterday, she said: ‘I looked at the training materials and I was very sad at what very intelligent, fair-minded, professional people were being taught.

‘This training stuff was based on a premise that someone like me, an Asian woman from a working-class background, must necessarily be a victim, must necessarily be oppressed, must necessarily be a victim of white privilege and white fragility.’

She said that rather than uniting people, it divides them by cohorts ‘based on different kinds of grievances’.

‘I don’t think it’s the right way to spend taxpayers’ money, I don’t think it’s the right way to use vital civil service resource when we’ve got a Passport Office that needs to work harder on delivering passports and we’ve got a DVLA that needs to be quicker at issuing driving licences,’ she added.

Her first achievement was to be in post during the Queen’s funeral events, which went superbly.

Her second was to order an urgent enquiry into why June’s scheduled flight to Rwanda had to be abandoned.

On October 15, The Telegraph told us of the results:

A company owned by a lawyer who helped block the Government’s Rwanda deportation flight was given taxpayers’ money to train immigration advisers, The Telegraph can disclose.

More than £100,000 was awarded to HJT Training – a firm run by two barristers at the chambers which grounded a flight to the African country in June.

A Home Office source said Suella Braverman, the Home Secretary, had instructed civil servants to undertake an “urgent review” of the contract, amid claims from Tory MPs the quango responsible for overseeing immigration advice could have been hijacked by activism.

HJT Training and the quango – the Office for the Immigration Services Commissioner (OISC) – both denied there was any conflict of interest and they are not accused of any wrongdoing

Two of HJT Training’s four directors – Mark Symes and David Jones – are barristers at Garden Court Chambers.

On June 14, the chambers secured injunctions at an emergency hearing before the Court of Appeal which prevented a plane from removing asylum seekers to Rwanda.

Mr Symes, who is listed on Companies House as having a “significant control” in HJT Training, was a member of the team.

Mr Jones did not act in the case. Garden Court Chambers said the asylum seekers they were representing all “had strong cases for asylum in the UK” and their stories demonstrated the “inhumanity in the Rwanda policy”.

Her third achievement was deporting 11 Albanians shortly after they crossed the Channel in small vessels.

On October 18, The Guardian reported concerns from human rights groups, but this is the nub of the story:

The Albanians are thought to have arrived in the UK last week and were taken from Manston in Ramsgate where the Home Office processes small boat arrivals, to Stansted airport from where they were put on a plane back to Albania on Wednesday. It is thought to be the first time small boat arrivals have been put on a plane directly from Manston.

Her fourth achievement was seeing the Public Order Bill debated and passed in the Commons that day:

Her closing remarks in that debate will be remembered for some time to come:

When I was the Attorney General, I went to court to establish that it is not a human right to commit criminal damage. The Court of Appeal agreed with me in the Colston statue case that serious and violent disorder crosses a line when it comes to freedom of expression. That is common sense to the law-abiding majority.

Since 1 October alone, the Metropolitan police have made over 450 arrests linked to Just Stop Oil, and I welcome this, but more must be done. That is why I welcome the fact that, today, Transport for London has succeeded in securing an injunction to protect key parts of the London roads network. That is an important step forward in the fight against extremists. However, these resources are vital and precious, and this has drained approximately 2,000 officer days at the Met already. Those are resources that are not dealing with knife crime and are not dealing with violence against women and girls.

I am afraid to say—and I will come to a close soon—that that is why it was a central purpose of the Police, Crime, Sentencing and Courts Bill, now an Act, to properly empower the police in face of the protests, yet Opposition Members voted against it. Had Opposition Members in the other place not blocked these measures when they were in the Police, Crime, Sentencing and Courts Bill, the police would have already had many of the powers in this Bill and the British people would not have been put through this grief. Yes, I am afraid that it is the Labour party, the Lib Dems, the coalition of chaos, the Guardian-reading, tofu-eating wokerati and, dare I say, the anti-growth coalition that we have to thank for the disruption we are seeing on our roads today. I urge Opposition MPs and Members of the other place to take this second chance, do the right thing, respect the rights of the law-abiding majority and support this Bill.

The bill passed: 283 to 234.

The next day, Wednesday, I tuned in to GB News late that afternoon to find out that Braverman had resigned or been sacked:

As such, Braverman holds the record for being the shortest-serving Home Secretary at 43 days.

The next shortest-serving was fellow Conservative Donald Somervell at 62 days, says The Guardian:

Somervell held the post from May to July 1945 in Winston Churchill’s caretaker government before it was defeated in a general election.

Truss will have the shortest record as a serving Prime Minister when she leaves next week.

Grant Shapps, former Transport Secretary, replaced Braverman as Home Secretary. It is hard to imagine that he could do the job.

Nigel Farage said that this was a coup:

You could not make this up.

Guido Fawkes reported, alluding to her Public Order Bill closing speech (emphases his):

The Guardian gets the scoop that Suella Braverman is out as Home Secretary “at the behest of the Chancellor”.

Sources claimed the move was at the behest of the new chancellor, Jeremy Hunt, who has taken over control of the government’s economic response following Truss’s disastrous mini-budget, but who they claimed was now “pulling the strings”.

A major victory for tofu lovers everywhere…

UPDATE: Reports suggesting she was fired for breaching the ministerial code, after handling sensitive documents on a private phone. Chaos…

Anyone wondering if they are part of what Braverman called the ‘tofu wokerati’ can take a Times quiz and find out for sure.

Not surprisingly, I came in the middle with mostly ‘B’ answers to the multiple-choice questions:

Borderline. You know, in your heart, that the wokerati are a real and dangerous thing and definitely not some made-up term chucked about by a desperate home secretary. Come on! You know tofu is bad, nicely crisped or not. You’re just too wrapped up in seeming “reasonable” and with “seeing both sides of things”. Yes, your monthly mortgage repayments have gone up so much that you’ve had to sell one of your children … Come on. Time to get off the fence.

Braverman quickly posted her letter of resignation online:

Patrick Christys analysed it on GB News, pointing out the fourth paragraph, particularly the second sentence:

It is obvious to everyone that we are going through a tumultuous time. I have concerns about the direction of this government. Not only have we broken key pledges that were promised to our voters, but I have had serious concerns about this Government’s commitment to honouring manifesto commitments, such as reducing overall migration numbers and stopping illegal migration, particularly the small boat crossings.

While Braverman went on to speak at a Diwali reception sponsored by the India Global Forum that evening, the political animals among us were dissecting what really happened:

Boris Johnson’s former adviser Dominic Cummings said that what Braverman did was not a sacking offence. ‘OFF-SEN’ is shorthand for Official-Sensitive and ‘CABOFF’ is Cabinet Office:

Former Conservative MP Anne Widdecombe told Dan Wootton the same thing that evening:

The Guardian dissected Braverman’s letter paragraph by paragraph; excerpts follow, bold emphases theirs:

What she said

Earlier today, I sent an official document from my personal email to a trusted parliamentary colleague as part of policy engagement, and with the aim of garnering support for government policy on migration. This constitutes a technical infringement of the rules … nevertheless it is right for me to go.

What she meant

Braverman devoted the top two paragraphs of her letter – less than half – to addressing the issue she said she was resigning over, making clear she realised she had broken the ministerial code by storing government documents on a personal device and sending those to a “trusted parliamentary colleague”. She left herself little wriggle-room and wholly accepted the mistake. It means in the future she will be able to say she stepped down swiftly and try to brush away suggestions about her being unfit to rejoin the government.

What she said

Pretending we haven’t made mistakes, carrying on as if everyone can’t see that we have made them, and hoping that things will magically come right is not serious politics. I have made a mistake; I accept responsibility; I resign.

What she meant

Not hard to work out what she is referring to here. The parallel between Braverman taking responsibility for her mistake and Truss being accused of refusing to acknowledge the pain caused by her mini-budget is plain to see. Truss has recently said she takes responsibility for the chaos caused. If she were to follow the logic set out by the former home secretary in this paragraph, she would need to resign.

The analysis also addressed Truss’s brief letter of acknowledgement:

Liz Truss’s reply

I accept your resignation and respect the decision you have made. It is important that the ministerial code is upheld, and that Cabinet confidentiality is respected.

What she meant

Significantly shorter in length and far from gushing about Braverman’s performance as home secretary, Truss ensures that it is known the home secretary is stepping down squarely because of her breach of the ministerial code. Given she still has no ethics adviser, this is a quick decision the prime minister must have come to but she is keen to make sure there is no ambiguity.

Readers will be left with the impression there is no love lost between the two women.

The Telegraph reported that there was more to the story than a breach of the ministerial code. The two women had a row over immigration on Tuesday night, with Jeremy Hunt on hand.

Note that the Office for Budget Responsibility wants more migration, which isn’t surprising, as they are left-leaning:

The fuse for Suella Braverman’s resignation was lit on Tuesday night when she had a heated face-to-face row with Liz Truss and Jeremy Hunt, her new Chancellor, over their demands to soften her stance on bringing down immigration.

Friends said the Home Secretary was appalled that they wanted her to announce a liberalisation of immigration to make it easier for the Office for Budget Responsibility (OBR) to say the Government would hit its growth targets – a key plank in Mr Hunt’s strategy to restore market confidence.

Suella said, this is insane, why are we trying to appease the OBR? Is everything getting thrown out the window?” said one of her allies …

Within 24 hours of her “fiery” 90-minute meeting with the Prime Minister and Mr Hunt, Ms Braverman had been forced to resign after being accused of breaching the ministerial code on two counts for sending official documents to another MP from her personal email …

It now poses a threat to the future of the Prime Minister after Ms Braverman used her resignation letter to say she had “concerns” about the direction of the Government and the breaches of its manifesto commitments on immigration.

