A new chancellor and another U-turn for Truss

This is an audio transcript of the Payne’s Politics podcast episode: A new chancellor and another U-turn for Truss

Sebastian Payne
Liz Truss was forced to scrap yet another major part of her “mini” Budget on Friday in a humiliating U-turn that saw the prime minister lose her chancellor and throw into doubt whether she herself could even survive.

Liz Truss
But it is clear that parts of our “mini” Budget went further and faster the markets were expecting. So the way we are delivering our mission right now has to change. 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.

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Sebastian Payne
Welcome to Payne’s Politics, your essential insider guide to Westminster from the Financial Times with me, Sebastian Payne. In this episode we’ll be examining another extraordinary week in British politics, including the sacking of Kwasi Kwarteng, the significant economic U-turn made by Liz Truss, the problematic relations with only the markets, the Bank of England, but also Conservative MPs, and those very big questions about whether she can still survive. I’m delighted to be joined by a top line-up of FT colleagues to help us dissect it all. Political editor George Parker, economics editor Chris Giles, who joins us down the line from Washington, DC, and associate editor Camilla Cavendish. Thank you all for joining.

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Sebastian Payne
Liz Truss has been prime minister for just 38 days and yet the whole purpose for her being in Downing Street has already been removed. She won the Tory leadership contest this summer on a platform of radical economic form, of cutting taxes, reshaping the state and going for growth. Instead, her whole agenda has been salami sized bit by bit. First, it was the cutting the top rate to 45p tax. And now it was slashing corporation tax. The prime minister was forced to deliver a stilted statement at Downing Street on Friday, where she admitted she was going to have to take a different trajectory.

Liz Truss
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. Today, I have asked Jeremy Hunt to become the new chancellor. He’s one of the most experienced and widely respected government ministers and parliamentarians. And he shares my convictions and ambitions for our country.

Sebastian Payne
Well, George Parker, welcome back to the podcast. And there is no greater sign of what a mad day it’s been in Westminster. This is the second Payne’s Politics we’ve recorded today, the first episode our listeners will never hear because we had to jettison it following the traumatic events. But what a week for Liz Truss. If we just look back, we think this time last week she was coming off the back of party conference talking about the anti-growth coalition that she was saying against her plans. And there was a feeling she’d stabilise things slightly after a difficult party conference and now as we’re recording on Friday afternoon, it feels like she’s in more jeopardy than ever.

George Parker
Yeah, I never felt like it was all that stable to me, to be honest. And you’re right that for the start of this week, she’s been in full retreat. It’s been a rapid retreats started off this week with the reassertion of Treasury orthodoxy. We had the appointment of James Bowler as the new permanent secretary of the Treasury, which is a very symbolic appointment for Liz Truss, because there has been some expectation she might appoint someone called Antonia Romeo, who is the Justice Department’s permanent secretary. So very ambitious, direct style, but had no Treasury experience whatsoever. Whereas James Bowler, as we were reminded four times in the government press release, had 20 years of experience in the Treasury. So this was the Treasury orthodoxy returning. And don’t forget It was back in August we did an interview with Liz Truss where she decried the Abacus economics of the Treasury and their obsession with making sure that tax and spend adds up. Well, that didn’t last very long. And now the Treasury is back in charge.

Sebastian Payne
Well, Chris Giles, let’s go back to the beginning of the week. And as George was saying, it began with this news that instead of going for a disrupter in the Treasury, Liz Truss did decide to bring in someone who had 20 years of Treasury experience. And that coincided with a report from the Institute for Fiscal Studies think-tank that said that Liz Truss would need £60bn of spending cuts to make her sums add up. And it left this very difficult situation for the prime minister. Do you keep with your plan or do you try and slash back public spending? And you could see Conservative MPs were already saying this won’t get through the House of Commons, it’s not going to happen. But that really set the tone for a very, very difficult couple of days.

Chris Giles
Really, the maths is very easy and the IFS just laid it out very plainly. But we’d done this already in the Financial Times and so with other people are saying that since March, the fiscal sums, the public finance sums have got a lot worse because the situation has got a lot worse. Your economy is not going to be stronger when there’s a war in Europe and an energy price crisis. So the underlying numbers were worse. The headroom, the amount you had to spare in March, that was clearly already gone. And you have another 45bn tax cuts to it. You get 60bn without very much at all. And that’s essentially what the IFS said. And the Treasury would have known this, ministers would have known this. The OBR numbers are bound to be quite similar. It would be very hard to get a very different number. I’d been playing with a spreadsheet all week just trying to see if there’s any way you can get it to add up in a coherent and credible way — that just isn’t. You always end up with this number somewhere around £60bn hole given that the unfunded tax cuts the government have done and it just having the IFS said and say it so directly just force the issue.

