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The Guardian - UK
The Guardian - UK
Politics
Harry Taylor and Andrew Sparrow

Liz Truss apologises for going ‘too far and too fast’ with economic changes – as it happened

Jeremy Hunt Liz Truss United Kingdom George Parker Kwasi Kwarteng Pat McFadden Chris Mason Harry Cole Tax Cuts

Summary

Another eventful day, as we saw Jeremy Hunt reverse nearly all of the measures introduced in the “mini-budget” that has been the cornerstone of Liz Truss’ time so far in Downing Street.

  • Jeremy Hunt has dropped Liz Truss’s economic plans, including tax cuts and slashing the energy price freeze which the prime minister had championed. The universal provision will now end in April.

  • Hunt refused to rule out a windfall tax, as well as cuts to defence spending and the pensions triple lock.

  • He told Channel 4 news that a combination of tax rises and spending cuts will be used to help patch up a £40bn hole in the budget.

  • The chancellor has appointed a four-person advisory panel to give counsel on the economy, including George Osborne’s former chief-of-staff Rupert Harrison.

  • Truss did not turn up to answer an urgent question on the economy from Labour leader Sir Keir Starmer. Leader of the Commons Penny Mordaunt answered in her place, but was forced to say that she was not “hiding under a desk”.

  • Truss apologised in an interview on BBC News, saying that she acknowledged that mistakes had been made.

  • Earlier in the evening Truss had apologised to the One Nation group of Conservative party MPs.

  • An election will take place tomorrow for the 1922 Committee, the group of backbench Conservative MPs, that could pave the way for a confidence vote in the prime minister.

  • Defence secretary Ben Wallace said he will not stand as a unity candidate if Truss stands down, in an interview with the Times.

  • Two polls by Deltapoll and Redfield and Wilton Strategies puts the Labour party 32 and 36 points ahead of the Conservative party respectively. It would leave the Tories with less than 100 seats, and Labour with a majority of more than 300.

  • US president Joe Biden’s press spokesperson Karine Jean-Pierre has said he did not regret his criticism of Truss’ “mini-budget”.

That’s all for today, thanks for following along. I leave you with the round up of today’s events.

Two final frontpages, the Daily Mail lead with Liz Truss being “In Office, But Not In Power”

The Daily Mirror’s headline is simply “Humiliated”.

Roundup of Tuesday's front pages

The front pages of tomorrow’s national newspapers in the UK have started to be published, with the focus on Jeremy Hunt’s U-turn announcement today.

The Guardian has the story of Hunt tearing up the economic plans that have defined Liz Truss’ time as prime minister.

The photograph of former leadership candidates Penny Mordaunt and Hunt sat next to Truss and her deputy Thérèse Coffey tells a story in itself.

The Sun is perhaps one of the most scathing, calling Liz Truss “The Ghost PM” after she did not answer the urgent question in parliament, and then sat next to Jeremy Hunt as he delivered his statement on the changes in economic policy.

The Telegraph leads with Hunt’s statement to the Commons, saying that he would not rule out a windfall tax, that energy bills could go up for families after all from April and the plans to get rid of Truss continue.

The i has the view of Hunt taking control of the direction of policy, as Truss faces “48 hours” to save her premiership.

Business freesheet newspaper City AM has an image of a tombstone with “Trussonomics … laid to rest by Jeremy Hunt” adorning it.

And finally, regional newspaper from the North East The Daily Echo leads with the U-turn from Jeremy Hunt but it also carries an interview with Labour leader Sir Keir Starmer where he says he will “pick up the levelling up agenda and make it happen”.

Truss apologises for problems and higher costs caused by 'mini-budget'

Liz Truss has apologised for going “too far and too fast” with the economic policies in her “mini-budget” and has accepted responsibility for the problems created by it.

The prime minister refused to say whether her vision for Britain was “dead”, during an interview with BBC political editor Chris Mason but admitted that she had made mistakes. She also said that she would lead the Conservative party into the next general election.

Truss said: “I do want to accept responsibility and say sorry, for the mistakes that have been made. I wanted to act but to help people with their energy bills to deal with the issue of high taxes, but we went too far and too fast. I’ve acknowledged that. I put in place a new chancellor with a new strategy to restore economic stability.

“I recognise that we did act too fast, and that’s why I’ve adjusted what we’re doing and I do think it is the mark of an honest politician who does say, yes, I’ve made a mistake. I’ve addressed that mistake. And now we need to deliver for people, you known what we’ve said we’ll deliver.”

Truss admitted that government policies have made things harder for families and their ability to pay their mortgages, the repayments on which have risen since Truss and Kwasi Kwarteng’s “mini-budget”.

“I have said sorry for the fact that we did act too far. We went too far and too fast … The reason I did that was to make sure that we were dealing with the immediate issue of the energy crisis. And we did help people with their energy bills.”

The prime minister sought to reassure vulnerable families that they would still get support with their energy bills, despite another U-turn on Monday that the government finance in place that keeps the average bill for a household to £2500 would only be universally available until April.

Prime minister Liz Truss gives a an Interview to BBC’s Chris Mason in 10 Downing Street.
Prime minister Liz Truss gives a an Interview to BBC’s Chris Mason in 10 Downing Street. Photograph: Simon Dawson/No10 Downing Street

“I can can reassure people off is that the most vulnerable will be protected into next winter. We’re looking at exactly how we can do that. And being in government is always about a balance or being able to make those decisions but I also have to think about and the chancellor has to think about economic stability. So we will make sure those households who are struggling, do have that support into next winter. We’ll be saying more about that in due course,” she said.

Truss repeated her campaign’s central pledge that she is focused on growth, and emphasised that she had been “upfront and honest” with her apology and undoing the policies she had Kwarteng had introduced.

“Well my message to my colleagues is yes, I completely acknowledge that there have been mistakes. I have acted swiftly to fix those mistakes. I’ve been honest about what those mistakes were. And what we now need to do is move forward and deliver for the country because that’s ultimately, that’s ultimately what people care about. People care about us delivering and that’s what we as elected politicians need to focus on.”

Updated

An interesting snippet from Bloomberg’s roundup of today’s events, which has been published this evening.

Conservative MPs think that Jeremy Hunt’s change to the plan to subsidise energy bills to keep costs down could cause more problems for the party, as voters will face higher mortgages at a time where their energy bills would also increase. One described it to the news website as an “electoral black hole”.

Ben Wallace has said he will not be a unity candidate to become prime minister, amid speculation he could have been lined up to take over from Liz Truss if she resigns.

The defence secretary has said he wants to stay in his job. Wallace had previously been discussed as a leadership candidate this summer, but did not stand.

He told the Times (paywall): “The public wants stability and security and if the government fails to deliver that then they will send us into opposition.

“I want to be the secretary of state for defence until I finish. I love the job I do and we have more to do. I want the prime minister to be the prime minister and I want to do this job.”

Wallace is about to travel to Washington, where he will discuss the war in Ukraine and its dynamics as Russia’s position appears to be weakening. He criticised Tory MPs for their actions in recent weeks.

“I say to the colleagues who think our role is to feed the instability within the party, by proposing other people as leaders no matter who they are, [you] are doing a disservice. The markets are responding at the moment in the UK to unsurety about the government. The best way to give those markets some confidence is for people to stop playing political parlour games,” he said.

Updated

Simon Hoare said some of the errors from the Truss’s government have been “schoolboyish” and “unforced”.

The Tory MP told journalists following a meeting of the One Nation group of Conservative MPs: “Some of the errors have been schoolboyish, some of the errors have been unforced, some of the wounds have been self-inflicted. And that’s regrettable. But we are where we are.”

He added that “polls come and go”, arguing that “this voracious appetite for who thinks what about whom, when and where, doesn’t actually help, because it doesn’t allow for calm, reflective decision making”.

He said no one in the meeting had suggested Ms Truss should stand down.

Veteran Tory MP Christopher Chope has said the Conservative party “faces oblivion” if it gets rid of Liz Truss.

Chope, who said Truss is the 9th leader during his time in parliament told Iain Dale on LBC: “If we get rid of her, then we are basically faced with having a general election. There is another 18 months or two years until a general election is due.

“Our ship, our state has been blown off course, there is no doubt about that. It has been a very troublesome couple of weeks. I think if we stick with the team at the helm at the moment, that is the way forward.