However, the most incendiary was a coded attack on Ms Truss’s integrity in which the Prime Minister’s former leadership rival said “the business of government relies upon people accepting responsibility for their mistakes”

It had been intended at the start of the week that Ms Braverman would set out the new immigration policy on Thursday with a meeting of the Cabinet’s home affairs committee, with Mr Hunt, Therese Coffey, the Deputy Prime Minister, and other senior ministers due to finalise the plans on Wednesday lunchtime.

However, Mrs Braverman never attended the meeting after sending an email on Wednesday morning intended for Sir John Hayes, the chairman of the Common Sense group of Tory MPs, containing Government documents about immigration.

The Home Secretary accidentally clicked on the wrong drop-down tab on her email and sent the document from her personal email address to a staffer who works for Tory MP Andrew Percy.

Mr Percy then complained to Wendy Morton, the Government’s Chief Whip, who reported the leak to the Cabinet Office, before Prime Minister’s Questions on Wednesday.

Simon Case, the Cabinet Secretary, investigated and rapidly concluded Ms Braverman had broken the ministerial code on two counts.

One was on part 2.14 of the code, the “security of government business”. That section says “ministers have an important role to play in maintaining the security of Government business”.

The other was 2.3, “collective responsibility”. That states “the internal process through which a decision has been made, or the level of Committee by which it was taken should not be disclosed”.

Ms Truss then confronted Ms Braverman with the findings. She made clear what should follow from ministerial rule breaches, according to allies, leaving Ms Braverman to resign.

There is a dispute over the nature of the documents that she emailed. Ms Braverman maintains it was a draft written ministerial statement (WMS), due for publication imminently and much of which had already been briefed to MPs.

Downing Street sources were, however, incensed by the claim that it was only a WMS which was made public. Instead, the sources said it was the contents of a sensitive internal policy document that Ms Braverman had passed on.

Allies of Ms Braverman said she was told by Ms Truss that if the Government defended her, it would be at risk of “salami slicing” by critics trying to pick off ministers.

“Liz says: ‘If you stay, we’ll have to defend you and it will salami slice our credibility. For your own sake you should go’,” said one ally.

“Suella thought ‘are you serious, you’re not even going to defend anyone over anything?’ She said: ‘Fine, if you won’t stand up for me, I’ll go’.”

The row meant that Ms Truss had to pull out of a visit to a venue near London. Ministers briefed privately that she was detained on a “national security issue”.

Within two hours Ms Braverman had quit

Allies of Ms Braverman said she was in a minority in Cabinet in her attempts to resist liberalising migration to boost growth and the arrival of Mr Hunt as Chancellor appeared to reinforce that majority. In his leadership bid in 2019, he vowed to abandon Mrs May’s immigration target of tens of thousands

Ms Braverman’s refusal to accept an “open borders migration policy” with India proved one flashpoint – and was blamed by critics for delaying efforts to secure a trade deal with the second most populous nation in the world …

Migration has already hit a new high as more than one million foreign nationals were allowed to live, work or study in the UK in a year for the first time.

Wendy Morton

As if Braverman’s departure wasn’t enough during the day, there was more to come with Labour’s motion in the Commons that evening, Ban on Fracking for Shale Gas Bill.

Although the debate was about banning fracking, the results of the vote were one of confidence in Liz Truss’s premiership. As such, Conservative MPs were told there was a three-line whip. There are Conservative MPs who would love a fracking ban.

The Commons was noisy on both sides of the chamber during the debate. I watched the last hour or so.

At the end, Graham Stuart, the Minister for Climate, responded on behalf of the Government. He sowed doubt as to whether this was a whipping matter for Conservatives:

It is a great pleasure to wind up this debate, to which there have been so many excellent contributions from across the House. Perhaps not for the first time, the right hon. Member for Doncaster North (Edward Miliband)—he is an extremely clever man, for whom I have a great deal of respect—has been a little bit too clever by half. Perhaps if more drafting had gone into this, instead of seizing the Order Paper we could have had a different style—[Interruption.] It was an attempt to seize the Order Paper. Quite clearly, this is not a confidence vote[Interruption.] Obviously, this is not a confidence vote; it is an attempt—[Interruption.]

Conservative MP Andrew Percy intervened:

The Minister is absolutely right about the green revolution, in which our region in the Humber is playing such a big part. I ask him to reflect on the speeches that have been made today. If this was a clear vote on whether or not we should have fracking, I would be in the Lobby with the Opposition

Labour’s Ed Miliband, who was leading his party’s motion, then asked for clarification:

For the guidance of the House, the Minister said something very important from the Dispatch Box: he said that this is not a confidence motion. I think Conservative Members want to know, because if he confirms that statement, they can vote for our motion in the safe knowledge that they can be confident in the current Prime Minister. Will he confirm that?

Stuart said he had already given the answer more than once. Another Labour MP intervened to ask for clarification.

Then another Conservative MP, Ruth Edwards, intervened:

I really need to press the Minister on this question of a confidence vote. Many of us have been told today by our Whips that if we vote for, or abstain from voting against, this motion, we will lose the Whip. Will he please confirm whether that is the case?

Stuart replied:

That is a matter for party managers, and I am not a party manager.

The Telegraph explained:

… the deregulatory side of the growth package is under threat, with Tory MPs wary of relaxing planning laws and seeking solid guarantees that fracking has local support before going ahead. Ms Truss’s difficulty is that on all these issues she could face rebellions and her beleaguered position makes it harder to persuade her party to support government policy.

Tonight’s Labour procedural vote on fracking, which was originally said to be a confidence matter, was a case in point. Although the Government won, the chaos surrounding the vote only reinforced the sense of a parliamentary party now edging towards open mutiny.

The division — the vote — went on for longer than usual. Madam Deputy Speaker, Dame Eleanor Laing, asked the Serjeant at Arms to investigate the No lobby.

After the results were read, showing that the Government’s stance on fracking only with local approval prevailed, the Shadow Leader of the House, Thangham Debbonaire, raised a point of order:

On a point of order, Madam Deputy Speaker. There are very strong rumours that the Government Chief Whip has apparently resigned. I wonder if it is possible to get some clarity[Interruption.] More than rumours[Interruption.] Well, if Government Front Benchers want to say no. I seek your guidance, Madam Deputy Speaker, on whether or not that can be confirmed, given that this is a matter of parliamentary discipline?

Laing said she had not been informed of any Government resignations.

Then Liberal Democrat MP Tim Farron asked whether this was actually a vote of confidence:

On a point of order, Madam Deputy Speaker. I wonder whether you could clarify that the Minister closing the debate we have just had from the Dispatch Box informed his colleagues that it was not a vote of confidence, when we saw earlier, in writing from the Government Deputy Chief Whip, that it was. Could it be possible that Government Members voted in the Division just now without any clarity on what it was actually they were voting for?

Laing replied:

I thank the hon. Gentleman for his point, which of course is not a point of order for the Chair. My concern is that what is said on the Order Paper is correct and accurate, and it is. I thank the hon. Gentleman for the point he raises, but it is not one on which I can judge. Ministers are responsible for their own words.

Then Labour’s Chris Bryant raised a point of order:

On a point of order, Madam Deputy Speaker. I urge you to launch an investigation into the scenes outside the entrance to the No Lobby earlier. As you know, Members are expected to be able to vote without fear or favour and the behaviour code, which is agreed by the whole House, says that there shall never be bullying or harassment of Members. I saw Members being physically manhandled into another Lobby and being bullied. If we want to stand up against bullying in this House of our staff, we have to stop bullying in this Chamber as well, don’t we? [Interruption.]

Laing replied:

Order. We are talking about behaviour. We will have a little bit of good behaviour for a moment on both sides of the House.

The hon. Gentleman raises an important matter about behaviour. He knows better than anyone else that we have an extremely good system for investigating allegations of bullying, intimidation or bad behaviour. If the hon. Gentleman cares to bring evidence and facts to me, I will make sure that the matter is properly investigated. Of course, we must have decorous behaviour at all times, so we will now proceed quietly and politely.

Later that evening, The Guardian reported:

Amid chaotic scenes in the Commons, it was reported that Wendy Morton, the chief whip, and her deputy, Craig Whittaker, had left the government. However, after hours of confusion Downing Street released a statement saying the two “remain in post”

The change of personnel in the second of the four great offices of state came on a frantic day which also saw a series of Tory MPs, including Truss’s net zero tsar, rebel in a fracking vote, another U-turn over the pensions triple lock, and a mauling from Keir Starmer at prime minister’s questions.

After the government won a vote to defeat a Labour motion to ban fracking, the Labour MP Chris Bryant told the Commons in a point of order that he had seen some Tory members “physically manhandled” by ministers into voting for the government.

Just after midnight on Thursday morning, The Telegraph reported on the chaos around the No lobby.

Things did not look good for the Prime Minister:

The Chief Whip was forced out of Government and then reinstated on Wednesday night, capping off a day of chaos for Liz Truss after a confidence vote descended into allegations of backbenchers being manhandled through the lobby. 

It had been reported earlier in the evening that Wendy Morton, one of Liz Truss’s closest allies, had been ousted and that her deputy, Craig Whittaker, quit in protest at her treatment.

But hours later the position was reversed, with a No 10 spokesman issuing a statement to say that the “chief and deputy chief whip remain in post”.

Downing Street sources insisted Ms Morton resigned, but some MPs claimed that she marched out of the Chamber during the vote on fracking before being sacked by Ms Truss.

Meanwhile, Jacob Rees-Mogg, the Business Secertary, insisted that “this is a Government that is functioning well.”

It came at the end of a day of high drama in Westminster, which saw confusion reign over whether or not Conservative MPs would lose the whip for rebelling over a Labour opposition day debate on fracking.

The motion, which was defeated, would have guaranteed Commons time to debate a new law to ban fracking once and for all.

The vote meant that Ms Truss faced a showdown with rebellious MPs, many of whom have openly expressed their opposition to her plans to lift the moratorium on fracking.

But the Prime Minister ordered backbenchers to support the contentious policy – a high risk strategy given the already mutinous mood within the party.