Sebastian Payne
Well, Camilla Cavendish thank you very much for coming back on the podcast again. And I think when you go back to the beginning of this week, it was that lack of credibility, the second train the events were going to come on to because Liz Truss had put forward this tax cutting plan which gave you that big fat number Chris was talking about. And there were obviously some within Liz Truss’ inner circle who would like to cut back £60bn of public spending. They very much would like to see the state shrunk, but there’s no mandate for that. There’s no basis of Tory MPs who would vote that through. And when the markets were looking at this, they just rejected it and didn’t really see it as credible.

Camilla Cavendish
That’s right. And I mean, I think a lot of MPs, even those who really weren’t initially supportive of her agenda, were also every day being reminded of the points that Rishi Sunak had been making all the way through the leadership contest, pointing out that the likelihood of her policies leading to this kind of catastrophe, this kind of it really made people rattled, the party conference had already made them pretty rattled. A lot of MPs didn’t even go to the party conference. And it was one of the emptiest, I think many of us have ever been to. Then you got Jacob Rees-Mogg out on the airwaves on Wednesday explaining in the most patronising terms possible that the market turmoil had nothing to do with the “mini” Budget, and also suggesting that the Chancellor didn’t need to take account of the OBR, which cut directly across what Kwasi Kwarteng was trying to do to reassure the markets by saying he was indeed going to take account of the OBR. So it felt really very chaotic. You had PMQs where Truss was, I’m afraid, on pretty robotic form. Penny Mourdant’s face, she could not control her exasperation sitting behind of the prime minister. And of course, the 1922 committee. One MP who was at that just said to me, you know, one of the worst aspects of this is that Liz Truss cannot take responsibility. So there’s a whole series of questions. One of them has been tone this week.

Sebastian Payne
And George, we actually saw that, which was summed up nicely in a clip by the business secretary, Jacob Rees-Mogg, who was on the Robert Peston programme on ITV. And he had this to say about the IMF who made their second intervention about the UK’s economic policy.

Jacob Rees-Mogg
I think the IMF is wrong on both counts. I think it’s particularly wrong on energy and frankly doesn’t know what it’s talking about because the price signal via the increases that are already happening, have already come in with the £2,500 average usage cap are very strong to discourage wasteful usage of energy. So that, that just doesn’t make any sense.

Sebastian Payne
That’s one of those takes that’s not aged particularly well, is it, George?

George Parker
No. I mean, Liz Truss has been basically trying to shore up the institutional framework around economic policymaking and denouncing institutions is not part of the key message that she’s been trying to deliver in the last couple of weeks. I mean, I think it was one of the ironies of this week is that the free marketeers have basically been routed by the market, haven’t they? They’ve realised you can’t, you can’t buck the markets. You have to take them with you and you have to explain what you’re doing and you have to show the sums add up. It’s something the Treasury has learnt the hard way over, you know, the last century or more and something Liz Truss has learnt very slowly to her cost.

Sebastian Payne
Chris, this sort of general attack on institutions which I think has defined some of the events we’ve had, this was not just about the IMF, but there’s been this sort of testy nature between the Treasury and the Bank of England. And Andrew Bailey announced in the middle of this week that its programme to buy government debt, to try and sort the pension market, was going to come to an end on Friday. And it’s really that moment that sort of symbolised why the political action was taken. Let’s hear from Mr Bailey.

Andrew Bailey
We as the Bank of England, I know not all central banks like this have never bought index linked gilts and I’m not sure of operations. But we realise that for financial stability purposes we have to do it but we’ll act by the end of this week. We think the rebalancing must be done and my message to the funds involved and all the firms in Bolton manage those funds. You’ve got three days left now. You’ve got to get this done because again, part of the essence of any given financial stability intervention is that it is clearly temporary.

Sebastian Payne
What was the impact, do you think, of those words in Whitehall?

Chris Giles
Well, the impact was huge. It was much, much stronger than anyone thought Andrew Bailey would say, because normally in a financial stability crisis, you want to keep, leave your options a little bit open, have a little door that could be opened just in case things go wrong. But he firmly shut out. I mean, the bank has got a lot of internal tensions. And you heard that exactly from Andrew Bailey. They were using essentially quantitative printing money to sort out the pension funds situation. This is when they want to be tightening policy at the same time. So they had a terrible internal tension and the only way they could make it square up was to say that this intervention was incredibly temporary, and that’s what he did. But of course, that made it much, much more difficult for government because it immediately made government have to sort out the fiscal situation pretty much by the end of the week. Otherwise the markets would be very, very sickly on Monday. And that is what we’ve seen, that the only way in the end that the politics could square with the Bank of England, which was just had decided to be extremely independent, was to have a complete U-turn and the end of one very short-lived chancellor.