“If you ditch your leaders it normally makes things worse rather than better. I said when Boris is ousted, we would rue the day when we did it, and I think I have been proven right, but we would rue the day more if we get rid of Liz Truss.

“There is no way we get rid of her without triggering an election, changing the rules and creating a whole lot more chaos in the country at a time where we should be concentrating on sorting out our political and economic problems.”

He said there was “no way” Rishi Sunak would become leader and prime minister, because there is “too much of a coalition of opposition to him”.

Updated

More from Liz Truss’ speech to the One Nation group of Conservative MPs in parliament this evening.

Her press secretary has said that she had tried to do too much too quickly.

“The prime minister said she was sorry for some of the mistakes that have been made over the last few weeks.” Truss emphasised the need to push ahead with changes to National Insurance and the energy package.

MP Simon Hoare, who was at the meeting, told PA Media: “I think she, in a very sincere way - and I was struck by her sincerity... she was candid that mistakes had been made. I think some of those mistakes she admitted were avoidable mistakes.

“But I thought that the tone, the language that she adopted, indicated a clear apology, without... flagellating herself in the middle of the room.”

Anonymous briefings continue, however, the BBC’s political correspondent Iain Watson said one MP described her appearance as “the first time [they had] heard a corpse deliver its own eulogy”.

Liz Truss’ press secretary has said that there was not a point on Monday when she thought she would have to resign.

Journalists have also been told that there are no plans for a reshuffle of the cabinet, despite calls for people from across the party to be brought into the top table of government to try and unify the party.

Truss’ press secretary said her general mood had been “determined” to do “what’s best for the country and deliver the growth plan”, according to PA Media.

Updated

Cabinet ministers arrive at Downing Street for Truss drinks reception

Business secretary Jacob Rees-Mogg arrives at 10 Downing Street in London.
Business secretary Jacob Rees-Mogg arrives at 10 Downing Street in London. Photograph: Henry Nicholls/Reuters

Cabinet members are arriving at Downing Street for a drinks reception with Liz Truss.

Business secretary Jacob Rees-Mogg, fresh from his appearance in the Commons for the second reading of the energy bill, said Truss should “absolutely not” resign. “[She is] a very good prime minister,” he told PA Media.

Foreign secretary James Cleverly, leader of the House of Commons Penny Mordaunt, Tom Tugendhat, chief whip Wendy Morton and culture secretary Michele Donelan have also been seen arriving.

Updated

Here’s some insight into the members of Jeremy Hunt’s panel of experts who will advise on economic policy from my colleague Richard Partington.

They include Rupert Harrison, who was a key aide to George Osborne when he was chancellor. Karen Ward, Gertjan Vlieghe and Sushil Wadhwani complete the line-up.

The Lib Dem Treasury spokesperson Sarah Olney has criticised them as “purely wealthy asset managers” whose appointment shows how out of touch the government is.

Rupert Harrison, an architect behind the former chancellor’s austerity drive, will provide advice on economic policy as Liz Truss’s government battles to repair the damage to its reputation after the mini-budget.

The chancellor said Harrison would make an important contribution as he pushed to find billions of pounds in budget savings from tax changes and spending cuts.

“Rupert Harrison, in particular, has enormous experience of running the Treasury under George Osborne,” he told the Commons.

A note from my colleague Aubrey Allegretti, our political correspondent, who points out that there are two seats up for election on the 1922 Committee of backbench Conservative MPs, which governs whether there could be a rule change that will allow a vote of no confidence in Liz Truss.

Updated

The chancellor Jeremy Hunt has been doing a series of interviews this evening after his statement and two-hours answering questions in the House of Commons earlier.

Speaking to Krishnan Guru-Murthy on Channel 4 News, he said that it had been difficult for Liz Truss to change her policies and drop those in the “mini-budget”. Hunt also denied that he wanted to become prime minister. He told Beth Rigby on Sky News that he thinks Truss will still be leader at Christmas.

Analysis by Channel 4 found that cuts or tax rises still needs to make up £70bn of deficit.

He said: “It’s difficult for any politician to change course as dramatically as the prime minister has. She is doing what it takes and I think we have to respect that she has taken those very tough decisions for her personally.”

Hunt would not apologise for the damage caused, saying “it is beyond words”. He added that there would be a mix of both tax rises and cuts.

“I think she has recognised that it was wrong not to have OBR forecasts with the original ‘mini-budget’, and she has made a lot of changes and she is doing what it takes. I need to finish the job with a series of difficult decisions facing me and the country, that shows this is a country that pays its way.”

“There will be difficult decisions in terms of public spending cuts and increased taxation, I don’t think it’s fair to rely on either one of those. Yes, taxes will go up.

“We will take the decisions through the prism of a compassionate Conservative government which has the most vulnerable people at the top of our minds.”

In response to a question about whether the chancellor had anything reassuring to say to the public, he said: “I dont think I do … I think that’s a fair comment but I think the thing that is most terrifying of all when you face very grave challenges.

“These are very serious times for all countries around the world and the worst thing any government can do is not be completely honest and transparent about the scale of the challenges.

“And I think, actually, I don’t want to say it’s reassuring, but I hope people understand that we are being straight about the scale of the challenges and I hope there are some reassurance in that honesty at least.”

Updated

Biden 'no regrets' over Truss criticism

US president Joe Biden’s press spokesperson Karine Jean-Pierre has said he did not regret his criticism of Liz Truss’ “mini-budget”.

During a visit to an ice cream parlour in Oregon he said it was “predictable” she had to U-turn on her policies. The comments into the domestic policy of its ally were seen as being highly unusual.

Biden said: “I wasn’t the only one that thought it was a mistake.

“I think that the idea of cutting taxes on the super-wealthy at a time when … I disagree with the policy, but it’s up to Britain to make that judgment, not me.”

Jean-Pierre was asked whether Biden regretted it today by Jeff Mason, Reuters’ White House Correspondent.

“No”, Jean-Pierre said.

Labour leader Sir Keir Starmer was also addressing his MPs, at the meeting of the parliamentary Labour party this evening.

After Jeremy Hunt had been giving his statement in the commons on the reversal of measures in the “mini-budget”, Starmer focused his attack on him and his appointment as chancellor.

According to Kevin Schofield of HuffPost UK, he said: “If you ever needed a sign of a dying government, it’s surely the return of Jeremy Hunt just in time for the horror show that is going to be their Halloween budget.

“The man who butchered the NHS, risen from his political grave, shoring up this night of the living dead government and taking the reaper’s scythe to what remains of public services after 12 years of the Tories.”

Truss tells One Nation group 'mistakes have been made'

The first signs of what Liz Truss told the One Nation group of Conservative MPs this evening are emerging, after party chairman Jake Berry spoke to journalists outside the meeting.

Berry said there had been a focus on “unity”.

“The prime minister started by saying that mistakes have been made, she acknowledged them, she is bringing the party together,” PA Media reported.

“Colleagues who were there [were] very heavily focused on unity. Matt Hancock made a really good intervention, saying that now is the time for unity, we’ve got to get behind the PM.”

On the theme of spending cuts, which Treasury select committee chair Mel Stride suggested earlier might be necessary to balance the government’s budget, the general secretary of trade union Unison Christina McAnea has said further cuts would have a big impact on public services.

After LBC presenter Andrew Marr suggested that cuts could mean 15% less spending for departments, she said: “It would be an utter disaster. I have negotiated with Jeremy Hunt in the past in the years of austerity and we were told we were all in this together but we are yet to see the results of that.

“I know the people who I represent, the nurses, the paramedics, people who work in the NHS are already feeling the strain. They feel, yet again, they are the ones who will be asked to pay the price of the government’s total and utter disaster.

“A big part of this is down to this government trying to take this huge gamble with the British public and the British finances.

“Cutting public services won’t help grow the economy. It didn’t help during austerity and it won’t help if they try and do it again.”

The chair of the Treasury select committee has said the government will have to consider spending cuts to close its £40bn “fiscal black hole”.

Mel Stride, a Conservative MP who had been critical of the “mini-budget”, said he had warned during the summer’s leadership campaign that Liz Truss’ tax plans would trigger problems in the financial markets.

Speaking to BBC Radio 4’s PM programme, he said: “I think it’s undeniably the case, unfortunately, that [Rishi Sunak], I, and many others at the time did warn that if you plunge into very large-scale unfunded tax cuts at a time of high inflation, tight labour markets, and sluggish growth, you are likely to spook the markets.”