On Wednesday morning, Tory MPs were told by the whips’ office that the vote was a “100 per cent hard three line whip”.

The message from Mr Whittaker went on to say: “This is not a motion on fracking. This is a confidence motion in the Government.

“I know this is difficult for some colleagues, but we simply cannot allow this. We are voting no and I reiterate, this is a hard three line whip with all slips withdrawn.”

If a vote is being treated as a matter of confidence in the Government, it usually means that MPs who vote against it would be expelled from the Conservative Party and have to sit as independent candidates.

Throughout the afternoon, a string of senior Tory MPs broke ranks to declare that they would be prepared to “face the consequences” of voting against the Government.

Truss’s Net Zero tsar, Chris Skidmore, said he would rebel:

Several other Conservative MPs echoed his sentiment.

When it came time to vote on the motion:

Tory backbenchers remained completely in the dark as to whether they would lose the whip for voting against the Government or not.

The scenes must have been unbelievable:

It was at this point that the mayhem appeared to reach boiling point, with Labour’s Chris Bryant claiming that Tories were “physically manhandled” into the “no” lobby.

Ms Truss was reportedly yelled at by rebel MPs as she went through the lobby. Meanwhile, Mr Whittaker was reportedly overheard saying: “I am f***ing furious and I don’t give a f*** any more.”

According to some reports, Ms Morton resigned and left the Chamber as the voting was taking place, with Ms Truss grabbing her arm in an attempt to persuade her to reconsider. The Prime Minister then left the lobby trailing behind Ms Morton, and in the chaos, did not manage to vote herself.

While the Government won the vote, there were no fewer than 40 Tory abstentions – including Kwasi Kwarteng, who was sacked as chancellor on Friday, Theresa May, former prime minister, and Ms Truss herself.

I saw a later report that said that Truss voted but her pass card did not work, which was why her vote did not immediately show.

Chris Bryant alleged that Cabinet members were involved in the chaos:

It was unclear how many of the 40 abstentions were because MPs were unavoidably away from Parliament – Boris Johnson, for example, is currently on holiday – or because they were abstaining as a point of principle.

Mr Bryant told Sky News that Cabinet ministers Therese Coffey and Mr Rees-Mogg were among a group of senior Tories who were putting pressure on Conservative MPs to vote against the Labour motion on fracking.

“There was a bunch of Conservative Members obviously completely uncertain whether they were allowed to vote with the Labour or against it,” he said.

“There was a group including several Cabinet ministers who were basically shouting at them. At least one member was physically pulled through the door into the voting lobby. That is completely out of order.

“I know that Therese Coffey was in the group. I know that Jacob Rees-Mogg was in the group and there were others as well. The group all moved forward with one member.”

Other MPs were also upset at the lack of clarity:

One furious MP said they felt the Government had deliberately tried to trick backbenchers into supporting it with the mix-up over whether the vote was a confidence matter. They said this amounted to a “breach of trust” between No 10 and MPs that would be almost impossible to repair.

Another senior Tory MP put the confusion down to a “cock up” between No 10 and the whips office and said the confidence vote was in fact meant to be attached to the Government’s motion, and not the one tabled by Labour

One senior Tory MP appeared to sum up the mood in the party and said the past 24 hours had been “beyond comedy”, adding: “You couldn’t make it up if you spent 20 years trying to write this. The greatest author in the world couldn’t make it up.”

Business Secretary Jacob Rees-Mogg attempted to shed light on the situation:

Speaking to Sky News after the vote had ended, Mr Rees Mogg said he did not know whether Ms Morton was still in post or not, saying: “I am not entirely clear on what the situation is with the Chief Whip.”

He explained that the confusion arose over whether the Commons vote on fracking was a confidence vote because of a message sent by a “junior official in 10 Downing Street”, suggesting they did not have the authority to do so.

Asked whether the Government “blinked” and U-turned on the confidence vote over fears of losing it, he told Sky News: “I don’t think that’s a fair way of looking at it. I think what happened was that, late in the day, a junior official at 10 Downing Street sent a message through to the front bench that it was not a vote of confidence and nobody else was aware of that.

“The whips were not aware of that, I was not aware of that and most members thought that it was a vote of confidence. It was simply one of those unfortunate miscommunications that occasionally happens.”

He added: “It’s one of the issues you always face in government that people say they speak for Downing Street without having actually ever bothered to get the authority of the Prime Minister and unfortunately on this occasion it fed through immediately to the floor of the house.”

The conversation about the vote continued on Thursday, culminating in Liz Truss’s resignation.

More about this debacle will follow in my post on Monday.

Yesterday’s post introduced the sad saga of Prime Minister Liz Truss and her first Chancellor Kwasi Kwarteng over their fateful fiscal event of Friday, September 23, 2022.

My post ended with the market turmoil and negativity up to Friday, September 30.

Many of us hoped that his plan would work. After all, the market turmoil is global, for different reasons in different Western countries.

What motivates Kwarteng

On Wednesday, September 28, Rachel Sylvester wrote an interesting profile of Kwarteng for The Times, complete with photos of him and Truss from their earlier days as MPs. One from 2013 shows them together at a book awards event and another from 2018 has them enjoying a picnic at that year’s Hay literary festival.

Excerpts follow, emphases mine.

Kwarteng was pleased with his fiscal event and believed the market’s jitters were temporary:

So sure was he of his plan that he smiled as he announced that he was abolishing the cap on bankers’ bonuses introduced by David Cameron in 2014.

Within hours the pound had tanked, but Kwarteng doubled down, promising that he had “more to come”. As the markets reacted to the UK’s biggest tax cuts in 50 years, the pound fell to a record low against the dollar. One senior figure in the City described the fiscal statement to me as “economically reckless”. Yet the chancellor did not blink, with an ally suggesting that this was just “the City boys playing fast and loose with the economy” and insisting, “It will settle.”

Although it is unclear what Kwarteng thinks today, he and Truss were allies dating back at least a decade:

At 47, Kwarteng is the same age as Liz Truss and is one of her closest political allies. Earlier this year, he moved into a house just down the road from her in Greenwich and now they are neighbours in Downing Street. His appointment as chancellor was one of the first decisions she made when it became clear that she was likely to win the Tory leadership contest. Truss and Kwarteng have been working for weeks on their “shock and awe” shake-up of taxes, including changes to stamp duty and the abolition of the top 45p rate of income tax. The blueprint has been in their dreams for years

His allies say his politics have also evolved. In 2012 the chancellor was one of a group of free marketeers – including Truss – who published a pamphlet called Britannia Unchained, which described British workers as “among the worst idlers in the world” and railed against a “bloated state, high taxes and excessive regulation”. He has since distanced himself from the controversial text.

His parents arrived in England from Ghana. Both received a first-class education and had top-flight careers:

An only child, Akwasi Addo Alfred Kwarteng was born in Waltham Forest, northeast London, in 1975. His parents had come to Britain as students in the Sixties. His father, Alfred, an economist for the Commonwealth Secretariat, was educated in Ghana at an Anglican school with a Winchester-educated English headmaster. His mother, Charlotte, a successful barrister, was an admirer of Margaret Thatcher. “It was a self-reliance thing,” Kwarteng once explained. She instilled in her son a ferocious work ethic and education was of fundamental importance to the family.

When his father was posted to Switzerland, Kwasi was sent at the age of eight to board at the fee-paying Colet Court – now St Paul’s Juniors – in southwest London. He admits it was probably too young to be separated from his parents but he not only survived, he thrived. He won a scholarship to Eton where friends recall a “lanky malcoordinated” but hard-working teenager who was determined to make the most of the opportunity he had been given.

Like Boris Johnson, Kwarteng played the wall game – a brutal mixture of football and rugby. “He’s so tall that he was a great addition to any team,” one fellow pupil recalls.

Kwarteng is not attracted to identity politics:

Kwarteng never expressed his desire to be “world king” in the way that Johnson did. “I was slightly surprised when he went into politics,” says a contemporary from Eton and Cambridge. “He wasn’t in a political activist circle at university. People sometimes think one Etonian is just like another, but Boris and Kwasi are very different. Boris wants to rule the world; Kwasi wants to solve problems, rather than just being in power for the sake of it. He’s not going to go out there to break rules. Kwasi does listen to people and wants to discuss ideas” …

Kwarteng’s 2011 book Ghosts of Empire is a far more nuanced analysis than the rose-tinted version of British history favoured by Tory traditionalists. He rejects the “sterile debate” over whether “empire was a good or bad thing” and concludes, “Much of the instability in the world is a product of its legacy of individualism and haphazard policymaking.” According to those who know him well, the chancellor is uncomfortable with “culture war” politics and describes his own philosophy as “relentless pragmatism”. One aide insists, “He is sometimes lazily pigeonholed as a ruthless, black and white free market ideologue. It is true that he is a low-tax Conservative. He’s a free marketeer, but there are occasions when the state does need to intervene.” In 2019, the chancellor told a Tory party conference event: “There’s nothing [better] to convert someone from being a radical free marketeer to seeing the virtues of government action than making them an energy minister.”

He focused on his studies at Trinity College, Cambridge:

“As a student he was charismatic and a bit chaotic,” says a friend from that time. “He was scholarly. The everyday run of things didn’t worry him. He would be immersed in his books.”

He began meeting the great and the good in the Conservative Party:

… the future chancellor was spotted by Dr John Casey, an English fellow and legendary figure among Conservative thinkers, who invited him to his dining club, the Michael Oakeshott Society. There Kwarteng met Tory politicians and journalists such as Norman Lamont, Geoffrey Howe, Norman Tebbit and Charles Moore. Casey insists it was never a political society: “It is devoted to intelligent conversation and strong views don’t go with that.

“He has a first-rate mind and a first-rate personality,” Casey continues. “He is intellectually and personally equipped to be chancellor. He’s a cultured man, an intellectual – there are very few in politics. He’s not like anybody else; he’s himself.”