Sebastian Payne
Well, Camilla let’s go back to the politics this moment. So things start to really come to a head on Wednesday. First of all, we had prime minister’s questions which suggested that there was very, very little backbench support for Liz Truss and what she was trying to say. And in fact she was asked by Sir Keir Starmer would she be looking to cut spending and her answer was no.

Keir Starmer
During her leadership contest, the prime minister said: My quotes are exactly I’m very clear. I’m not planning public spending reductions. Is she gonna stick to that?

Audio clip of a man shouting
Prime minister?

Liz Truss
Absolutely. Absolutely.

Camilla Cavendish
Yeah. This was an apparently throw away remark. It was hard to tell whether she’d planned it. It was odd to have said that in response to Keir Starmer. And so again, we were left feeling slightly rattled. The benches behind her were astonished. There was a kind of intake of breath when she said ‘absolutely.’ (laughter) So I don’t think that helped. I mean, a lot of Truss’s critique of herself has been about communication. She seemed really for most of the last two weeks to think that the only problem was inadequate communication. But she herself, even at PMQs, was completely failing to explain her policies or to set out training what she was doing or why. So suddenly saying that she wasn’t going to cut spending with no explanation. It wasn’t very helpful.

Sebastian Payne
And George, we’ve sat through so many of those PMQs, when you can feel the power draining away from a leader. Again, you would normally expect this 38 days into a premiership, but at that PMQs there was none of the usual support from backbench Tories. It was a reminder that in the first stage of the Tory leadership race, Liz Truss only had the backing of 50 MPs and very nearly didn’t get on the ballot paper. She was in that final vying off with Penny Mordaunt in the latter stages, but it didn’t feel like a confident prime minister and the party just didn’t feel like it was behind her.

George Parker
No, I think that’s, I think that’s right. I mean, a lot of MPs have stayed away from the chamber, particularly those who are disgruntled with her leadership. But you’re right. I mean, you can just see from the body language, the power shifting. And you saw Keir Starmer, who always is gaining strength by the day as the opinion poll ratings change, as people look at opposition leaders differently if they think they’re a prospective prime minister rather than just someone carping from the sidelines. And you could see the confidence building with Keir Starmer and often the polls have a, have a sort of effect of changing the dynamic where people look at their own leaders in a different way. It makes the opposition party more united if they’re on the up. And it leads to a huge amounts of discord on the government benches if they feel they’ve started towards disaster. And I was speaking to one Tory MP this week. He basically said that we’re gonna lose the next election. All we can really do now is limit the damage and try to keep the losses down to 150 rather than 200, this was what this MP said.

Sebastian Payne
Now, Camilla, we then also had a meeting of the 1922 committee of backbench Tory MPs, and I’ve been covering these meetings for about 12 years, I think, where you journalists stand along the corridor and try and peer into what’s going in the meeting. There’s now a policeman on the door, which means you can’t actually put your ear to what’s happening. But thankfully WhatsApp exists and MPs were very chatty after this meeting and the reports that George and I got, I think were probably the worst we’ve ever heard, with one minister describing it as a bloodbath, another saying the mood was funereal and there was a particular intervention from Rob Halfon who’s the well-liked Tory MP for Harlow. And he accused Liz Truss to her face of trashing working people’s conservatism, of destroying the last ten years of economic competence. And much like that Downing Street press conference, she just looked flabbergasted and couldn’t really deal with it. And it just shows again that she hasn’t got the party and doesn’t seem to have the capability of winning MPs over to her side of the argument.

Camilla Cavendish
Yeah, that’s interesting Seb. But I mean, I think there is a real frustration in the party that Truss has come in not in an election, but having been appointed and is pretending that this is a completely new regime. And she’s ripped up the mandate that they’ve got in 2019 under Boris Johnson, where, you know, as we remember, they had a very significant victory. And she’s tried to go it alone. She’s also essentially left out of her cabinet, everyone who supported Rishi Sunak, even if that support was lukewarm. So she’s drawn a very, very narrow circle around herself. And there is enormous resentment. And the issue now really is that people are saying, well, if she’s ditched the only policies that were closest to her heart and she’s got one of the lowest poll ratings in history, what is the point of her?

Sebastian Payne
And I think this is something that’s been asked again and again that she made her economic platform such a big part of her leadership pitch. With it being salami sliced, where does she go next? Now Chris take us to Thursday, where we start to get these rumours that the package is going to be further modified. And as we now know, of course, it was the corporation tax element. Was it Andrew Bailey’s statement that forced this? Was there something else in the aether that forced Liz Truss’s hand?