He added: ““[Hunt] has diminished the size of the fiscal black hole by £32bn. That is an eye watering amount, basically by rolling back on just about everything in the mini Budget. But I think the OBR is probably sitting on a figure for that fiscal hole of about £70bn or £72bn. So he’s still got another £40bn to go. He’s under half way.”

Stride suggested spending cuts may follow. “That’s where the really difficult stuff is going to start happening. Because without leaning into spending in a meaningful way, it’s very difficult to see how he’s going to close that gap down.”

Updated

Liz Truss is currently addressing the One Nation group of MPs in her latest attempt to win over Tories, with dozens reportedly attending according to those outside.

As ever for these meetings, journalists are judging Truss’ reception by the volume of audible desk banging going as she makes her entrance. The political editor of Byline Times, Adam Bienkov, describes it as “the barest minimum”.

Polling expert John Curtice has said that historical precedent means the Conservative party cannot win the next election, and that the challenge facing the government was the combination of both Black Wednesday and the 1976 crisis when the Labour government was forced to seek an IMF bailout.

In an interview with GB News, Curtice said: “Well, history would suggest that it can’t, because of course what essentially is happening to this government is a repetition of Black Wednesday 30 years ago in September 1992 with, by the way, a Labour fiscal crisis of 1976 wrapped into it as well.

“In the wake of Black Wednesday, that Conservative administration was unable ever to recover politically. Its reputation for economic competence was trashed. It suffered a 7.5 points swing in the polls within a month and that then got even bigger to the kinds of numbers that we’ve now been seeing in the wake of this crash and, of course, John Major became a deeply unpopular prime minister.

“Now the one thing of course, that didn’t happen after 1992 was that the Conservative party didn’t change its leader, it changed its chancellor eventually, but it didn’t change its leader. John Major did subsequently himself call a leadership contest which he fought out with John Redwood, but one he won fairly comes from fairly comfortably.

“History would suggest that perhaps the one card that might be left for the Conservative Party that certainly wasn’t played in 1992 would be to replace the prime minister but certainly history suggests that governments that preside over fiscal crises struggle at the ballot box at the next election.”

On pensions earlier, Hunt refused to say whether he would keep the “triple lock”, which means they go up in line with either inflation, average earnings or 2.5% – whichever is higher.

He said: “I’m very aware of how many vulnerable pensioners there are and the importance of the triple lock, but as I said earlier, I’m not making any commitments on any individual policy areas, but every decision we take, will be taken through the prism of what matters most, to the most vulnerable.”

This is Harry Taylor taking over from Andrew Sparrow.

Sir Charles Walker has become the fifth Conservative MP to publicly call for Liz Truss’s resignation. He told Sky News:

I think her position is untenable. She has put colleagues, the country, through a huge amount of unnecessary pain and upset and worry. We don’t need a disruptor in No 10. We need a uniter.

He said the crisis for the Conservative party could only be resolved with a new prime minister, and that he expected that within a week or two she would have to go.

Sky’s Tom Larkin will have to update his spreadsheet.

That is all from me for tonight. My colleague Harry Taylor is taking over now.

Updated

Hunt says that he thinks in the long run cutting corporation tax can raise more money for the exchequer. But it has to be real money that has been earned, not borrowed money, he says.

Back in the Commons, asked about Liz Truss’s U-turns, Jeremy Hunt said it was “the most challenging form of leadership to accept that the decision you have made needs to change”.

This is similar to the argument Penny Mordaunt made earlier in the chamber about Truss showing “courage” in changing course. (See 3.41pm.)

Truss was meeting Graham Brady, chair of 1922 Committee, while Mordaunt responding to UQ on her behalf, sources reveal

Liz Truss was meeting Sir Graham Brady, chair of the 1922 Committee, during the urgent question on the sacking of the chancellor, which Labour said she should have been answering personally, my colleague Pippa Crerar reports.

Ipsos has now put its October political monitor online. Here is the chart illustrating the point featured in the Evening Standard story this morning – that Labour is ahead of the Conservative party on managing the economy for the first time since September 2007.

Best party on managing the economy
Best party on managing the economy Photograph: Ipsos

The polling for the political monitor also suggests Labour has a 21-point lead over the Tories. It has Labour on 47%, and the Conservatives on 26%.

Hunt tells MPs that he thinks the exchequer will get “more money out of those rich bankers” with the cap on their bonuses lifted.

Hunt hints benefits will be uprated in line with inflation

Back in the Commons John McDonnell, the former shadow chancellor, asked Jeremy Hunt for an assurance that benefits will be uprated for next year in line with inflation. Like Alison Thewliss, he cited the recent research suggesting austerity contribute to 330,000 excess deaths.

Hunt said that he could not make that announcement now. But he hinted that he was minded to uprate in line with inflation, saying:

I hope that [McDonnell] is reassured that I have been very clear about the values through which we will take those decisions. (See 4.36pm.)

There are two polls out today suggesting Labour has a lead of more than 30 points over the Conservatives.

According to Deltapoll, Labour is 32 points ahead.

The Redfield and Wilton Strategies poll suggests the Labour lead is even bigger, at 36 points.

Hunt refuses to rule out new windfall tax on energy firms, saying he is not against in principle, in further snub to Truss

Ed Davey, the Liberal Democrat leader, asks if Hunt will implement a genuine windfall tax.

Hunt replies:

I am not against the principle of taxing profits that are genuine windfalls.

But, in the energy industry, it is a very cyclical industry. There are businesses that have periods of feast and famine and you have to be very careful that you don’t tax companies in a way that drives away investment.

So we have said that nothing is off the table.

This is very different from what Liz Truss said when asked about a windfall tax on energy companies at her first PMQs. She said:

I am against a windfall tax. I believe it is the wrong thing to be putting companies off investing in the United Kingdom, just when we need to be growing the economy.

The implication from what Hunt told MPs was that his view on this policy, not Truss’s, is now determining government policy.

Updated

Dame Margaret Hodge (Lab) asks if Hunt will abandon the plans for investment zones. She says they provide offer an opportunity for kleptocrats, oligarchs and criminals to launder money.

Hunt says the policy will be implemented in a way that learns the lessons from the way they have been tried in the past.

Liz Truss has now left the Commons.

Alison Thewliss, the SNP’s Treasury spokesperson, is speaking. She asks Hunt where the cuts will fall, and she points to Glasgow University research suggesting that austerity policies in the last decade contribute to 330,000 excess deaths.

And she says the SNP today set out plans for a fairer, greener future for Scotland, back at the heart of Europe where it belongs.

Here is the Scottish government’s news release with a summary of the paper out today setting out the economic case for independence.

Hunt challenges Labour to show it is willing to back spending cuts

Hunt is replying to Reeves.

He says, behind the rhetoric, he does not think Reeves disagreed with any of the decisions he announced. He says he thinks that is important for the markets to know.

He accepts that some decisions have been changed. But he rejects Labour’s “broader narrative” about Tory economic mismanagment. Unemployment is lower than at any time since 1974. And the growth rate since 2010 has been the third highest in the G7, he says.

And he claims the Tories protected the NHS throught one of its most difficult periods ever, after the financial crash. And the Tories then gave it its biggest spending increase ever.

He says the true test will come in two weeks’ time, when Labour has to decide it it backs spending restraint.

He ends:

I’ve shown Conservatives can raise taxes. Will [Reeves] show if Labour are willing to restrain spending?

Labour's Rachel Reeves says people will be paying 'Tory mortgage premium' for years to come

Reeves says the Tories have run out of credibility, “and now they are running out of chancellors”.

Jeremy Hunt was a big part of austerity season one, she says. And now he says the answer is austerity season two.

She says that Hunt, when he was standing for Tory leader, wanted corporation tax to be cut to even lower than it is now.

People will be paying a “Tory mortgage premium” for years to come, she says.

She agrees with Hunt that the country needs stability. But where does Hunt think the instability came from?

Updated

Rachel Reeves, the shadow chancellor, is responding for Labour. She jokes about having to again welcome a new chancellor to his place.

She says all that is left of the mini-budget is higher mortages for people, and the lifting of the cap on bankers’ bonuses.

She says it is harder than ever to see why the government will not agree to a windfall tax.

Hunt says he will publish a credible and costed plan to get debt down in the medium term on 31 October.