After Cambridge, Kwarteng won a Kennedy scholarship to Harvard. When he finished his time there, he returned to Cambridge to earn a doctorate in economic history, after which the City of London beckoned:

He then worked as a fund manager at the bank JP Morgan and at Odey Asset Management, run by the Brexit-backing investor Crispin Odey, as well as chairing the Bow Group, a conservative think tank.

His political career began afterwards:

In 2005 he stood as the Conservative candidate for Brent East, coming third, before being elected as MP for the safe Tory seat of Spelthorne in Surrey in 2010, the same year as Truss entered politics. He spent several years on the back benches after criticising coalition policies including the help-to-buy scheme. “He’s genuinely clever, with a very strong academic, scholarly mind,” one old friend says. “But that academic, scholarly mind meant he was happy to speak out against David Cameron and George Osborne and didn’t really worry about the consequences.”

Kwarteng understands the importance of a Prime Minister and Chancellor working closely together:

For now, Kwarteng and Truss are united on economic policy. The chancellor tells colleagues that his role is to support the PM, explaining: “I will facilitate; I won’t emasculate.” One ally says, “Kwasi was completely disillusioned with the battles between No 10 and No 11 under Rishi and Boris. When No 10 and No 11 are at war, nothing works. Kwasi will deliver what the prime minister wants. She is the first lord of the treasury, Kwasi is the second lord of the treasury. That will change the entire mood and approach of government. The institutions will try to break No 10 and No 11 apart, but they underestimate the strength of the relationship between Kwasi and Liz.”

Hmm. Interesting.

British public gaslit

The last week of September was one of news about unfunded tax cuts, the Bank of England stepping in to calm the UK markets, how Kwarteng and Truss didn’t bother to communicate their economic plan and how awful everything was.

On Friday, September 30, Tom Harwood, GB News’s political correspondent and Guido Fawkes alum, put things into perspective, rightly saying that the media were gaslighting Britons:

That day, The Telegraph‘s Matthew Lynn wrote, ‘There’s no such thing as unfunded tax cuts — it’s our money’:

It is hard to imagine that three simple words could be quite so lethal. But over the last few days “unfunded tax cuts” have been held responsible for the potential destruction of the British economy, and, come to think of it, the global financial system as well.

We are told that the Government’s £45bn package of cuts announced last week have crashed the currency markets, sent mortgage rates soaring, and left the stock market to keel over and die. Any government crazy enough to even attempt unfunded tax cuts can expect to be evicted from office within days if not hours. 

Tosh. Although the phrase has become ubiquitous, we should be a lot more cautious about how we use it. In reality, tax cuts don’t need to be funded, for the same reason that staying home instead of going out to dinner doesn’t need to be ‘funded’, and nor does opting to spend Christmas with your parents rather than flying off to Mauritius need to be ‘funded’ either.

It isn’t spending. It is simply taking less of your citizen’s money. It is state spending that needs to be ‘funded’, and not its opposite – and until we get that straight, and change the language we use, we will never be able to have a grown-up debate about how to manage our economy.

If Kwasi Kwarteng had a grand for every time our broadcasters, newspapers, a think tank, or indeed a growing legion of City analysts, used the term “unfunded tax cuts”, or UTCs as we should probably call them, he’d have enough money to wade into the markets and send sterling back over the two dollar mark. The phrase probably has its own emoji by now, just to make it easier to discuss on WhatsApp (some sort of variant of the scowling face, I’d imagine).

Ever since the pound started falling modestly against the dollar on Monday – because after all “crashing” seems a slightly extreme term for a downwards correction of less than 10pcthe phrase has dominated the headlines.

According to just about every think tank, constant broadcasts from the BBC, dozens of newspaper analysts, the IMF, and just about every major City bank, not to mention a small army of retired central bankers, it was the Chancellor’s decision to cut a few taxes without announcing accompanying decisions on reducing spending that led immediately to a dramatic sell-off in sterling and a rise in bond yields that could only be controlled by emergency intervention by the Bank of England. 

A quick Google search yields 28,000 mentions of the phrase, and that is without even counting social media. According to the credit ratings agency Moody’s “large unfunded tax cuts are credit negative” while according to the former Bank Governor Mark Carney “the message of financial markets is that there is a limit to unfunded spending and unfunded tax cuts in this environment.”

And yet, in reality, we should be a lot more careful about the language we use. We can leave aside the point that the “unfunded” parts of last Friday’s fiscal package amount to no more than a few billion pounds, a trivial sum give the size of state spending, and that by far the largest part of it was made up of the energy support package that all sides of the political spectrum had been calling for. The more important point is this: we shouldn’t ever describe tax cuts as “unfunded”.

By definition a tax cut is not spending any money. It is simply a decision to take less from a particular group of people in one particular way

Next, the term ignores the possibility that tax cuts might pay for themselves

Finally, and perhaps most importantly, it concedes the argument before it has even begun. “Unfunded” is a boo word, and even more so when you put the inevitable “reckless” in front of it. The language deliberately skews opinion against a reform of the tax system. Even worse, it is used by banks and broadcasters who pretend they are staying neutral – when in reality they are anything but. 

fundamentally it is only state spending that needs to be funded – not leaving more money in the pockets of long-suffering taxpayers. If we could be a little clearer about that we might be able to have a slightly more sane debate about how much tax the government should be raising and how – instead of hysterical catastrophizing about UTCs.

On Saturday, October 1, The Sun rightly defended the Truss-Kwarteng plan, citing other Western economies’ woes:

https://image.vuukle.com/c4318e5c-ff26-463e-83e3-1b1398dfdcc3-adfb9f20-c294-49de-8b3e-378a6145c251

On Sunday, October 2, GB News’s and The Telegraph‘s Liam Halligan, formerly of Channel 4 News, was on the money when he said that the market meltdown was the fault of quantitative easing (QE):

… This week of financial turmoil has left millions frightened and angry.

While Kwarteng’s statement sparked last week’s alarming debt repricing, it was by no means the underlying cause. There are far bigger forces at play

what we saw last week was just the beginning of a long-term shift away from over a decade of ultra-low interest rates and quantitative easing. We’ve indulged in ultra-loose monetary policy since the 2008/09 financial crisis – a necessary emergency measure, which ossified into a lifestyle choice.

And now, the obvious excesses, dangers – and crass stupidity – of this policy, are coming home to roost.

Since that financial crisis, the Bank of England has created hundreds of billions of pounds of QE money, as have similarly aligned central banks, which have blown huge asset price bubbles in stocks, bonds and property.

QE has helped governments borrow cheaply, while making the rich even richer – which is why, having begun as a £50 billion temporary measure to inject liquidity into bombed-out banks, it has morphed, thirteen years on, into an £895 billion monster.

The early tranches of QE stayed largely within the financial system – so didn’t cause serious inflation. But the Covid-era variant, funding furlough and an avalanche of business support loans, has fed directly into the real economy – helping to explain today’s inflation predicament.

This is an inconvenient truth that no-one wants to admit – certainly not the likes of the International Monetary Fund and central bankers who oversaw QE. Better to blame an incoming Tory government ­– one led by a politically vulnerable Prime Minister, with only lukewarm support from her own MPs.

the idea that this “unfunded cut crashed the pound” is preposterous. Yet that is now the accepted political narrative – that a greed-driven Tory policy collapsed sterling and sent 10-year gilt yield surging as fears swirled of government insolvency, sending higher borrowing costs rippling across the economy, damaging hard-working families and firms.

What I suspect happened is that global currency traders, understanding the top tax cut was politically tin-eared, could see ministers were in for a kicking. With the Government introducing a potentially expensive energy price cap, the moment seemed right to start shorting – that is, betting against – the pound, knowing the media would pile in.

When that happened on Asian markets on Monday, and we woke to a plunging currency, I was astonished that ministers fell silent – given the strength of the arguments on their side

For now, the Bank of England’s intervention on Wednesday – buying gilts to rein in borrowing costsseems to have worked. By Friday, the pound was back where it was pre-statement, the 10-year yield having retreated from over 4.5pc to around 4.0pc.

But the City and Wall Street moneymen, having loaded pension schemes with billions of pounds of debt, yet again have the upper hand – effectively forcing the UK authorities to restart the QE asset-boosting machine. This cannot end well.

“Tory tax cuts”. It’s such an easy and convenient scapegoat. The truth is we’re in for a sustained period of painful adjustment – one which our political and media class must urgently start to explain.

The Times‘s Robert Colvile pointed out the global aspects of market turmoil, driven in part by the United States:

The markets were already primed to punish the UK, he [Albert Edwards of Société Générale] argues, because of the Bank of England’s decision the previous day to raise rates at a slower rate than the US and to keep trying to dispose of the assets accumulated under quantitative easing. So Kwasi Kwarteng’s decision to throw in a few more tax cuts just gave an extra push to a boulder that was already rolling

Admittedly, the attempts of some in government to blame last week’s rout in the markets entirely on global factors strained credulity. But they did have the core of a point. A year ago the Bank of England believed interest rates would stay below 1 per cent. A month ago they were set to top out at 3 per cent. By the time Kwarteng got to his feet, the expected peak had risen to 5 per cent — soaring over 6 per cent at the height of last week’s panic.

Now, some of that rise in September was probably due to anxieties about the new government. But it was also driven, yes, by global factors — in particular decisions made in Washington. Even if Kwarteng had replaced his planned statement with a lusty rendition of the Marseillaise, mortgage-holders would still be facing eye-popping jumps in interest rates. For example, at that 6 per cent rate a typical UK mortgage would, according to the Resolution Foundation, cost an excruciating £4,800 a year extra — but £3,800 of that was already on the way before Friday’s speech. The age of cheap money is over not just for Britain but for everyone.

Over the past three years, a number of conservatives must have wondered why Boris Johnson never delved deeper into economic policy. A letter to The Telegraph gives a possible explanation — global forces at work:

SIR – It takes great strength of character and conviction to stand up and face a baying mob, especially a political one. Liz Truss and Kwasi Kwarteng have my admiration.

