Inside Politics: Hunt takes over

Hello there, I’m Matt Mathers and welcome to The Independent’s Inside Politics newsletter.

Will Liz Truss outlast that lettuce? It is becoming too close to call. She was still prime minister when this email went out. But it might be worth double-checking now.

Chief political commentator John Rentoul on what to look out for:

If Liz Truss is still prime minister, she will chair a cabinet meeting this morning. The Commons meets at 11.30am, starting with questions to Brandon Lewis, the justice secretary. Ben Wallace, the defence secretary and possible unity candidate to succeed the prime minister, will travel to the US after appearing before the Defence Committee this afternoon. Chris Heaton-Harris, the new Northern Ireland secretary, appears before his select committee for the first time.

The admiral’s son has steadied the ship. Jeremy Hunt took an axe to Liz Truss’s economic plans yesterday and, for now at least, it is working. The pound remains up against the dollar (buying $1.14) this morning and the cost of government borrowing fell after the new chancellor delivered his emergency statement. Hunt scrapped the planned cut to the basic rate of income tax, the cut to dividend tax rates, the freeze on alcohol duty rates and the new VAT-free shopping scheme for non-UK visitors. The energy bill help scheme will be reviewed in April. He said the sweeping U-turns would bring in around £32bn for the Treasury each year, leaving a remaining black hole of about £30bn in the public finances, according to the Institute for Fiscal Studies. The UK is by no means out of the woods yet.

And while the cut to national insurance contributions will go ahead because it is already progressing through the Commons, Hunt said that more difficult decisions lay ahead. Further tax rises are possible, he said as he warned that government departments would have to find efficiencies (cuts). And there are reports this morning saying that not even the health or defence departments will escape the guillotine, while the pension “triple lock” might also be at risk. In the space of a single weekend, this Conservative government has gone from “growth, growth growth” to cuts, cut, cuts as the chancellor embarks on what very much looks and sounds like Austerity 2.0. Make no mistake, the speed at which Hunt moved yesterday to reassure the markets and bring Britain back from the brink underlines just how much damage Truss and the former chancellor inflicted on the economy.

Hunt is undoubtedly an effective communicator but it is going to take more than smooth talk to heal over the wounds he is about to inflict with a raft of swingeing public spending cuts. Truss is right when she says global conditions are difficult. But it is also true that the decisions she and Kwarteng took made things worse and the rest of us will now pay for it in mortgage costs and interest rates. “There is lasting damage that these policy U-turns won’t change,” Rachel Reeves, the shadow chancellor, told the Commons yesterday. “They’ve set fire to everything and now they insist it is all fine. The truth is...an arsonist is still an arsonist – even if he runs back into a burning building with a bucket of water.”

Truss did not show up to answer an urgent question on the economy tabled by Keir Starmer in the Commons and was subsequently (wittingly or unwittingly) humiliated by her own colleague, Penny Mordaunt, who perhaps wanted to settle some scores from the Conservative Party leadership contest during the summer. Truss eventually made her way into the chamber for the exchanges and later went on a “charm offensive” with the One Nation group of MPs on the left wing of her party, which is said to have gone better than expected. In an exclusive interview with the BBC last night Truss apologised for the mistakes she made, conceding that she went too far too fast. She also vowed to lead her party into the next election. But in reality the only thing keeping her in office is a need for calm in parliament following weeks of utter chaos and the lack of agreement on a unity candidate to replace her.

She wakes up to another set of dire headlines this morning. Even some of the true believers have lost faith, it appears. “In office, but not in power” says the Mail. “The ghost PM,” says The Sun.

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So what is the cost of all the current economic woes? According to the Trades Union Congress, workers could see their wages drop by £4,000 in real terms over the next three years.

Workers are on course for two decades of “lost living standards” and the “longest squeeze” in earnings in modern history under the “toxic” Conservative government, the TUC’s general secretary is to say, as she warns the trade union will take legal action if workers’ rights are targetted.

Later today Frances O’Grady is to address trade union delegates at the TUC conference in Brighton, where she will say that workers “have been pushed to breaking point” after the “longest wage squeeze since Napoleonic times”.

The TUC estimated that real-terms wages will not recover until 2028. This will result in them losing a further £4,000, on average, over the next three years as a result of inflation outstripping wage growth, it said.

Hunt rules out taking over from Truss.

“I rule it out, Mrs Hunt rules it out, three Hunt children rule it out.”

i chief politics commentator Paul Waugh on Truss’s BBC appearance.

“It’s so excruciating to watch. Like it’s really all a game.”

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