He says he is setting up a new advisory council. Its members will include Rupert Harrison, chief of staff to George Osborne when he was chancellor.

Hunt says he has genuine optimism about the long-term prospects for growth. He ends by saying:

The reason the United Kingdom has always succeeded is because at big and difficult moments we’ve taken tough decisions in the long-term interests of the country, and in a way that is consistent with compassionate Conservative values. That is what we will do now.

Updated

Hunt describes the energy price guarantee as “a landmark policy”.

But, reluctantly, he and the PM have agreed that it cannot continue in its current form beyond April. It would not be responsible to expose the public finances long term to potential increases in energy prices, he says.

Hunt is now summaring the tax cuts from the original mini-budget that have been axed. (See 11.15am.)

Jeremy Hunt tells MPs 'eye-watering' decisions on tax and spending will be taken in accordance with 'compassionate Conservative values'

Jeremy Hunt starts by stressing the importance of economic stability. The wording is similar to that from his statement this morning.

He says the government will have to take decisions of “eye-watering difficulty”.

But the government will take those decisions so that any spending cuts or tax increases are decided in accordance with “core compassionate conservative values”.

Updated

The UQ is over. We are about to get the statement from the chancellor.

But Chris Byrant raises a point of order first. He says if there were legitimate reasons for Liz Truss not being able to take the UQ, she should give them now.

Sir Lindsay Hoyle says this is matter for the government.

“Get up and tell us,” somebody shouts.

Liz Truss has just entered the Commons. There was some cheering – more ironic than genuine, I think.

Colleagues are speculating about where Liz Truss might be. No one seems to know, but if she has had a meeting that is more important than this UQ, it has got to be more than a catch-up with the Ukrainian president.

One person who is a lot more important to Truss at the moment is Sir Graham Brady, chair of the 1922 Committee.

One option for Truss would be for her to call a confidence vote in herself. John Major did this when his leadership was under question in 1995. It worked for him in the short term, in that he won, and there were no further leadership challenges. But, in the long term, it did not enhance his authority.

In the Commons Penny Mordaunt has just said that Truss has always acted in the national interest. Mordaunt also said the country needed stability.

Updated

Mordaunt says there will be many opportunities to hear from the prime minister, “some in the next 24 hours”.

That implies Truss will make some sort of public statement before PMQs on Wednesday.

Chris Bryant (Lab) says it is “despicable” to sack someone for your own mistake. He says Truss abandoned the mini-budget because she could not get it through the Commons. In the past, a government that could not get its business through would call a general election, he says.

Mordaunt says it is “an honourable thing” to act in the national interest.

Mordaunt repeats PM has 'genuine reason' for missing Commons question

Mordaunt says, again, there is a “genuine reason” why Truss is not here. She says she hopes Truss will be in the chamber later.

Dame Margaret Hodge (Lab) asks Mordaunt to explain why Truss is not here. She says, for the sake of market confidence, it is important for people to know.

Mordaunt says she cannot say. She says she did ask if she could, but she cannot disclose the reason, she says.

Updated

Mordaunt says, for a third time in this UQ, that she is sorry about the events leading up to the mini-budget U-turns.

Chris Stephens (SNP) asks Mordaunt about the Mail on Sunday story saying Liz Truss over-ruled Kwasi Kwarteng on the mini-budget. (See 3.22pm.)

Mordaunt says those are not matters for her.

Sky’s Sam Coates says Liz Truss is in parliament this afternoon.

So, if Coates is right (and he normally is), Truss is not in Ukraine. This is from the Spectator’s Isabel Hardman.

Jess Phillips (Lab) says people are entitled to want to hear from the prime minister. She asks Mordaunt to be honest, “because nothing we have seen has been honest”. The Speaker allows the comment, after Phillips says it was not aimed at an individual. She asks why it was necessary to reassure the markets.

Mordaunt says:

There is a very genuine reason why the prime minister is not here today.

She does not answer the question about the markets.

Updated

Labour’s Diana Johnson asked Mordaunt to confirm that Truss would not be taking any economic decisions herself in the future. That provoked a loud burst of laughter from MPs.

Mordaunt did not quite say yes. She says Truss and her chancellor and her cabinet would be taking economic decisions in the future.

Truss 'is not under desk', Mordaunt tells MPs, claiming PM has 'very good reason' to be not answering UQ

In response to a question from Labour’s Stella Creasy, Mordaunt declared: “The prime minister is not under a desk.” Creasy suggested Liz Truss was “cowering” under one.

She says says Truss is not here “for a very good reason”.

There is speculation on social media that Truss may have rushed off to Ukraine, copying a favourite Boris Johnson tactic faced with domestic mayhem.

Updated

Intentionally or not, Alberto Costa highlighted with his question the perception that Penny Mordaunt seems to be auditioning for the post of prime minister with her performance this afternoon. (See 10.55am.) And she is making a decent fist of it, according to the Twitter commentariat.

From ITV’s Robert Peston

From my colleage Pippa Crerar

From Cat Neilan at Tortoise

From the broadcaster Michael Crick

From my colleague Rafael Behr

From the broadcaster Paul Mason

Alberto Costa (Con) tells Mordaunt that she is showing in this UQ what an “enormous asset” she is to the government. He says any Tory would do better than the socialists or separatists opposite.

Mordaunt agrees. She says Larry the cat would give the opposition a run for her money.

Updated

From the SNP’s John Nicolson

Commons leader Penny Mordaunt says she is sorry government actions added to concerns about economy

Ed Davey, the Lib Dem leader, asks Mordaunt if she will apologise to the public for what has happened.

Mordaunt replies:

I am sorry that the events leading to the changes today have added to the concerns about the major volatility that was already there existing in the economy. That’s why we are putting it right today.

Kirsten Oswald (SNP) contrasts Liz Truss’s performance with Nicola Sturgeon’s at her press conference this morning. Sturgeon set out a hopeful vision, she says, and took questions for more than an hour. She asks where Truss is.

Mordaunt does not reply to the question, but she asks if Sturgeon’s independence statement covered the tax dividend Scots get by being in the UK.

Updated

Sir Peter Bottomley (Con), the father of the house, says Keir Starmer has reversed most of the things he said he would do when he became Labour leader.

Mordaunt agrees, and lists various areas where she says Starmer has changed policy.

Mordaunt praises Truss for 'courage' she showed in implementing mini-budget U-turns

Mordaunt starts by saying she does not think Starmer will get his 15 minutes as prime minister.

She pays tribute to the “courage” shown by Liz Truss in changing course.

The decision taken by our prime minister would have been a very tough one, politically and personally. Yet she has taken it, and she has done so because it is manifestly in the national interest.

She did not hesitate to do so because her focus is on the wellbeing of every one of our citizens.

It was the right thing to do and, whether you agree with this or not, it took courage to do it.

She says Starmer did not need courage to table today’s UQ. And she attacks Starmer for opposing Brexit.

Starmer asks why Truss is not here herself. She is “scared of her own shadow”, he says. “The lady’s not for turning – up.”

Updated

Starmer says Tories have crashed economy 'at 100 miles an hour'

Starmer thanks Mordaunt for replying. He says under this government everyone gets to be prime minister for 15 minutes.

The government has lost control, he says.

Government borrowing costs have soared, mortgage rates have ballooned, markets need reassuring, and there is long-term damage that can’t be undone.

Once you’ve crashed the car at 100 miles an hour, you’ve damaged it for good, and you’re going to be paying much more on your insurance for years to come.

Updated

Mordaunt says Truss not answering UQ because she is 'detained on urgent business'

Keir Starmer asks his UQ. He starts by just asking “the prime minister” to make a statement on the replacement of the chancellor.

Penny Mordaunt, the leader of the Commons, starts by saying Liz Truss is “detained on urgent business” and that MPs will have to make do with her.

She says Jeremy Hunt, one of the “longest serving and most experienced parliamentarians”, has been made chancellor.

In his Mail on Sunday column yesterday Dan Hodges also included this claim about Liz Truss being primarily to blame for the decision to include the abolition of the 45% top rate of in the original mini-budget. This was the most unpopular proposal in the mini-budget, and the first one to be subject to a U-turn. Hodges said:

‘We were in a meeting to discuss the Budget,’ one aide told me, ‘and one of her advisers said, “I think there’s a problem with this. It’s going to look like our priority is tax cuts for the rich.”