I always wondered why Boris Johnson did not attempt to enact some of his early policies after Brexit, for which he had great public support. Perhaps he understood how the pro-EU and socialist contingents in Parliament and the wider political world would react, and was fully aware of the force that would be against him.

I wish Ms Truss and Mr Kwarteng good luck. They have shown enough courage in their beliefs to see this challenge through.

Conservative Party Conference

The Conservative Party Conference opened on Sunday, October 3, in Birmingham.

That day, The Times reported that Kwarteng had requested Cabinet ministers to cut expenditure in their respective departments:

Kwasi Kwarteng has told ministers to make cuts in their departments and warned them “we have a duty to live within our means”.

The chancellor has asked cabinet ministers to send him their “proposals to support growth” by the end of the month.

He is also launching a reprioritisation, efficiency and productivity review across the public sector, which will re-examine “existing spending commitments” and repurpose budgets to deliver the government’s “core priorities”, including growth.

I wrote about the conference, including Truss’s and Kwarteng’s U-turn on abolishing the 45% tax rate, the prominent Conservative MPs in disarray, the rebels and Truss’s closing speech.

On Monday, October 3, the duo pulled out of a fringe event, which cost £3,000 a ticket:

Nigel Farage, looking on from the outside, predicted a Labour rout in the next general election:

Meanwhile, Guido Fawkes kept us apprised of market movements, which weren’t nearly as alarming as expected that week:

He rightly criticised Labour’s shadow chancellor Rachel Reeves for stirring the pot unnecessarily:

On Wednesday, October 5, as the conference closed, Guido wrote (emphases his):

The Bank of England has been easing off its interventions in the gilt market, leaving Rachel Reeves’s hyperbolic attack lines exposed for their inaccuracies. Julian Jessop points out the fact the Bank did not have to buy any gilts again today, leaving total purchases stable at £3.66 billion. A tad short of the £65 billion she repeatedly claims. This is a further sign market jitters have been effectively mitigated, far from Labour’s claims of an “economic crash”. As a trained economist and former Bank of England employee, Rachel really must know better. Her sums were out by a factor of 17…

At the weekend, while anti-Conservative pundits were still banging on about the 45% tax rate, which Truss and Kwarteng did a U-turn on …

The Telegraph‘s Ambrose Evans-Pritchard pointed out that gas prices were already falling, indicating that ‘Liz Truss may be winning her gamble on the energy price cap after all’:

Plummeting global gas prices have slashed the cost of the UK’s energy price cap and may ultimately reduce the monthly subsidy to zero, greatly alleviating the strain on Government borrowing.

NatWest Markets estimates that the price guarantee would cost approximately £30bn over the first six months based on current futures contracts, half the £60bn figure assumed by the Treasury and the rating agencies …

While NatWest remains wary of gilts after the mini-budget and the bond shock last month, it said pessimism over the UK’s public finances may have gone too far. Gilts may no longer be a one-way bet for traders

Goldman Sachs thinks European wholesale prices may fall a further 40pc by late winter. Average energy bills in the UK would in that case fall to £2,000 or less.

The Government could put its cheque book back in the drawer.

Douglas McWilliams, from the Centre of Economics and Business Research, says that the public finances are in better shape than widely-supposed.

An odd week that began well

By Monday, October 10, things appeared to be looking up for Truss and Kwarteng.

Mel Stride MP, chairman of the Treasury Select Committee and not one of their best friends, was satisfied that the then-Chancellor agreed to review his economic plan on Halloween rather than in November:

Tuesday, October 11, was a red-letter day.

The head of JP Morgan said that Truss deserved a chance:

Guido wrote:

… Speaking last night from London with US broadcaster CNBC, Dimon backed Liz’s tax plans and hammered home the need for laser-like focus on growth – adding he’d “love to hear that out of their mouth every time a president or prime minister speaks”…

It’ll take time to execute the policies and kind of drive growth and what’s important … [but] there’s a lot of things the UK has going for it and proper strategies to get it growing faster … then it can accomplish some of the other objectives it wants to accomplish too […] I would like to see the new Prime Minister, the new Chancellor, be successful […] I think every government should be focusing on growth. I would love to hear that out of their mouth every time a president or prime minister speaks.

Another proud member of the Pro-Growth Coalition. Although he did warn the US will likely tip into recession in about 6 months…

The IMF did an about-face, as The Telegraph reported:

Kwasi Kwarteng’s tax cutting mini-Budget will help Britain to be the fastest growing major economy this year at the cost of higher long-term inflation, the International Monetary Fund (IMF) has said.

Strong momentum at the end of 2021 means UK economic growth will outpace the rest of the G7 this year. Tax cuts announced in the mini-Budget are expected to lift it even higher than the IMF’s current forecast of 3.6pc, which was published on Tuesday but finalised before the Chancellor announced his plans …

The paper‘s Ambrose Evans-Pritchard wrote, ‘Rejoice: we may be very close to Fed capitulation’:

Not only is the Fed rushing through jumbo rises of 75 points each meeting, it is also draining global dollar liquidity with $95bn a month of quantitative tightening (QT). It has never done the two together before. And it does not understand how QE/QT actually works, as admitted cheerfully by one Ben Bernanke, Nobel Prize laureate as of yesterday …

Ben Bernanke flagged the dangers of a strong dollar and the capital exodus from emerging markets yesterday. Without naming the British gilt market, he said financial stress in the international system was building up and posed a threat. “We really have to pay close attention,” he said. 

On Wednesday, October 12, it was noted that a Federal Reserve hike in interest rates took place before Kwarteng’s economic statement:

Furthermore, the US was also experiencing an unusual increase in mortgage rates, meaning that the UK was not the only country with that problem:

On Thursday, October 13, Truss had her weekly meeting with King Charles, who greeted her with ‘Dear, oh dear’ while the press were there:

What did he know?

He would have heard Foreign Secretary James Cleverly defend Truss and Kwarteng on that day’s news round. The poor man.

The Telegraph has a running diary of what went on that morning. This is the summary:

James Cleverly has warned it would be a “disastrously bad idea” to replace Liz Truss as Prime Minister.

Ms Truss is under intense pressure from some of her own MPs to abandon her economic plan following a market backlash to the measures set out in the mini-Budget.

The Prime Minister’s leadership is being questioned after little more than a month in the job, with some Tory MPs already considering who could replace her.

ConservativeHome‘s editor Paul Goodman was also on the airwaves. He told BBC Radio 4 that some Conservative MPs had suggestions for Truss’s and Kwarteng’s replacement:

The former Tory MP told BBC Radio 4’s Today Programme: “All sorts of different people are talking about all sorts of different things because the Conservative backbenchers are casting around for a possible replacement for Kwasi Kwarteng, even for a possible replacement for Liz Truss.

“All sorts of names are being thrown about, Rishi Sunak, even Boris Johnson, Kit Malthouse, Sajid Javid.

“But one idea doing the rounds is that Penny Mordaunt and Rishi Sunak, who, after all, between them got pretty much two-thirds of the votes of MPs, come to some kind of arrangement and essentially take over.”

The King probably also knew that Truss and Kwarteng were going to do a U-turn on corporation tax, which they planned to lower to 19%, as it is in Ireland:

On Wednesday, at PMQs, Truss stood by the cut:

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.

On Thursday, October 13, Guido wrote:

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.

An unpleasant surprise for Kwarteng

Meanwhile, Kwarteng was in Washington at the annual IMF meeting.

Guido’s post had an update:

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…

On Friday, October 14, we woke up to the news that Kwarteng was summoned back to London, under the guise that emergency budget negotiations had to take place. The IMF meeting was to last into the weekend:

This could mean only one thing — that his time as Chancellor was over.

Guido reported that Mel Stride was happy that Kwarteng’s economic package was about to be shot to bits:

… one source quoted in the Financial Times claims “Almost everything in the Budget is now up for grabs” …

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

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…

A Downing Street source tried to downplay Kwarteng’s return:

Kwarteng had scrambled to take the last commercial flight from Dulles Airport to Heathrow:

The next bit of news was that Truss was going to hold a press conference that afternoon.

Guido wrote:

Liz is set to U-turn on the corporation tax freeze at 2pm this afternoon. It’s rumoured she’ll whack it all the way up to 25% in the spring. Kwasi won’t be appearing alongside her…

Speculation began on who the new Chancellor would be. The Sun‘s political editor Harry Cole tweeted the following in the hours before the press conference, indicating Jeremy Hunt:

Cabinet members were correct about Jeremy Hunt:

King Charles approved the following appointments from Truss:

Nigel Farage was rightly furious about a Remainer assuming the post of Chancellor:

Harry Cole got a copy of Truss’s letter to Kwarteng, thanking him for his hard work:

The nation now had a new dream team. This seconds-long video is a must-see. The UK is doomed:

I’ll go into Truss’s press conference tomorrow.

In short, it was absolutely dire and lasted only eight minutes, which included four questions, one of which was from Harry Cole. His face is a picture:

I’ll have more tomorrow on how shocked Kwarteng must have been as well as what this means for Truss’s premiership.

Yesterday’s post introduced the ongoing Conservative Party leadership contest.

Today’s post will discuss what happened on Wednesday and lead up to Thursday afternoon’s vote, the result of which will appear tomorrow.

