United Kingdom: Liz Truss's seat is on shaky ground

It repeals almost the entire «mini-budget» of the government Liz Truss Britain's new Minister of Finance, Jeremy Hunt.

In addition, Hunt announced a significant excerpt of household support package against high energy prices, a package that had become Liz Truss's «flagship» initiative.

In a statement on the economic measures, Hunt emphasized that only those tax cuts that have already entered the legislative process will be retained, namely the following two measures:

• the repeal of the increase in social security contributions
• and the reduction in the stamp duty on the purchase of a primary residence.

All of the other measures that had been announced by Mr. Hunt’s predecessor, Kwasi Quartey are being repealed. Chief among these is the indefinite postponement of the reduction in the basic income tax rate from 20% to 19%.

The changes to the dividend tax and the creation of VAT-free shopping zones are also being canceled. Overall, by canceling the tax cuts, the government is securing just over 32 billion pounds a year.

More Targeted Support for the Energy Crisis

As for the other part of the mini-budget—the support packages for households and businesses to combat rising energy costs— Hunt said that while they will be maintained, the government will examine how they can be made more targeted starting in April, at a lower cost to the state.

In any case, he also foreshadowed new «difficult decisions» regarding taxes and government spending, which, as he said for the first time, will need to be cut in certain areas, despite Ms. Tras’s repeated assurances to the contrary.

Liz Truss's seat is on shaky ground

There is no end in sight to the political crisis in Britain. Although it has been only five weeks since Liz Truss took office, three Conservative MPs already stated publicly yesterday, Sunday, that they want her removed from the office of prime minister. According to British media reports, an estimated 100 Conservative MPs are discussing her removal behind the scenes, exploring possible scenarios for her replacement.

In practice, if the British prime minister does not resign on her own, then the Conservative Party’s constitution will have to be amended in order to remove her from office. This is because the Tories’ party constitution stipulates that an internal no-confidence vote against their leader is not permitted unless 12 months have passed since she took office.

In this context, Sir Graham Brady, the chairman of the 1922 Committee, who is in charge of this process, will meet today with Ms. Tras to convey to her the strong dissatisfaction of Conservative MPs.

In a last-ditch effort to salvage what can be salvaged, this morning the new Finance Minister, Jeremy Hunt—who took office just last Friday— stated that nearly all of the tax breaks announced by the government as part of the so-called mini-budget are being withdrawn. «The government decided today to make further changes to the mini-budget. We have decided to announce them ahead of the medium-term fiscal plan, which will be presented to Parliament in two weeks (October 31), in order to minimize unnecessary speculation,» Mr. Hunt said. At the same time, as he emphasized, his goal is to restore «confidence and stability» to the country’s public finances.

It has caused a stir that the government’s energy price guarantee will ultimately be universal until April, rather than for two years, as originally planned. It is worth noting that Liz Truss, as soon as she took office in early September, the first measure she announced to address the rapid rise in the cost of living was a freeze on energy prices. After April, the plan will be more targeted and will not apply to all households in Britain, announced the Jeremy Hunt.

There are many possible scenarios for the day after. Some of the so-called «rebels» want the country’s reins to be taken over jointly by the Rishi Sunak and the Penny Mordont That is, the two candidates who came in second and third, respectively, in the recent Conservative Party leadership election. Penny Mordant, however, in her article today in the newspaper Daily Telegraph, states that he will continue to support the British prime minister, noting, among other things, that «the country needs stability, not a soap opera.».

A second scenario is for the Minister of Defense to take over Ben Wallace, who is extremely popular, not only within the party but also more broadly. His high approval ratings are mainly due to the way he is handling the war in Ukraine. In fact, according to reports, many Conservative MPs, particularly those from the centrist wing, are rallying around Wallace. He, however, continues to state that his focus is on supporting Ukraine, emphasizing the need for unity within the party.

Finally, the current finance minister is also high on the list of potential successors. Jeremy Hunt is considered extremely moderate and has, in any case, run for the Conservative leadership twice in recent years. However, in remarks he made over the weekend, he made it clear that he supports Liz Truss, noting that replacing her would exacerbate the climate of instability. «She has changed. She wants to do something that is very difficult in politics: to change course,» Mr. Hunt said yesterday on BBC television, referring to the British prime minister. In any case, the coming weeks—if not the coming days—will be extremely difficult for Liz Truss’s political future.