‘And she just turned on him. She literally shouted him down.’ Now she must accept responsibility for her mistakes. Or her party must make her accept responsibility.

Mordaunt to reply on behalf of Truss to Labour UQ on sacking of chancellor

Penny Mordaunt, the leader of the Commons, will soon be answering an urgent question from Labour’s Keir Starmer on the sacking of Kwasi Kwarteng as chancellor. Starmer wanted Liz Truss to reply, but she has sent Mordaunt to face MPs instead.

The sacking of Kwarteng seems particularly unfair in the light of a report in the Mail on Sunday yesterday by Glen Owen saying it was Truss who forced Kwarteng to include the abolition of the top rate of tax in the original mini-budget – despite his misgivings. Owen reports.

Now sources have claimed that the most contentious policy, the proposed cut in the top rate to 40p, was effectively forced on Mr Kwarteng after he suggested to Ms Truss that it should be delayed until next year to avoid ‘doing too much at once’.

The PM is understood to have said: ‘No – let’s go for it.’

When this newspaper asked Mr Kwarteng after the mini-budget whether Ms Truss had ‘bounced’ him into the cut, he paused before responding: ‘I think we were agreed on that.’

Owen also says separate sources have also claimed that “Kwarteng had agonised before deciding whether to back Truss in the leadership contest earlier this year.” Owen says:

They say he confided that he was worried about her candidacy on the grounds that she was ‘a bit crazy’.

Updated

The Resolution Foundation thinktank says the revised mini-budget will still benefit the richest homes most in cash terms – but not on anything like the scale that the original one would have done.

As Sky’s Rob Powell points out, the Treasury pictures (see 3.08pm) reveal some of the text in the documents being held by Jeremy Hunt.

And this is from my colleague Aubrey Allegretti on the final point.

The Treasury has posted pictures on its Flickr account of Jeremy Hunt preparing for his TV address this morning announcing the revised mini-budget.

Jeremy Hunt preparing his statement.
Jeremy Hunt preparing his statement. Photograph: Simon Walker/HM Treasury
Jeremy Hunt with aides.
Jeremy Hunt with aides. Photograph: Simon Walker/HM Treasury
Jeremy Hunt getting ready to give his TV statement this morning
Jeremy Hunt getting ready to give his TV statement this morning Photograph: HM Treasury

Jeremy Hunt, the chancellor, had a private meeting with Tory MPs earlier, after he announced he was junking most of the original mini-budget. Here is my colleague Aubrey Allegretti’s account of what happened.

And this is from the BBC’s Iain Watson on the same meeting.

Updated

The Conservative MP Sir Charles Walker told Radio 4’s World at One that the situation for Liz Truss was “enormously precarious” and that he did not expect her to be able to carry on like this. He said:

I think when you’re in this sort of position, you’ve got to expect as a prime minister that the party won’t tolerate it for any length of time, certainly not weeks.

Walker said he was losing sleep over the situation, even though he has already decided to stand down as an MP. He said:

As a Conservative member of parliament, I’m losing sleep about it to be perfectly honest, not about my own future, because I’m leaving parliament. But we’ve got to pull ourselves together. We really do. It’s painful to watch … I can see why people are thoroughly hacked off. I mean, I’m hacked off and I’m part of the performance.

Walker said Tory MPs would not want an early election because, on current polling, “we’d be a smaller party than the SNP” afterwards.

While not backing an alternative candidate for prime minister, Walker said that Jeremy Hunt, the new chancellor, “has been greeted favourably by the markets, by the media and by colleagues”.

And he said the fact that Hunt did badly in the Tory leadership contest in the summer (coming last, with just 18 votes, in the first ballot of MPs) could be an advantage “because no one camp of the other candidates who went further can feel too sore and bad about not having their man or woman as prime minister”.

Updated

Jeremy Hunt getting into a car at the rear of Downing Street this morning.
Jeremy Hunt getting into a car at the rear of Downing Street this morning. Photograph: Victoria Jones/PA

Mini-budget U-turns won't on their own 'plug gap' in government finances, says IFS

The Institute for Fiscal Studies, an economic thinktank, has described mini-budget 2, this morning’s statement from Jeremy Hunt reversing most of the tax cuts in the original mini-budget, as a big, welcome step “in the right direction”. But it also says the £32bn in extra taxation will not by itself “plug the gap” in the government’s balance sheet.

In a press release setting out the IFS analysis, Paul Johnson, its director, says:

Fiscal credibility is hard won but easily lost. Today’s announcements won’t be enough, by themselves, to plug the gap in the government’s fiscal plans. Nor will they be enough to undo the damage caused by the debacle of the last few weeks. But they are big, welcome, clear steps in the right direction. It is also encouraging that, with most of the tax cuts abandoned, perhaps the most growth-friendly of them, the stamp duty cut and the increased annual investment allowance for corporation tax, remain.

Backing this up with a coherent set of well-designed fiscal targets and a credible plan for meeting them is now the priority for the chancellor’s statement on 31 October. Jeremy Hunt will still have to make some scary decisions on tax and spend this Halloween. And it remains hard to see where significant spending cuts could come from. With today’s policy reversals the tax burden is again set to rise and stabilise at an historically high level.

The IFS also says the fiscal plan being published on 31 December is likely to involve “some cuts to planned investment and day-to-day spending”.

Updated

Penny Mordaunt to respond to Labour's UQ on Kwarteng sacking instead of Truss

Penny Mordaunt, the leader of the Commons, will respond to the Labour urgent question for Liz Truss on the sacking of Kwasi Kwarteng (see 1.02pm), Tory sources have confirmed. Labour sources say this shows Truss is “frit” (a Lincolnshire word for frightened, used by Margaret Thatcher to taunt Michael Foot in 1983).

It is no surprise that Truss would rather not take questions from Starmer and other MPs on this, but it is not unusual for a prime minister to send someone else to answer an urgent question. It is what normally happens.

Updated

On the World at One Nicholas Watt, Newnight’s political editor, has just said that people in No 10 are “not sure that Liz Truss will last the week” as PM.

Sturgeon says it is 'glaringly obvious' UK does not offer economic security as she launches new independence paper

Jeremy Hunt was not the only leading UK politician addressing the media this morning. In Edinburgh Nicola Sturgeon, Scotland’s first minister, gave a news conference to mark the publication of the latest paper from the Scottish government making the economic case for independence. Sturgeon said that it was “glaringly obvious now that the UK does not offer economic strength and stability or financial security”. In another reference to the turmoil in London, she said:

There can’t be many, if any, who look at Westminster now and think that this is as good as it gets.

The full 110-page paper is here. It accepts that, if an independent Scotland were to join the EU (as the SNP wants), and the rest of the UK were to remain outside the single market, there would have to be a trade border between England and Scotland. It says:

Sharing responsibility for customs checks is something that happens on the Norway-Sweden border and, together with the use of technology, has the result that most goods traffic travelling across the border are cleared by customs within three to nine minutes.

Any actual physical checks would likely only be undertaken on the two main trunk routes between England and Scotland or at rail freight terminals.

Updated

Truss is making difficult decisions to 'provide economic stability', No 10 says

At the Downing Street lobby briefing the prime minister’s spokesperson brushed aside claims that Liz Truss has nothing left to deliver on, given that so many of the policies she set out during the Tory leadership campaign have been abandoned. Truss was focused on growth, the spokesperson said.

Asked what credibility Truss now has as PM, the spokesperson said she was committed to providing economic stability. He said:

The prime minister is listening to the public. She is listening to advice on the markets, she is listening to her colleagues and she is making the necessary difficult decisions to change our approach so that we can provide the economic stability and indeed maintain that stability of leadership which is important …

The prime minister is demonstrating that she is able to make the difficult decisions necessary to provide the leadership for this country.

Truss also stressed the importance of stability in a tweet put out under her name.

This is quite a reversal. In her party conference speech, less than two weeks ago, Truss depicted herself as the agent of “change” and “disruption”.

Campaign groups and industry organisations have warned that the end of the energy price guarantee in its current form from April could “heap huge financial pressure” on households, PA Media reports.

Mike Foster, the chief executive of the Energy and Utilities Alliance, said:

News that the energy price cap protection coming to an end in April will surprise and worry millions of hard-pressed families.

Together with the announcement that promised tax cuts have also been withdrawn will heap huge financial pressure on to those already struggling to pay their bills.

And Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said:

The country was already facing a financial cliff edge in April due to plans to end other support packages, but this cliff edge has now become even steeper.

Without the energy price guarantee, the government will need to fundamentally reform the energy market alongside providing unprecedented levels of support for energy efficiency schemes and financial support for the most vulnerable.

But any threat to people’s energy security is a threat to their health and wellbeing. If people cannot trust the government to deliver the support it has promised, what trust can anyone have that they will keep people warm this winter and beyond?

Updated

Starmer seeks to get Truss to face questions from MPs with urgent question on sacking of Kwasi Kwarteng

The Speaker, Sir Lindsay Hoyle, has granted a Commons urgent question to Labour about the sacking of Kwasi Kwarteng. Keir Starmer has tabled the question, and he wants Liz Truss to attend in person to answer.

But there is no guarantee that Truss will appear. She may get another minister to answer on her behalf, like Nadhim Zahawi, the Cabinet Office minister, or Brendan Clarke-Smith, a more junior Cabinet Office minister.

On the BBC’s Politics Live a few minutes ago Jonathan Reynolds, the shadow business minister, claimed that if Truss was not able to answer a question like this herself, it was “over” for her.

The UQ will come at 3.30pm. Starmer will be speaking, regardless of who is responding for the government. Jeremy Hunt will deliver his statement afterwards, at around 4.30pm.

Updated

Nadine Dorries, the former culture secretary and Boris Johnson supporter, says that if Tory MPs cannot support Liz Truss, they should make Johnson PM again, or hold a general election.

The energy price guarantee U-turn is not just embarrassing for Liz Truss. (See 11.04am.) This is what Jake Berry, the Conservative party chair, tweeted just yesterday.

Liz Truss held a political cabinet conference call this morning. (See 11.27am.) In a readout of what was said, her press secretary said that Jeremy Hunt, the chancellor, blamed the global situation for the need for U-turns. The press secretary said:

The chancellor set out the worsening global economic situation, with interest rates rising around the world as monetary policy returns to a sense of normality. Because of this, the government is adjusting its programme while remaining committed to long term reforms to improve growth such as investment zones and speeding up infrastructure projects.

Sky’s Beth Rigby argues this is a mistake, because it implies that No 10 is still not accepting that its original mini-budget triggered the crisis. But on Friday Liz Truss did acknowledge that the mini-budget was a factor, saying it went “further and faster than markets were expecting”.

Political journalists are arguing that, while the mini-budget U-turns announced by Jeremy Hunt this morning may have reassured the financial markets, they may have made Liz Truss’s position even more impossible. Here are four takes.

From Sky’s Beth Rigby

From the Times’ Henry Zeffman

From my colleague Peter Walker

From Sky’s Sam Coates

These are from Faisal Islam, the BBC’s economics editor, on the proposed review of the energy price guarantee. (See 11.32am.)

One measure has survived the mini-budget, the FT’s George Parker points out.

But abolishing the cap on bankers’ bonuses was not a tax cut (although it may have felt that way to some bankers). The Treasury said that getting rid of the cap would promote growth, at no cost to the taxpayer.

Angela Richardson has become the fourth Tory MP to publicly call for Liz Truss’s resignation. The Guildford MP told Times Radio this morning:

We saw those unfunded tax cuts. Had that not happened, the markets would not have responded in the way that they did ... And I believe that’s 100% down to the prime minister, I’m afraid. And so I just don’t think that it’s tenable that she can stay in her position any longer. And I’m very sad to have to say that.

Markets remain upbeat as Hunt ditches mini-budget tax cuts

Investors are welcoming Jeremy Hunt’s decision to ditch most of the mini-budget, and rein in the costs of the energy price cap, my colleague Graeme Wearden writes on his business live blog. Graeme says:

The pound is holding its earlier gains, still up around one cent at $1.127.

And UK bonds are on track for one of their best days in decades, as Jeremy Hunt scrapped most of the unfunded tax cuts that had undermined confidence in the UK.

The yields on the 30-year gilt dropped by nearly 40 basis points to 4.385%, marking one of its biggest daily drops on record, Reuters reports.

Bond prices had already strengthened sharply before Hunt took to the air, particularly following reports that the energy cap was being cut back.

And these are from Newsnight’s Ben Chu.

There is more on the business live blog.

Updated

Treasury explains how seven mini-budget U-turns will raise £32bn

Here is the Treasury news release with details of the mini-budget rewrite announced by Jeremy Hunt at 11am. Arguably this is one of the biggest tax-raising announcements in Treasury history, raising £32bn by 2026-27, although most of these tax increases are simply reversals of tax cuts that were never implemented anyway.

The table also shows that there have now been seven mini-budget U-turns.

This Treasury chart sets out how much will be raised by each of the U-turns.

Treasury score card for mini-budget U-turns
Treasury scorecard for mini-budget U-turns. Photograph: HM Treasury

Updated

Guardian Live are holding a panel discussion tonight on the subject of whether Liz Truss can survive. It starts at 8pm and it will feature Randeep Ramesh, the Guardian’s chief leader writer; Aditya Chakrabortty, Guardian columnist and senior economics commentator; Carys Roberts, executive director, IPPR; and Gaby Hinsliff, Guardian columnist. They will be discussing Truss’s plight and taking questions. You can book tickets here.

Updated

Labour claims government U-turn on fuel bills freeze makes case for new windfall tax on energy companies even stronger

Labour says the energy price guarantee U-turn makes it even harder to understand why the government won’t back its plan for a new windfall tax on energy companies. These are from Rachel Reeves, the shadow chancellor.

Hunt says 'some areas' of public spending will have to be cut

In his statement Jeremy Hunt also confirmed that public spending would be cut in “some areas”. He said:

There will be more difficult decisions, I’m afraid, on both tax and spending as we deliver our commitment to get debt falling as a share of the economy over the medium term.

All departments will need to redouble their efforts to find savings and some areas of spending will need to be cut.

But as I promised at the weekend, our priority in making the difficult decisions that lie ahead will always be the most vulnerable and I remain extremely confident about the UK’s long-term economic prospects as we deliver our mission to go for growth.

What Jeremy Hunt said about how energy price guarantee will become more targeted and less expensive from April

This is what Jeremy Hunt said in his statement about the energy price guarantee.

The biggest single expense in the growth plan was the energy price guarantee.

This is a landmark policy supporting millions of people through a difficult winter, and today I want to confirm that the support we are providing between now and April next year will not change.

But beyond that, the prime minister and I have agreed it would not be responsible to continue exposing public finances to unlimited volatility in international gas prices.

So I’m announcing today a Treasury-led review into how we support energy bills beyond April next year. The objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need.

Any support for businesses will be targeted to those most affected and the new approach will better incentivise energy efficiency.

Jeremy Hunt delivering his statement to broadcasters.
Jeremy Hunt delivering his statement to broadcasters. Photograph: Sky News

Updated

Liz Truss held a political cabinet call at 10am to discuss the decision to scrap the mini-budget measures, PA Media reports. PA says:

The chancellor set out the “worsening global economic situation, with interest rates rising around the world as monetary policy returns to a sense of normality”, a No 10 source said.

“Because of this, the government is adjusting its programme while remaining committed to long-term reforms to improve growth such as investment zones and speeding up infrastructure projects.”

Jeremy Hunt is expected to meet all secretaries of state this week to decide on future spending plans, which will then be submitted to the Office for Budget Responsibility on Friday.

Updated

Hunt confirms energy price guarantee will only last in its current form until April

Hunt confirms that the energy price guarantee, as originally announced, will only last until April.

He says Liz Truss agreed that it would be wrong to make such a long-term spending commitment, when it is unclear what will happen to energy prices in the future.

He says there will then be a review. A more targeted system will then be put in place, he says.

This is the big surprise in today’s announcement. It will probably go down well with the markets. But this cuts the knees from under Liz Truss. The only policy that she had left that she was able to take credit for – see 11.04am – has now gone into the shredder. There is nothing left of the Truss agenda at all.

Updated

Hunt reverses 'almost all' of mini-budget tax cuts, raising an extra £32bn per year

Jeremy Hunt is speaking now.

He says a central responsiblity for any government is economic stability.

No government can control the markets. But every government can give certainty about the sustainability of the public finances.

He says, as well as going ahead with the corporation tax increase, he is announcing other changes.

He is doing so now ahead of a statement to MPs.