Before Wednesday’s vote

Guido Fawkes wrote the following on the morning of Wednesday, July 13, before the first round of voting (red emphases his, purple ones mine):

Good morning. Six of the eight remaining Tory leadership candidates face an uphill battle throughout the day, as they attempt to reach the 30-MP threshold required in the first knockout round of the contest at 6pm. Rishi now has 48 backers, meaning he can basically sit back and relax for at least the next two rounds, though that hasn’t stopped him adding Steve Barclay to his list of supporters this morning. Penny Mordaunt also has the 30 required. The other six, not so much…

All eyes are on Jeremy Hunt and Suella Braverman as the ones most likely not make it, though one of Hunt’s backers told Guido last night they believe they have the requisite support. They also described rumours that Gavin Williamson is instructing Rishi backers to temporarily support other candidates like Hunt and Kemi, so Rishi doesn’t have to face Liz in the final two, as utter rubbish, though members of other campaign teams believe it is absolutely happening. With Sajid, Shapps and Priti now out of the race, there are 30 newly floating MPs up for grabs…

News overnight includes a policy-light interview with Rishi in The Telegraph, who’s trying to get the press back onside after yesterday’s scenes at his campaign launch. He says he’ll run the economy like Thatcher if he wins. Tom Tugendhat committed to spending 3% of GDP on defence last night.  Penny has used a Times op-ed to commit to supporting families as PM. Stay tuned for her campaign launch at 10.30 this morning…

And:

from now on candidates can also vote for themselves…

Candidates experienced highs and lows, as covered below.

Nadhim Zahawi

When Boris Johnson appointed Nadhim Zahawi as Chancellor of the Exchequer on July 5, it was remarked that he is the first Chancellor with facial hair in 65 years:

Before Harold Macmillan, we have to go back another few decades to find another bearded Chancellor:

Zahawi appears to be the man who convinced Boris that he should stand down as leader of the Conservative Party. On Thursday, July 7, the Daily Mail reported:

Boris Johnson will finally announce his resignation today – but is lining up a ‘unity Cabinet’ as he battles to stay in Downing Street for months longer.

The PM admitted defeat in the wake of a shattering intervention from Nadhim Zahawi, who was only appointed on Tuesday night following Rishi Sunak’s departure. He told Mr Johnson that his situation is ‘not sustainable’.

Two days later, on Saturday, news emerged that HMRC (Her Majesty’s Revenue and Customs) were investigating Zahawi’s tax situation. Hmm:

Zahawi said on a Sunday morning news programme that, if elected Party leader, he would release his tax returns. He complained of being set upon, something Boris knows only too well:

On Tuesday, July 12, he launched his campaign video in which he tells his life story. He arrived in England from Iran with his parents. He started school not knowing a word of English. Fast forward to the past two years and he was able to live his dream. He headed the coronavirus vaccine rollout and went on to become Education Secretary. Today, he is Chancellor. Amazing:

On Wednesday morning, he told LBC’s Nick Ferrari that, if elected leader, he would give Boris a Cabinet post:

Guido has the video and concluded:

He’s the second leadership contender to make such a pledge after Suealla Braverman. Clearly Zahawi sees some benefit in associating himself with Boris. A swift change of tone considering he was calling for Boris’s resignation just a few days ago…

Agreed, but there is no way that a former Prime Minister would take a Cabinet post.

Later on Wednesday morning, someone hacked Zahawi’s campaign website and redirected it to Penny Mordaunt’s. Penny’s website also seemed to have issues:

They are not the only ones, however, as Guido reported that Rishi Sunak’s site is banned on the Parliamentary estate:

Website woes are a common theme throughout the leadership campaign, Rishi’s site is blocked in Parliament as “insecure” and candidates have had their domain registration timings scrutinised. Turns out this stuff is hard to do right…

Jeremy Hunt

Conservatives either love or loathe Jeremy Hunt.

He served as Health Secretary and then as Foreign Secretary, until Boris sacked him in July 2019.

Hunt ran against Boris in the 2019 leadership contest. In one appearance during that campaign, he said his wife was Japanese. She quickly corrected him and reminded him that she is Chinese.

I wonder if he said that on purpose, because …

During the pandemic, as a backbencher, Hunt proposed Chinese-style lockdowns and mandatory vaccines for healthcare staff.

Nadine Dorries MP recalled a conversation with Hunt in July 2020:

On Christmas Day in 2021, the Mail reported that Hunt’s wife presents Chinese state-sponsored television programmes, broadcast on Sky TV from London:

The wife of former Cabinet Minister Jeremy Hunt presents a TV show for China’s state-run media that has been accused of ‘whitewashing’ the Communist Party’s human rights abuses.

Lucia Guo, who has three children with the former Health Secretary and Foreign Secretary, appears on China Hour, a series broadcast on Sky TV that showcases Chinese culture to a UK audience.

It is made by the state-owned China International TV Corporation and British-based Dove Media, in partnership with the Communist regime’s tourist office in London.

The programme has featured reports on the effectiveness of China’s pandemic response and about the beauty of the Xinjiang region without mentioning it is the site of ‘re-education’ camps for its persecuted Muslim Uighur population. 

Ms Guo, who is originally from the city of Xi’an in central China, hosts a feature on the show called Signature Flowers of China

It has been broadcast since September and is also available on YouTube.

Human rights campaigners at the US research institute Freedom House last year accused China Hour of being part of the Chinese Communist Party’s international media web.

The programme has been praised in Beijing for its viewing figures while its reports on the pandemic have been credited with ‘playing a unique role in communicating the Chinese narration of the epidemic to the world’.

On March 13, 2020, three days before the UK’s first lockdown, Hunt wanted all British schools closed.

Although Hansard has all of Jeremy Hunt’s contributions to parliamentary debates, in May 2022, he tried to walk back his promotion of Chinese-style pandemic measures.

Someone put this graphic together around May 21, a significant date for Hunt, as you will see below:

https://image.vuukle.com/afdabdfb-de55-452b-b000-43e4d45f1094-c4c6b24c-6016-418c-aeb4-a5db26a4495c

The next day, May 22, he appeared on Sophy Ridge’s Sky News programme to say that he did not want to see a Conservative leadership contest:

Guido posted the video and this comment:

Maybe Hunt is one of these Tories who thinks it might be good to lose the next election? He could become leader of the opposition…

That day, a number of letters to the editor appeared in The Sunday Times. The week before, he had written an article for the paper outlining how he would reform the NHS.

A retired GP wrote the Times to point out that Hunt had ample time as Health Secretary some years before, yet he took no action:

What a nerve! Jeremy Hunt tells us “How I would fix the NHS” (News Review, last week) — but he was the longest-serving health secretary in British history and has a huge responsibility for the NHS being in this parlous state.

He did nothing to increase the capacity of our hospitals, which has resulted in ambulances queueing outside A&E departments, unable to discharge their patients. He pledged that by 2025 we would be self-sufficient in “homegrown” doctors, but a lack of planning has resulted in a huge shortage of NHS staff in all sectors. He went out of his way to alienate junior doctors, causing the unprecedented strike of 2014. He did nothing to integrate the NHS with social care.

This is the man who could replace the fool we now have as prime minister. Heaven help us.

One week later, on May 28, an article in the Mail suggested that Hunt had a plan to topple Boris:

Boris Johnson‘s Cabinet allies have accused supporters of former Health Secretary Jeremy Hunt of mounting a secret pub plot to oust the Prime Minister.

They suspect MPs who attended a dinner at an upmarket bar in West London called The Surprise last week were scheming to trigger a Tory leadership challenge.

The event, held the night before Sue Gray’s report into Partygate was published, was hosted by Devon MP Mel Stride, a former campaign chief for Michael Gove who is seen by the Johnson camp as a rebel ringleader.

Also in attendance was long-serving Ludlow MP Philip Dunne, a key ally of Mr Hunt.

The article has two familiar names, in addition to Hunt’s. Those MPs entered the current leadership contest:

Of the 16 MPs known to have been there and who voted in the 2019 leadership election, just three backed Mr Johnson.

Five backed Mr Hunt, who is widely expected to mount a leadership bid if a contest is called, while six supported Mr Gove, who is not expected to enter another contest …

Politicians at the dinner strongly denied they were scheming against Mr Johnson and accused his allies of ‘paranoia’.

They pointed to the fact that Boris arch-loyalist Grant Shapps – who has himself been tipped as an outside bet for the leadership –addressed the meeting.

But a Cabinet ally of Mr Johnson said: ‘Mel Stride is a Goveite looking for a new horse to hitch his wagon to. Many of the people he invited to the pub backed Gove or Hunt last time – including Dunne, who is running Hunt’s latest bid.

‘Any MP considering backing Hunt must be a masochist yearning for the kind of thrashing we sustained in 2017 and longing for the humiliation of a very long spell on the Opposition benches.

‘Without Boris, we will be handing the next Election to a Labour-SNP coalition. But then, some of our pro-Remain MPs and those who think they were naturally destined for high office, are too bitter to care’ …

Trade Minister Penny Mordaunt, considered a potential future Tory leadership contender, condemned behaviour at No 10 as ‘shameful’, telling the Portsmouth News she was ‘angry’ that people blocking ‘reasonable requests to relax [Covid] restrictions, were at the same time ignoring the rules’.

I agree with whoever said that without Boris, the next election will go to a Labour-SNP coalition. Yet, here we are, sadly.

By June 6, the story of Hunt’s yearning to be the next Conservative Party leader grew traction, especially with GB News presenters.

Neil Oliver threw his characteristic diplomacy away in this tweet:

Bev Turner shared a Hunt anecdote, wherein he advocated paying domestic staff low salaries:

Someone from Hong Kong confirmed the Chinese way of paying peanuts to domestic staff:

A Conservative Party member chimed in with disgust:

Adam Brooks, the publican who appears on Dan Wootton’s show was grateful that Boris was at the helm during the pandemic:

Now let’s look at what Jeremy Hunt told Nadine Dorries, Secretary of State for Digital, Culture, Media and Sport, back in July 2020:

Ben Leo, who works on Dan Wootton’s show, tracked Hunt down in front of his house on July 9 to follow up. This is an excellent video. Readers won’t be surprised to find out that Hunt said absolutely nothing:

Now let us fast forward to last weekend.

GB News viewers were aghast to find out that Esther McVey, an MP many of us admired up to that point, cast her support for Hunt, as did her husband Philip Davies:

Why would a no-nonsense, straight-talking Conservative back Jeremy Hunt?

