'It's over': Truss clings to power as Tories turn on her after humiliating tax u-turn

14 October 2022, 14:37 | Updated: 14 October 2022, 23:40

Liz Truss has reversed her flagship tax policy
Liz Truss has reversed her flagship tax policy. Picture: Alamy/Getty

By Kit Heren

Liz Truss is continuing to cling to power as Tories turn on her after announcing a humiliating tax u-turn and sacking Kwasi Kwarteng as Chancellor.

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The Prime Minister said in an eight-minute press conference on Friday that the plan would raise £18 billion pounds per year.

Ms Truss did not address the criticism of the government after the turmoil unleashed by the mini Budget at the end of last month - and did not respond to a question from ITV asking if she would apologise.

The Prime Minister only answered four questions before walking out, in a tetchy performance on Friday afternoon.

One former Cabinet minister said the PM had been "robotic" and made the situation worse for herself.

"What an absolutely shambles. She's got to go. After eight minutes... 'I'm going to walk off, I don't have to take this sh**,'" the MP told MailOnline.

"She has burned the house down and she is the chief firefighter. She is now going to be running the country on policies that she trashed completely in the leadership contest... why isn't she joining Kwasi under the bus?"

Another senior minister told the i paper: "It’s over, I imagine.”

A former minister added: "Credibility can be retained to some extent under a new leader but not this one."

Mini-budget went ‘further and faster’ than markets were expecting

It comes amid reports that Tory MPs are planning to outs the PM in favour of Rishi Sunak and Penny Mordaunt.

Several rebels are actively considering demanding a resignation within days.

However, loyalists have warned that another leadership switch could trigger an election before Christmas and mean the Tories are forced out of power.

Read more: Liz Truss 'will resign this afternoon or be gone within the next two weeks', says Andrew Marr

Ms Truss sacked her Chancellor Kwasi Kwarteng earlier on Friday with Jeremy Hunt installed in his place. Mr Hunt arrived at Downing Street for a meeting with Ms Truss on Friday afternoon at about 4.15pm.

She told the press conference: "It is clear that parts of our mini-budget went further and faster than markets were expecting. So the way we are delivering our mission right now has to change.

Andrew Marr says the PM will be gone today or in the next few weeks

"We need to act now to reassure the markets of our fiscal discipline.

"I have therefore decided to keep the increase in corporation tax that was planned by the previous government.

Read more: Jeremy Hunt appointed Chancellor after Kwasi Kwarteng sacked

"This will raise £18 billion per year. It will act as a down payment on our full medium-term fiscal plan which will be accompanied by a forecast from the independent [Office for Budget Responsibility].

"We will do whatever is necessary to ensure debt is falling as a share of the economy in the medium term."

Kwasi Kwarteng
Kwasi Kwarteng. Picture: Getty

The embattled Ms Truss said the UK would "get through this storm".

She added: "I want to be honest, this is difficult, but we will get through this storm. And we will deliver the strong and sustained growth that can transform the prosperity of our country for generations to come."

Jeremy Hunt
Jeremy Hunt. Picture: Getty

Mr Kwarteng was fired on Friday after just 38 days in the job.

Ms Truss said: "I met the former chancellor earlier today. I was incredibly sorry to lose him.

"He is a great friend and he shares my vision to set this country on the path to growth.

She called Mr Hunt "one of the most experienced and widely respected Government ministers and parliamentarians, adding that he "shares my convictions and my ambitions for our country."

No change in plans for corporation tax

The u-turn came after a government minister said just on Friday morning that there were no plans to change tack on corporation tax.

Trade minister Greg Hands said that there were "absolutely no plans to change anything", speaking to LBC's Nick Ferrari on Friday morning. He also said that Mr Kwarteng was secure in his position, echoing comments made by the former Chancellor himself the day before.

Labour's shadow chancellor Rachel Reeves criticised the government
Labour's shadow chancellor Rachel Reeves criticised the government. Picture: Getty

Opposition parties criticised Ms Truss after the press conference, with Labour saying the government needed to scrap its economic plan altogether.

Shadow Chancellor Rachel Reeves told LBC: "There's still much in the budget from just three weeks ago that is causing concerns in financial markets, and so much has already been done, with people’s mortgage rates higher and people worrying about their pensions as well.

"So instead of just another Conservative chancellor in this year alone, what we need now is a Labour government, which would prioritise economic stability."

Liz Truss ‘incredibly sorry’ to lose Kwasi Kwarteng

Liberal Democrat leader Sir Ed Davey told LBC: "If the British people were brought into this conversation, she'd go now."

Some Conservatives rallied behind Ms Truss in the wake of the press conference, with close ally Therese Coffey tweeting: "The PM is right to act now to ensure our country's economic stability - key for families and businesses - and reassure the markets of our fiscal discipline, especially in light of the worsening global economic conditions with Putin's illegal invasion of Ukraine."

Thérèse Coffey spoke out in support of Liz Truss after the press conference
Thérèse Coffey spoke out in support of Liz Truss after the press conference. Picture: Getty
Nadhim Zahawi
Nadhim Zahawi. Picture: Getty

Former Chancellor Nadhim Zahawi said: "It's time to get Britain moving. We are determined to grow the economy, eliminate the covid backlog and protect people from Putin's energy warfare."

The corporation tax climbdown is just the latest in a series of u-turns performed by Ms Truss' government in its few weeks in office.

The government has also rowed back on cutting the 45p top rate of income tax, as well as a policy of not giving out "handouts" to help people with higher energy bills by introducing a massive support package.