We will reverse almost all the tax measures announced in the growth plan three weeks ago that have not [already started the parliamentary process].

He says this includes:

  • Cuts to dividend tax rates

  • The IR35 tax changes

  • VAT-free shopping for tourists

  • The alcohol duty changes

Hunt also says the 20% basic rate of tax will remain indefinitely.

He says these measures will raise an extra £32bn per year for the Treasury

UPDATE: Hunt said:

We will reverse almost all the tax measures announced in the growth plan three weeks ago that have not started parliamentary legislation.

So whilst we will continue with the abolition of the health and social care levy and stamp duty changes, we will no longer be proceeding with the cuts to dividend tax rates, the reversal of off-payroll working reforms introduced in 2017 and 2021, the new VAT-free shopping scheme for non-UK visitors or the freeze on alcohol duty rates.

Hunt also said the basic rate of income tax could remain at 20p in the pound until economic conditions allowed a reduction. He said:

It is a deeply held Conservative value - a value that I share - that people should keep more of the money that they earn.

But at a time when markets are rightly demanding commitments to sustainable public finances, it is not right to borrow to fund this tax cut.

Updated

How Truss attacked Labour at PMQs last week for only proposing to freeze energy bills for six months

In the light of what journalists like Hary Cole and Steven Swinford are reporting about the energy price guarantee policy being revised, this is what Liz Truss said at PMQs five days ago.

We have taken decisive action to make sure that people are not facing energy bills of £6,000 for two years. We remember that the opposition are only talking about six months. We have also taken decisive action to make sure that we are not facing the highest taxes for 70 years in the face of a global economic slowdown …

The fact is that all the opposition have said is that people should be supported for six months. Does he think that, in March, pensioners should be facing very high energy bills? That is what will happen if he does not support our energy price guarantee.

Updated

From Steven Swinford at the Times

Jeremy Hunt's statement on further changes to mini-budget

Jeremy Hunt, the new chancellor, is about to announce changes to the mini-budget.

He is speaking to the media, and not waiting to address parliament at 3.30pm, because he wants the markets to hear what is happening asap.

Tory leadership crisis - some latest developments

  • Penny Mordaunt, the leader of the Commons, has written an article for the Daily Telegraph saying Tory MPs should “work with the prime minister and her new chancellor”. In its splash the Daily Telegraph writes this up as Mordaunt being supportive of Truss. But in her article Mordaunt barely mentions Truss and instead she stresses the importance of “pragmatism” (she uses the word three times) and much of the article reads like an indictment of Truss’s approach to politics, not an endorsement of it. For example, Mordaunt says:

This land of ours is full of stories of those in our communities - national or local, large and small - that have risen to challenges. That have stayed the course or made improvements. Our characteristic hopeful pragmatism has provided stability. It has ensured extremism has never taken hold …

We must remember what we have achieved and how we did it. Above all, it was down to a commonsense approach. Pragmatism must always take precedence over policy. The Conservative party understand this. If it has a fault, it’s that it’s impatient to get on with it.

There is a talented team of energetic and dedicated public servants at every level of government in this country. They are matched by leaders in just about every field of human endeavour. They know the problems we face are difficult and complex.

The national mission though is clear, as the prime minister said. That is what we should all focus on now. It needs pragmatism and teamwork. It needs us to work with the prime minister and her new chancellor. It needs all of us.

Mordaunt, of course, is another of the Tories seen as a potential replacement for Truss. The Telegraph may have published her manifesto.

  • Steve Baker, the Northern Ireland minister, has told ITV’s Anushka Asthana that Tory MPs hoping to remove Truss are not being realistic.

  • George Osborne, the former Tory chancellor, has described Truss as PINO – prime minister in name only. He told the Andrew Neil Show last night that he thought Truss would probably be gone by Christmas. (To be fair, he said much the same about Theresa May just after the 2017 election, but was out by about two years.)

  • MPs believe that as many as 100 Conservative backbenchers may have written no-confidence letters demanding a vote on whether to depose Liz Truss, Hugo Gye and Chloe Chaplain report for the i.

  • Ben Wallace, the defence secretary, has indicated that he will withdraw support for Truss if she reneges on her promise to raise defence spending to 3% of GDP, Jason Groves reports for the Mail.

  • Grant Shapps, the former transport secretary, has written an article for the Times saying Tory defeat at the next election is not inevitable. He says:

I am a contrarian. If someone tells me that such and such is so, I say “prove it”. So, the doomsters say the Tories are finished. The consensus is that Labour’s 20 to 30-point lead is unassailable. I say, look at Theresa May’s poll lead before the 2017 election. She was 23 points ahead with two months to go and managed to blow that lead entirely, resulting in a minority Tory government. We have two years to go and we can do a hell of a lot of good in two years.

But we have to bin the infighting and ideology and rediscover core Conservatism: a desire to preserve that which is good, an aversion to unnecessary state interference in people’s daily lives, a belief in the liberating power of free enterprise. We must demonstrate compassion for the vulnerable, and maintain an unwavering belief in the greatness of this nation and its value to the wider world as a force for good.

Nothing in politics is written in stone. Precedents are there to be broken. Can the Conservatives win a fifth term? Of course we can. So long as we remember why we were elected.

Updated

Andrew Bowie, a Scottish Conservative MP who backed Rishi Sunak in the leadership contest, urged Liz Truss to appoint Sunak to her cabinet. Bowie told Times Radio this morning:

I think that if we are going to bring the party back together, govern in the national interest and go on to do good things as a government [we must] demonstrate the ability to reach out across the divide within the party. That means having the best brains and the best talents within Government - that includes, obviously, Rishi Sunak.

But there is no evidence that Sunak wants a job in Truss’s cabinet. The former chancellor is one of several candidates being discussed as a possible successor to Truss as prime minister, and Sunak (who has not given up his ambitions to lead the country) seems to have concluded that he is best advised keeping his head down.

This is from Nick Macpherson, a former permanent secretary at the Treasury.

Labour is ahead of the Conservative party on 14 out of 15 policy areas, when voters are asked who would tackle them best, according to Ipsos polling for the Evening Standard.

As Nicholas Cecil reports in his story, Labour is even ahead on managing the economy for the first time since 2007. He says:

Labour is seen to have the best policies on managing the economy over the Conservatives for the first time since September 2007. Sir Keir Starmer’s party is on 34 per cent, up eight points since April, with the Tories on 21 per cent, down 11 points and a gap now of 13 points.

Other polls have put Labour ahead on the economy this year, but polling companies tend to ask this question in different ways, and Ipsos asks people to rate parties on “managing the economy” separately from other aspects of economic policy, like taxation and cost of living.

Commenting on the polling, which was carried out before Kwasi Kwarteng was sacked on Friday, Gideon Skinner, head of political research at Ipsos, said:

Over the last couple of years, the Conservative party image has been in steady decline – particularly on issues of governing competence and empathy – and this has continued under the new prime minister.

Now however it is compounded by the party also falling behind Labour when the public rates who has the best policies on their top two priorities: the cost of living crisis and the economy (where Labour have their first lead for 15 years).

Updated

Victoria Atkins, the Tory former prisons minister and, like Damian Green (see 9.25am), was a bit more explicit than he was about Liz Truss being on probation when asked about the prospects of her remaining PM.

Asked on the Today programme if she wanted Truss to lead the party into the next election, Atkins said:

She is the prime minister at the moment, we will not have an election for the next few years. I want her to get us back on to the right track, I want her to reiterate our concerns for our constituents and for compassionate one nation values.

Asked again if she wanted Truss to lead the Conservatives into the next election, Atkins replied:

If she’s able to bring those values to the fore then I’m very happy for her to do that.

Victoria Atkins
Victoria Atkins Photograph: Kirsty O’Connor/PA

Updated

Damian Green suggests Truss will have to become 'a lot more successful' to stay on as PM

Judging by what Conservative MPs have been telling journalists in private over the last few days, the consensus (but not unanimous) view among Tories seems to be that Liz Truss will have to be replaced as party leader before the next election. But very few MPs are saying that in public, and Sky’s Tom Larkin, who is running a spreadsheet of Tories calling for Truss’s resignation, has only got three names on it.

