What does the chancellor’s emergency statement mean for Liz Truss?

Jeremy Hunt’s burial of the remaining bones of Trussonomics today might buy Liz Truss a little more time, but it will not save her job.

The chancellor ripped up all the tax cuts in his predecessor Kwasi Kwarteng’s 23 September mini-Budget, apart from the reversal of the rise in national insurance this April, which has already been approved by the Commons, and reductions in stamp duty. It will be painful for Truss to swallow the indefinite scrapping of her proposed cut in the basic income tax rate from 20p to 19p in the pound. Her allies had hoped it would merely be delayed by a year.

The biggest surprise in Hunt’s statement was the decision to pare back Truss’s flagship energy price guarantee. She can no longer contrast her two-year scheme with Labour’s plan; both will now expire next April. Another big plank of her strategy is removed as her ship sinks further.

The new chancellor had to target the open-ended energy package because he has rightly realised the limitations of relying on spending cuts to fill the estimated £60bn hole in the public finances. He has announced £32bn of savings so far, so there will still be cuts. Claiming that most of the gap would be closed by savings would not satisfy the financial markets; with mutinous Tory MPs ready to rebel over specific measures, huge cuts would clearly not be deliverable.

If he can draw up a more realistic list of savings, Hunt has a chance of being able to claim in his medium-term fiscal plan on 31 October that UK debt as a share of GDP will be falling within five years. A return to traditional fiscal conservatism and sound money – and the very “Treasury orthodoxy” Truss vowed to blow up.

Such a change would be welcomed by the markets. Yet I doubt we will see the return of full confidence in the government while Truss remains in charge – officially, at least.  Her project is dead. It is obvious that Hunt is calling the shots; she is the hostage prime minister.

Yet Truss is still in denial.  Showing no contrition, she is now talking about charting “a new course”, as if the one she launched six weeks ago was charted by someone else.

She has been forced to make a much bigger correction to try to regain market confidence after what aides promised in advance would be “shock and awe” in the mini-Budget. Now the bombs are raining down on her and are still coming – despite Hunt’s strong, if unpalatable, medicine.

The plotting among Tory MPs to oust Truss is becoming more intense by the day against the backdrop of a feverish atmosphere at Westminster. Having jettisoned her chancellor and now the economic policies on which she won the Tory leadership, Truss has nothing left to sacrifice but herself.

She has upset fellow libertarians on the Tory right who hoped, unrealistically, that she would stick to her guns. Her disastrous start has alienated many who supported her for the leadership.  She has vindicated her opponent Rishi Sunak’s warnings about her reckless strategy.

The one thing saving Truss from immediate dismissal is her party’s inability to reach a consensus on who should succeed her. The contenders are Sunak; Hunt; Penny Mordaunt, the Commons leader; Ben Wallace, the defence secretary; and Boris Johnson. I think we can discount Johnson; fortunately, many Tories agree the public would think they had gone completely potty if they recalled him.

To keep up to speed with all the latest opinions and comment, sign up to our free weekly Voices Dispatches newsletter by clicking here

The sensible choice would be Sunak, but this is not a sensible party and he has enemies in the Truss and Johnson camps. It is a party more obsessed with its faction-fighting than running the country. The factions deserve the chance to beat each other into submission – during a spell in opposition, not while they push up our mortgages and prices and reduce our public services.

Sooner or later, Tory MPs, if only for their own sakes, will surely come to their senses and agree on who should take over. They cannot go into the next general election under Truss, the most unpopular PM we have seen, who has detonated her party’s unique selling point on economic competence and made it look like the “nasty party” again. Some voters were prepared to put up with some harsh Tory measures because they wanted stability and competence. Truss is now a symbol of instability and incompetence, and always will be.

Many Tory MPs think the next general election is already lost, but believe a new PM could limit the damage and avoid a landslide that consigned the party to the wilderness for a generation. Despite her latest spectacular U-turn today, the question is still when Truss’s premiership comes to an end – not if.