The answer came on Sunday, July 10, when Hunt announced that, if elected leader, Esther McVey would become Deputy Prime Minister.

Guido posted the video:

She must be stupid if she believes that, I thought. It’s like a would-be Romeo trying to seduce a girl. Promise her anything to get her to submit …

Just look at the man’s eyes. He often looks like this:

Guido tweeted:

That’s me done with McVey and Davies. I liked him, too. No longer.

On Monday, July 11, Dan Wootton warned that Conservative MPs could destroy the Party if either Rishi Sunak or Jeremy Hunt become leader:

He is not wrong in that assessment.

First round voting results

Sir Graham Brady, chairman of the 1922 Committee of Conservative backbench MPs, declared the results of the first round of voting shortly after 5 p.m.

Nadhim Zahawi, the new Chancellor, and Jeremy Hunt were eliminated from the contest:

Conservatives around the nation breathed a sigh of relief at Hunt’s elimination from the race.

Perhaps Hunt should have taken a cue when the top of the bell he was ringing flew off, nearly hitting a bystander:

Bell GIF - Find & Share on GIPHY

As for Zahawi, he posted a lengthy letter:

Image

He has a lot on his plate, so perhaps it is best that he focuses on recovering some of the millions that fraudsters took during the pandemic. Those people stole taxpayers’ money:

He should also do something about road fuel tax:

Meanwhile, Jeremy Hunt pledged his support for front runner Rishi Sunak:

And then there were six

As Wednesday closed, we were left with six candidates going into Thursday:

Kemi Badenoch, someone around whom most Conservatives could rally, had just over 50 MPs supporting her.

Tom Tugendhat, rather surprisingly, considering that he has a high profile, had fewer than 50.

Suella Braverman, another candidate who makes most Conservative Party members happy, has just over 40.

I think that Braverman and/or Tugendhat will lose on Thursday. Tugendhat is another one who deserves to go.

Guido summed up Wednesday’s activity. Highlights follow.

Rishi Sunak could be losing momentum:

  • … After hogging the limelight with his campaign launch yesterday, today he resumed being the punching bag of choice for all other candidates.
  • Faced some horrible polling from all quarters, which shows he basically stands no chance of winning among the members if he gets through to the final two.

Penny Mordaunt did well:

  • A great day for Penny – if she wins the contest, today will undoubtedly be viewed as the day she secured the victory
  • Received a major boost from YouGov polling that shows, should she get through to the final two, she’d smash every other candidate.
  • Remains a comfortable second among MP backers.

Liz Truss survives another day:

  • Vowed to halt green levies
  • Continued her campaign as the ‘Boris continuity candidate’.

Suella Braverman is unlikely to make it through past Thursday’s voting.

Kemi Badenoch does not want tax cuts but has gained support:

  • Continues to gain support, not least with her former employers at The Spectator.

Kemi is also opposed to the current form of the dreaded Online Safety Bill, the debates on which could not be completed before summer recess, as the Northern Ireland Protocol Bill, quite rightly, took priority. There is also the debate on confidence in the Government on Monday, which should be interesting:

https://image.vuukle.com/d7c6fe0e-9619-4565-bd5c-842da1c18a99-40de4d4b-e1d3-4501-8f54-42d4cc2b50f2

Thursday, before the vote

Guido summed up the state of play on Thursday, July 14. An excerpt follows:

In a few months’ time, what will people remember of Jeremy Hunt’s 2022 leadership campaign? Nothing, obviously. Seemingly just 18 MPs realised he was running one at all, which is odd as he needed 20 to get on the ballot in the first place. As Sky’s Sam Coates asked last night: what exactly does Rishi gain from being endorsed by this competition’s biggest loser? He certainly won’t gain all of Hunt’s supporters – many of them are now angry that Hunt went with Rishi, and not Tugendhat. Mind you, there was already anger towards Hunt from Team Penny, who endorsed him in 2019, as it was very clear he was never considering returning the favour this time around. Et tu, Jeremy…

Today should, in theory, be Truss’s day in the spotlight. Her campaign launches bright and early in Smith Square, in two hours’ time. They’ll be delighted with The Mail splash this morning, which is blatantly campaigning for Liz and telling the right to unite behind her to defeat Rishi. The same front page carries a briefing from someone in the Truss camp accusing Penny of telling lies about her trans stance. Lord Frost has also just taken to the airwaves to slam Penny’s record in government, saying she was so rubbish as his deputy he had to ask the PM to move her during the Northern Ireland negotiations…

Yes, this was a damning moment for Penny.

Guido has the video …

… and the quote:

To be honest I’m quite surprised that she is where she is in this leadership race. She was my deputy, notionally more than really, in the Brexit talks last year… I felt she did not master the detail that was necessary in the negotiations last year. She wouldn’t always deliver tough messages to the European Union when that was necessary… she wasn’t always visible. Sometimes I didn’t even know where she was. I’m afraid this became such a problem that after six months I had to ask the Prime Minister to move her on… from the basis of what I saw I would have grave reservations about [Mordaunt].

Guido says that Lord Frost isn’t the only one critical of her, either:

On Tuesday, CityAM published damning claims from Department for International Trade sources alleging Penny was “missing for months” as a trade minister and wasn’t reliable something Guido’s ministerial sources later confirmed themselves…

As the day unfolded, Rishi tried to make his resignation and leadership candidacy appear sudden, failing to mention that he had his website domain registered in 2020:

On a lighter note, Tom Tugendhat will rue this photo of ‘Tom a tart’:

Oh, well, he’s likely to be out by the end of the day, anyway.

It is unfortunate that so many members of the public cannot identify the next Conservative leader:

Meanwhile, among the party membership, here’s the latest from Grantham & Stamford Conservative Association. I am surprised that Mordaunt is doing so well. At least Badenoch is in second place:

Today’s vote began at 11:30 and closed at 3 p.m. All being well, I will have an analysis of the results tomorrow.

‘No one is remotely indispensable’.

So were the words of Boris Johnson as he stood in front of Downing Street in the early afternoon of Thursday, July 7, 2022, to announce that he was standing down as Conservative leader. He said that he planned to stay on as Prime Minister until a new leader is chosen.

Boris’s resignation speech

The Prime Minister’s speech is just over six minutes long:

Knowing how quickly the leadership contests moved in 2016 (David Cameron to Theresa May) and in 2019 (May to Johnson), we are likely to see a new party leader in place before Parliament’s summer recess. Regardless of what news outlets say, it no longer takes two or three months. The timing — i.e. summer resignations in all three cases — will accelerate because of recess.

Guido has the transcript of Boris’s speech, excerpts of which follow (I’ve put in punctuation, paragraphs and emphases):

It is now clearly the will of the parliamentary Conservative party that there should be a new leader of that party and, therefore, a new Prime Minister and I have agreed with Sir Graham Brady, the chairman of our backbench MPs [the 1922 Committee], that the process of choosing that new leader should begin now and the timetable will be announced next week.

And I have today appointed a cabinet to serve – as I will – until a new leader is in place.

So I want to say to the millions of people who voted for us in 2019 – many of them voting Conservative for the first time — thank you for that incredible mandate, the biggest Conservative majority since 1987, the biggest share of the vote since 1979.

And the reason I have fought so hard for the last few days to continue to deliver that mandate in person was not just because I wanted to do so but because I felt it was my job, my duty, my obligation to you to continue to do what we promised in 2019, and of course I am immensely proud of the achievements of this government …

He went on to list Brexit, the coronavirus vaccine rollout, coming out of lockdown the earliest of any other Western nation and showing leadership with regard to Ukraine.

He clearly regretted that he had to stand down:

If I have one insight into human beings it is that genius and talent and enthusiasm and imagination are evenly distributed throughout the population but opportunity is not, and that is why we need to keep levelling up, keep unleashing the potential of every part of the United Kingdom. And if we can do that in this country, we will be the most prosperous in Europe.

And in the last few days I have tried to persuade my colleagues that it would be eccentric to change governments when we are delivering so much and when we have such a vast mandate and when we are actually only a handful of points behind in the polls, even in mid term after quite a few months of pretty unrelenting sledging, and when the economic scene is so difficult domestically and internationally. And I regret not to have been successful in those arguments and, of course, it is painful not to be able to see through so many ideas and projects myself.

But as we’ve seen at Westminster, the herd is powerful and when the herd moves, it moves and,
my friends, in politics no one is remotely indispensable.

And our brilliant and Darwinian system will produce another leader equally committed to taking this country forward through tough times, not just helping families to get through it but changing and improving our systems, cutting burdens on businesses and families and – yes – cutting taxes, because that is the way to generate the growth and the income we need to pay for great public services.

And to that new leader I say, whoever he or she may be, I will give you as much support as I can and, to you the British people, I know that there will be many who are relieved but perhaps quite a few who will be disappointed. And I want you to know how sad I am to give up the best job in the world, but them’s the breaks.

I want to thank Carrie and our children, to all the members of my family who have had to put up with so much for so long. I want to thank the peerless British civil service for all the help and support that you have given, our police, our emergency services and, of course, our NHS who at a critical moment helped to extend my own period in office, as well as our armed services and our agencies that are so admired around the world and our indefatigable Conservative Party members and supporters whose selfless campaigning makes our democracy possible.

I want to thank the wonderful staff here at Number Ten and, of course, at Chequers and our fantastic protforce detectives – the one group, by the way, who never leak.

And, above all, I want to thank you the British public for the immense privilege you have given me.

And I want you to know that from now until the new Prime Minister is in place, your interests will be served and the government of the country will be carried on.

Being Prime Minister is an education in itself. I have travelled to every part of the United Kingdom and, in addition to the beauty of our natural world, I have found so many people possessed of such boundless British originality and so willing to tackle old problems in new ways that I know that even if things can sometimes seem dark now, our future together is golden.

Thank you all very much.

Boris delivered his speech in a normal, matter-of-fact way, which was good, especially given the circumstances.