Damian Green, the former first secretary of state, was on the Today programme and you would expect him to be on the Larkin list. He is chair of the One Nation Conservatives caucus, the group most horrified by Truss’s experiment with hardline free market ideology. But he insisted that Truss did have the credibility to carry on as PM, despite the fact she is abandoning most of the key tax policies at the heart of her leadership campaign. He explained:

She is a pragmatist - she’s realised that the first budget didn’t work in spectacular fashion, so she’s now taken the sensible view that we will now try something else, and she’s appointed a very sensible chancellor in Jeremy Hunt.

I obviously don’t know what he’s going to say, but clearly what he’s going to do is already beginning to reassure the markets, and I hope will continue to do so afterwards.

That means we can hopefully put the past few weeks behind us and start again.

Green said the public would look “pretty askance” if the Tories staged another leadership election and that what was best for the country was for the government to succeed. Asked if he wanted Truss to lead the party into the next election, Green replied:

Yes, because if she leads us into the next election, that will mean that the next two years have been a lot more successful than the past four weeks have been. That would not only be good for the Conservative party, that would be particularly good for the country as well, so I think everyone would welcome that.

That sounded like Green saying he wanted Truss to stay on as PM until the next election. But in fact what he was actually saying was that Truss would only be able to stay on if her premiership became “a lot more successful”.

Damian Green.
Damian Green. Photograph: Dominic Lipinski/PA

Updated

According to the Sun’s Harry Cole, Liz Truss and Jeremy Hunt, her new chancellor, may review the energy price guarantee as part of their bid to reassure the markets that the government has got spending under control.

Truss announced the energy price guarantee two days after becoming prime minister. The move, which will cap the unit price for gas and electricity for families for two years, with the result that on average households will pay £2,500 a year, was widely welcomed, although experts said it was more costly than necessary because help was not targeted on those most in need.

A U-turn on this would be a further humiliation for Truss. Only last week at PMQs Truss was stressing that her plan would protect householders for two years, while Labour’s energy saving proposal only covered six months.

Truss should resign because she has 'no credibility, no authority', says Labour

Labour has called for Liz Truss’s resignation. In an interview with Sky News, asked if Truss should quit, Pat McFadden, the shadow chief secretary to the Treasury, said:

We think she should go because she has got no credibility, no authority. She caused this damage, she was 100% co-owner of that mini-budget with Kwasi Kwarteng and therefore if she stays in post, why is she staying in post? It can’t be for the interests of the country. This is just the Conservative party looking after itself today and they cannot fix the damage they have caused.

Pat McFadden.
Pat McFadden. Photograph: UK Parliament/Jessica Taylor/PA

Updated

George Parker, political editor of the Financial Times, reckons that around two-thirds of the tax cuts in the original mini-budget will be abandoned in the update being announced by Jeremy Hunt at 11am.

Updated

Sky’s Ed Conway has more on gilt yields this morning.

Commenting on developments in the markets this morning (see 8.27am and 8.31am), Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said:

Today’s developments may hold off a fresh assault on government borrowing costs by the bond vigilantes standing by in the UK gilt market, but it could only be a temporary reprieve.

Trussenomics may have been ripped up and fed to the shredder but the author of the big gamble remains in power, and has the final say on the direction of travel.

Investors are craving more stability but, given the flip-flopping we’ve had so far in her super-short tenure, economic policy uncertainty remains and that’s likely to be the key driver in the bond markets and on foreign exchange desks.

Updated

The pound was also up this morning following the announcing that mini-budget 2 has been fast-tracked, PA Media reports. PA says:

Sterling leapt to $1.129 at one stage, having kicked off more nervously, dipping to $1.122 against the greenback in overnight trading ahead of what many have feared would be a testing day on markets.

UK government borrowing costs fall as trading begins

The initial response from the markets this morning to the news that mini-budget 2 is coming two weeks early was positive, according to Sky’s Paul Kelso.

And this is from Henry Tapper at AgeWage.

And this is from my colleague Graeme Wearden.

The bond market is open … and UK government borrowing costs are falling.

That suggests the City is welcoming Jeremy Hunt’s push to unravel the mini-budget with new tax and spending plans.

The yield, or interest rate, on 30-year government bonds (or gilts) has dropped sharply to 4.55%, down from 4.77% on Friday night.

Yields measure the cost of government borrowing, and fall when bond prices rise (and vice versa).

Graeme has more on his business live blog.

According to the BBC’s political editor, Chris Mason, the statement from Jeremy Hunt today will primarily focus on reversing tax cuts that were included in the original mini-budget. Mason says Hunt is not ready yet to announce decisions on spending.

Labour says Hunt’s decision to bring forward full overhaul of mini-budget ‘evidence of panic’

Good morning. Jeremy Hunt declared that he had a “clean slate” to overhaul the disastrous mini-budget after he was appointed chancellor on Friday, and this morning he is going to deploy it, making a statement consigning yet more of the measures announced by his predecessor, Kwasi Kwarteng, to the dustbin.

Announcing Hunt’s appointment, Liz Truss confirmed that the government was going ahead with the corporation tax increase that had been cancelled in the mini-budget. But that was not enough to convince the financial markets that the government had spending under control and on Friday afternoon gilt yields were going up (meaning government borrowing costs were rising). Ministers were braced for more trouble with the opening of the bond markets at 8am this morning.

Instead Hunt has decided to get ahead of events. At 6am this morning the Treasury said he would be making a major statement about tax and spending policy. He will be in the Commons at 3.30pm to give details to MPs, but reassuring the financial markets takes precedence over the convention about big announcements being made in the chamber first, and so Hunt will be releasing the details at 11am.

Labour has called this “evidence of panic”. Pat McFadden, the shadow chief secretary to the Treasury, told the Today programme:

I think it’s evidence of the panic that the government is in and that damage that’s been caused over the past few weeks.

Clearly, ministers are now terrified of market reaction. They’ve concluded that they cannot wait until October 31.

In its own terms, that’s right because the country couldn’t carry on for the next two weeks in the way that we’ve been going, but the key thing is where does this now leave the prime minister? She was elected to lead the Conservative party on the basis of the policies that were announced by the previous chancellor on September 23 [in the mini-budget].

It is hard to know what to call Hunt’s statement, but “revised mini-budget”, or “mini-budget 2” would work as acceptable shorthand. Kwarteng said that he would follow his mini-budget with a “medium-term fiscal plan” that would explain how the tax cuts in the mini-budget would be funded. He was going to set out new fiscal plans, and explain what would happen to spending (not covered in the original statement).

Today Hunt is expected to delay or scrap some of the mini-budget measures that have not already been binned. The cut in the basic rate of income tax by 1p in the pound, that was due to take effect from April next year, will almost certainly be shelved.

But he is also expected to give details of the spending cuts that will be needed to balance the government’s books. (See 8.19am for an update on this point.) He gave a hint of what to expect over the weekend when he said:

We are going to have to take some very difficult decisions both on spending and on tax. Spending is not going to increase by as much as people hoped and … taxes are not going to go down as quickly as people thought and some taxes are going to go up.

Today’s statement will not entirely replace the fiscal plan, due to be published on 31 October. That is still going ahead, and the Treasury confirmed this morning that that is when the Office for Budget Responsibility will publish its economic forecast – its assessment of the credibility of the government’s plans.

Hunt’s move is primarily about assuring the financial markets. But the political markets need reassuring too. The Liz Truss share price hit rock bottom at the weekend and many Conservatives think that, if Tory MPs can agree on a candidate to replace her, she will be out. Today we may get a better sense of whether or not that is imminent.

Here is the agenda for the day.

11am: Jeremy Hunt will making his statement about changes to the mini-budget.

11am: Nicola Sturgeon holds a press conference in Edinburgh as she publishes the latest paper from the Scottish government making the economic case for independence.

2.30pm: Simon Clarke, the levelling up secretary, takes questions in the Commons.

After 3.30pm: Hunt makes a statement to MPs about his mini-budget overhaul.

4.3pm: MPs hold a debate in Westminster Hall on an e-petition signed by more than 600,000 people calling for an early election.

After 5pm: MPs debate the energy prices bill

I try to monitor the comments below the line (BTL) but it is impossible to read them all. If you have a direct question, do include “Andrew” in it somewhere and I’m more likely to find it. I do try to answer questions, and if they are of general interest, I will post the question and reply above the line (ATL), although I can’t promise to do this for everyone.

If you want to attract my attention quickly, it is probably better to use Twitter. I’m on @AndrewSparrow.

Alternatively, you can email me at andrew.sparrow@theguardian.com

Updated

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