On Friday, the prime minister duly performed her whooping U-turn, but refused to resign. Instead, she threw her chancellor and ideological soul mate, Kwasi Kwarteng, to the wolves and chose a regular old hand from the conservative party’s political center, Jeremy Hunt, to replace him.
The situation is dire, but is it hopeless? The Prime Minister is now entering the most important parts of her libertarian program. She says that her ‘vision remains’, but that survival must come first. The only man who can save her now is Hunt. As so often in the past, the relationship between number 10 and number 11 Downing Street will be crucial.
In recent decades there have been few disputes between these government neighbors that have resulted in layoffs or dismissals. Tony Blair and Gordon Brown may have been rivals, but it was a long and fruitful partnership before turning into a simmering cold war. David Cameron and George Osborne kept any disagreements a secret, except for the decision to hold a referendum on European Union membership. However, in a throwback to the bad old days of the 1950s to the early 1990s, Boris Johnson managed to lose two chancellors in a row. The resignation of his second, Rishi Sunak, earlier this summer hastened the fall of the former prime minister.
If history turns a blind eye, Hunt can still save Truss’ skin as Chancellor.
For example, Harold Wilson, the UK’s most economically literate Prime Minister since World War II, has wasted a huge amount of political capital defending the value of the pound. Then, in 1967, he devalued the pound sterling, announcing that “this will not affect the pound in your pocket.” He pushed aside his chancellor and appointed a fiscally conservative replacement, Roy Jenkins, and held office for another three years—although he always looked nervously over his shoulder at his ambitious new neighbor in the Treasury.
In 1992, it was the turn of a Conservative Prime Minister, John Major, to defend the value of the pound sterling in the European Exchange Rate Mechanism (ERM). Major burned billions to support the pound but lost his bet against the markets. His eurosceptic chancellor Norman Lamont unwisely admitted that after the U-turn he “sang in the bath” and was pushed aside. Major’s personal authority was shot down, but his government faltered through to complete a full term. Meanwhile, his dashing new chancellor, Ken Clarke, kept the show on track by stabilizing the economy.
Yet Truss’ plight is more dangerous than that of her predecessors, even though her party has a fictitious majority of 70 seats in the House of Commons.
Unlike Wilson and Major, who had previously triumphed in the election, this prime minister has no electoral mandate for her libertarian prospectus. She gained the support of a majority of party members, not Conservative MPs, to become leader. Truss has been in the top position for some 40 days and her chancellor’s far from “mini” budget of unfunded tax cuts has been bombarded in the markets and polls.
The government has up to two years before the allotted time is up, but the prime minister could struggle until next month to survive the dismay of her MPs. Even one of its most vocal supporters of the paper, the Daily Mail, began its editorial on Friday by noting that Truss could soon earn the dubious distinction of being the shortest-serving prime minister ever, surpassing George Canning’s record of 119 days. would undermine.
Many Conservative MPs dream of crowning Truss’ closest rivals, Rishi Sunak and Penny Mordaunt, as Prime Minister and Deputy Prime Minister (in no particular order) without a protracted battle among the wider members. Though another coup d’état would install the fifth Tory prime minister in six years, fears of electoral oblivion are driving the parliamentary party to consider desperate measures.
Hunt is now canceling a number of major items before what’s left of Kwarteng’s mini-budget goes back this month to the Office for Budget Responsibility for inspection – including the £18bn ($20.1bn) plan to fund planned corporate tax hikes that were the centerpiece of his boss’s leadership campaign and indeed his own bid for power in the same contest. The markets had already surrendered.
Truss declares herself a follower of Margaret Thatcher, but unlike the Iron Lady, she is made of a more flexible material. The Prime Minister nods every concession. Just three days after Kwarteng announced it in the House of Commons, she dropped the controversial income tax cut proposal for the better off. And now she’s dropped Quarteng too.
What remains of Truss’ mantra of “grow, grow, grow”? Major was fatally accused of being in office but not in power after the ERM debacle. Has the Prime Minister also become a figurehead?
Her fate now rests in the hands of her smooth chancellor. Although he is a free trader by conviction, a big plus for Hunt is that he understands the importance of empathy. I saw him as Minister of Health show tremendous concern for the families of victims of medical malpractice and poor maternity care. Contrast that with Truss’s failure to recognize the cost to homeowners of the skyrocketing mortgage bills that followed the mini-budget.
Hunt will command some respect from his parliamentary colleagues for his seniority and experience, but they are rowdy and divided. The chancellor voted for the UK to remain in Europe in the referendum (as did his born-again eurosceptic boss), so the party’s right will be suspicious.
Hunt has only days to make his mark. It’s not a mission impossible, but unless he calms the storm, his own tenure could be cut just as short as Truss’s.
This column does not necessarily reflect the views of the editors or Bloomberg LP and its owners.
Martin Ivens is editor of the Times Literary Supplement. He was previously editor of the Sunday Times in London and its chief political commentator.
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