Now that he has resigned from the Conservative leadership, some ministers are willing to come back into Government for the interim period.

As such, Boris held a Cabinet meeting at 3 p.m. today:

Those who read my post from yesterday will recall that I had not expected to cover this development until next week at the earliest.

However, yesterday afternoon into this morning was pure political carnage.

Wednesday, July 6

Junior ministerial resignations continued to pour in throughout the day, into the night.

Mid-afternoon, Boris held a second online meeting with Conservative MPs:

Guido has the story (emphases in red his):

In a sign of a continuing effort to hold on to his job, the PM has held a second meeting of Tory MPs in his parliamentary office, just 19 hours after his last meeting. Last night’s turnout was said to be around 80 – today’s turnout is said to have fallen to around 30. A loyalist MP spins that the PM was in a “buoyant mood and keen to get on with the job”. Presumably he was just happy his PMQs slagging was over and done with…

Boris apparently pointed to polls narrowing to “about five points” and left his reduced coterie of supporters under no doubt that “he’s going nowhere… no chance of stepping aside”. We’ll see what the 1922 Committee has to say about that this evening…

Guido’s mole concluded that “Basically the current challenge is all about personality and not policy. It’s a coup attempt before recess” The timetable observation is, at least, objectively correct…

At 3 p.m., Boris appeared for 90 minutes before the Liaison Committee, which is comprised of all the MPs who head Select Committees.

They grilled him on his performance and whether he would resign.

I’ve never seen anything like it. You can watch the proceedings using the link below:

These were the topics of discussion and the names of the MPs questioning him. Sir Bernard Jenkin chaired the session. Conservative MPs Tobias Ellwood and Jeremy Hunt might have their eyes on the leadership. Boris defeated Hunt in the 2019 contest:

All were brusque, including Bernard Jenkin, sadly.

That said, in May, Jenkin did write to the Leader of the House, Mark Spencer, to express his disappointment that some Government ministers were not appearing as scheduled before Select Committees:

The Liaison Committee were vipers. They were on the attack relentlessly.

Boris stood his ground. He reminded one MP that, in 2019, he had more than doubled the number of sitting Conservative MPs:

He also stated that he did not want another unnecessary general election when he had a clear mandate from the electorate to carry out. You can see how nasty Bernard Jenkin got in this short exchange:

Huw Merriman went so far as to send Sir Graham Brady, Chair of the 1922 Committee, a letter of no confidence during the session:

Meanwhile, Guido Fawkes and his team were busy updating Wednesday’s list of resignations.

The 1922 Committee was — perhaps still is — considering a rule change allowing for more than a 12-month gap between votes of confidence in a Prime Minister. Pathetic.

Guido has the story (purple emphases mine):

There are some reports that the 1922 Committee may move in the next 24 hours-or-so to dispose of the PM. Bloomberg is reporting that “The Tory backbench 1922 Committee will meet at 5 p.m. Wednesday and will discuss changing the rules to allow another party-leadership ballot. If there is a majority opinion in favor, a ballot could be held as soon as next week.” James Forsyth of the Spectator reports rule change or not, a senior committee member tells him “they now favour a delegation going to Johnson to tell him that it is over and that they will change the rules to allow another vote if he doesn’t quit”.

Guido’s post has a list the 1922’s executive members and whether or not they favour this rule change.

Later on, the 1922 decided not to change the rules — for now — because they will be holding their executive election on Monday, July 11:

Guido reported:

Surprisingly the 1922 executive has decided against changing the rules to allow a second vote of no confidence in the PM. Instead executive elections will go ahead on Monday, 2pm to 4pm. 

The Times had more:

Critics of the prime minister are organising a slate of candidates who are expected to win a majority of places, given most backbenchers voted to oust Johnson in last month’s vote. They are then expected to endorse a rule change.

During the afternoon, it was rumoured that the Chief Whip, Chris Heaton-Harris, was going to tell Boris that time was up.

Boris was hemhorrhaging support. The resignations were coming thick and fast from junior ministers. This is how it is done. The same thing happened when Labour wanted rid of Jeremy Corbyn as leader:

I used to like most of the Conservative MPs. Given what happened yesterday, I am not so sure anymore.

Those who have gone down in my estimation include former Equalities Minister Kemi Badenoch; Lee Rowley; Liam Fox; Red Wall MPs Dehenna Davison, Jacob Young and Jo Gideon; Ed Argar and former Welsh Secretary Simon Hart.

And that’s not counting the rest of them that Guido has named, including those from Tuesday.

The only one I’m willing to give a pass to is Lee Anderson.

The hubris and hypocrisy got worse.

Attorney General Suella Braverman appeared on Robert Peston’s show on ITV that night to announce her withdrawal of support for Boris. I really had expected better of her, especially as Peston has been anti-Boris for years. To add insult to injury, she went on to announce on his show that she would be running for leader:

Cabinet members visit Boris

Just before 5 p.m. a small Cabinet delegation visited Boris in Downing Street.

Guido wrote:

A Cabinet delegation of Nadhim Zahawi, Grant Shapps, Brandon Lewis, Simon Hart and Michelle Donelan are currently waiting in Downing Street to tell Boris the jig is up, and it’s time for him to step down. Kwasi Kwarteng has also reportedly lost confidence. Beginning of the end…

Note Michelle Donelan’s name in that list. Boris had just made her Education Secretary after Nadhim Zahawi moved into the Chancellor’s role.

What did Michelle Donelan do? She resigned after 36 hours in the role:

Yes, of course, she got a pay out — one of £16,876.25:

The others got pay outs, too. I read that the total for ministers who resigned is over £120,000.

That’s not a Conservative plan, by the way.

That’s how the system works.

The caboose

Just before midnight, the final resignation of the day rolled in, that of Gareth Davies, making him the 35th that day. There were ten more from Monday as well as Michael Gove, summarily sacked. It’s hard to disagree with the person comparing this to Trump:

Michael Gove

It was time for this duplicitous man to go. I never trusted him and never will.

When he turned from supporting Boris in the 2016 leadership campaign to start his own before supporting Theresa May, he stabbed him in both the front and the back.

One thing we have learned during Boris’s premiership is that he — Boris — is one to forgive.

He made Gove part of his Cabinet in various high profile roles.

On Wednesday, Gove decided to tell Boris to resign:

Gove, most recently the Levelling Up minister, was conspicuous by his absence in the House of Commons. He missed Prime Minister’s Questions:

News emerged at 9:30 that Boris sacked Gove — via a telephone call:

I will be very disappointed if Gove returns to a Government role. He is a Scot who, in my opinion, is too young at the age of 54 to appreciate the Union fully, and he does not have the Englishman’s best interests at heart.

I’ve never heard him say anything about England other than to do away with English Votes for English Laws (EVEL) in 2021. As the then-Chancellor of the Duchy of Lancaster, he deemed it unnecessary in Parliament. It was a quick, quiet moment in the Commons. I do wonder why it went unchallenged by English MPs.

Yet, the English are the ones who have been overlooked the most over the past 25 years, beginning with Tony Blair, a quasi-Scot who pumped our Government and media full of many more Scots, e.g. Gordon Brown, to name but one. My apologies to Scottish readers, whom I admire greatly, but it is true.

Christian Calgie from Guido’s team explains that Boris might have sacked Gove because, unlike the Cabinet secretaries who had descended upon him earlier, Gove allegedly told Boris to resign:

By the end of Wednesday, it became clear that Boris was not about to leave:

Guido reported:

Guido has had it confirmed by a PM ultra loyalist that Boris Johnson is not resigning tonight, and is understood to be planning a reshuffle. The news will spark further senior cabinet resignations…

According to reports, Boris sat down individual members of the Cabinet – including those involved in the coup – and cited his 2019 mandate, as well as the belief the government needs to spend the summer focusing on the economy and not a leadership election …

I watched four hours of analysis on GB News on Wednesday, beginning with Nigel Farage …

… and concluding with Dan Wootton, who had a great interview with Boris’s father Stanley Johnson (see the 1 hour 15 mark, or, if the GB News clock shows, 10:21). Stanley is a big supporter of his son, which was heartening to see:

Thursday, July 7

Conservative ministers continued to resign en masse on Thursday morning, July 7.

Guido has a timeline of resignations and other events of the day.

Just before 9 a.m., Chancellor Nadhim Zahawi sent Boris a formal letter requesting his resignation.

Just after 9 a.m., Defence Secretary Ben Wallace — also thought to be a candidate for Conservative leader — tweeted MPs to say that they should make use of the 1922 Committee to get rid of Boris:

At 9:07 a.m., news emerged that Boris agreed to resign as Conservative Party leader. I agree that the next demand from the braying hypocrite hyenas in the media will be a call for a general election. Disgusting:

Guido reported:

Chris Mason has been told the PM has agreed with Graham Brady that he will resign, allowing a Tory leadership race to take place ahead of the Tory Party conference in October. A letter has been written. He’ll quit as Tory leader today. Guido’s frankly not sure how Boris can stay on for the summer with so many ministerial holes in his government…

Perhaps we can get by with fewer ministers, as someone said in Parliament this morning.

I hope that Boris’s Cabinet meeting at 3 p.m. went well.

Not everyone has been happy with the coup so far. Former Conservative Prime Minister John Major is fuming. It’s interesting he never reacted like that about David Cameron or Theresa May:

In brighter news, Boris’s loyal friend from Ukraine rang him with his condolences and thanks:

1457: PM has spoken to Zelensky on the phone. Finished the call by praising him: “You’re a hero, everybody loves you.”

Yes, well, I wished our MPs loved Boris as much as President Zelenskyy does.

Ladies and gentlemen, this was a coup.

It was for a ridiculous reason, too:

https://image.vuukle.com/42c85f62-4bbb-4aff-b15a-100d5034d7aa-f9083ab0-35b3-43b1-82cf-0e95a9739d29

Don’t forget: this was ALL ABOUT BREXIT.

More to follow next week.

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