Kwarteng faces sack as chancellor as Liz Truss U-turns on his Budget

Kwasi Kwarteng is expected to be sacked as chancellor of the Exchequer today, a senior source inside No 10 source has told The Independent.

There was no official confirmation from Downing Street of the expected move, which leaked out as Mr Kwarteng made his way back to central London from Heathrow after cutting short his visit to New York for meetings of the IMF and World Bank.

Ms Truss now faces a fight for her own political survival, as she looks set to abandon key elements of the tax-cutting agenda which she promoted during her campaign for the Tory leadership, approved for September’s mini-Budget and defended as recently as Wednesday in the Commons.

The Independent understands that Sajid Javid and Nadhim Zahawi - both former chancellors - are under consideration as replacements to take the helm at the Treasury in the hope of restoring confidence in the markets.

Moments after the chancellor touched down at about 10.30am, No 10 announced a solo press conference by the prime minister this afternoon. No time has been confirmed for the event, with speculation it could come as early as 2pm.

The timing of the announcement suggested that Mr Kwarteng was informed shortly after landing that a decision had been taken while he was in mid-air to reverse some of the tax cuts he announced in his disastrous 23 September mini-Budget.

The biggest rowback is expected to be the restoration of a rise in corporation tax scheduled for 2023 by Rishi Sunak but cancelled as part of a £45bn unfunded tax giveaway in the mini-Budget.

The U-turn would raise £18.7bn a year for the Treasury, on top of the £2bn saved by ditching Kwarteng’s abolition of the 45p income tax band for high-earners.

Only yesterday, Mr Kwarteng dismissed predictions of further U-turns, insisting he was focusing on preparations for a medium-term fiscal plan statement on 31 October in which he was due to expain how he would pay for the tax cuts.

And he brushed off rumours that he was in line for dismissal, saying he was “absolutely 100 per cent” certain he would be in office in a month’s time and declaring: “I’m going nowhere.”

The chancellor arrived at Downing Street shortly before noon and was expected to go straight in to talks with Ms Truss, who appointed him just 38 days ago on 6 September after she was named as PM.

His expected sacking comes just hours before the Bank of England closes an emergency £65bn bond-purchasing scheme launched to prevent a market meltdown in the wake of the mini-Budget.

Shadow chancellor Rachel Reeves said: “A humiliating U-turn is necessary - but the real damage has already been done to millions of ordinary people now paying much higher mortgages and struggling to make ends meet.

“This is a Tory crisis, made in Downing Street. They have plunged our economy into chaos and crisis with Truss’ discredited trickle down approach. It won’t be forgiven or forgotten.

“Only a Labour government has the credibility, authority and plan to fix things.”