Chris Giles
I think we still don’t quite know what exactly forced it, but I think the deadline of the end of the week was very clear in Washington and it was very clear for the start of Thursday. The chancellor issued his statement to the IMF just as normal, and that said no turning back in all of this. And it was all exactly normal, but it got more and more surreal through the day. And then when the whole of the Brits in Washington trooped up to the embassy for the traditional annual get together at this time of year, there was clearly things were afoot. And, you know, it ended up in a terrible rainstorm with a chance of being bundled into a car, dashing off to the airport and the treasury sources left behind saying everything’s fine, he just wants to get on with his medium term fiscal plan. And it was so obvious everything wasn’t fine, wasn’t remotely fine. And whatever happened, you know, we didn’t know at the time that and I’m pretty sure that he didn’t know at the time he was being, he was going to be sacked. But it was clear that on the economic side of things, at least Trussinomics was dead.

Sebastian Payne
Because George, there was this disconnect with life back in Westminster that you and I were starting to pick up ,these feelings that they were going to have a big shake up. And as Chris was saying Kwasi Kwarteng was at all these IMF meetings in DC and it really felt as if number ten, number 11, their world views were being pushed apart by reality here and throughout Thursday there were thoughts would he come back early. And as Chris was saying on the last BA flight back to London, that was assiduously tracked by political journalists as it came across the Atlantic. But again, do you have any sense of what forced Liz Truss to do this?

George Parker
Well, if you listen to Nick McPherson, the former permanent secretary of the treasury, he thinks it was Andrew Bailey’s ultimatum that this had to be sorted out by Friday that forced the governments to adopt this new fiscal position, basically to reassure the markets that things were gonna be brought under control. That’s one interpretation of it. The other interpretation is that she came back from that’s basically the 1922 committee on Wednesday that was described by various people we spoke to as horrendous, brutal. And she realised that support was ebbing away. She then had conversations with the Chief Whip and others, telling her that her position was precarious and that she changed her mind. And I’m told the big decision was taken on the Thursday morning when rumours started to seep out that things were changing. I’m told that some people were resisting the U-turn, but in the end, you know, I think reality dawned on the prime minister and she felt she had to do this. And it was a combination, I think, of the economics and market pressure coupled with the political reality that unless U-turned, frankly, her premiership was coming to an end.

Sebastian Payne
And it almost felt, Chris, in some ways that Truss’ team had begun to split here, that some of the real hard core people were saying, you’ve got to keep going, you’ve got to stick to this policy. But then other people in the camp were sort of saying, in fact, you can’t do this. Now, whether it’s the economic reality we’ve been talking about or the politics, the 1922 committee, you’re going to have to U-turn eventually. And I spoke to one long standing Tory operative this week who said to me, they’re gonna have to bin the whole thing. If they’re sensible, they’ll do it all in one go and take the head or it’ll be bit by bit and it will be more painful each time. And that’s actually what’s borne out to be because when we get to what’s happened on Friday, it doesn’t feel like we’ve actually got to the end of it yet.

Chris Giles
Now, on Friday, we had this statement from the prime minister that she’s now U-turned on half of the unfunded tax cuts. And the most important statement I think she made was that she said that spending will grow less rapidly than previously planned. And so that means there is new spending cuts down the road. I’ve been getting my little spreadsheet out and seeing how you can make the sums add up. And it’s difficult, frankly, if you want to keep spending growing in real terms, you can just about do it, if you cut all departmental budgets very sharply after 2025. Whether saying you’re gonna cut spending after an election is credible, that’s another thing. You have to cut capital spending a bit. Any programme to cut welfare benefits for non pensioners as well to get it all to add up just. But you can’t do it. On paper this is OK. But whether it’s credible and whether the markets will bear it and whether you can get to the end of October without further U-turns on the tax side I think is very doubtful at the moment.

Sebastian Payne
Because she did say in that statement, Chris, that this would sort of be the beginning in a way. But she also hinted there might still have to be spending cuts. And this comes back to Camilla’s point, that there isn’t actually a mandate, particularly for this, because Boris Johnson was elected on a kind of a big spend Tory platform and Liz Truss has come in and, through the actions of her government, is out to do the complete opposite.

Chris Giles
Yeah. And so there’s no mandate. They’re going to be quite deep, they’re not going to be trivial spending cuts, it’s about £40bn a year by the end of the forecast period that you need. You know, there’s a 60bn wholly filled about 20bn with the corporation tax rise and then you’ve got another 40 to find. Now, £40bn a year of spending cuts is not easy. That’s just the brutal and harsh reality. We’ve got public services which are not in a great shape at the moment in health and education and justice. So actually pressures are to spend more than the current plans, not less. And so if Liz is gonna say these current plans are there, we’re going to keep them as they are roughly until 2025. And then we’re gonna pencil in really deep austerity after that. But this government is very unlikely to win the next election on current form. I don’t think it would be credible with the markets. And so you might still have market turmoil even though on paper it adds up.

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Sebastian Payne
Now, George, let’s come to that quite extraordinary press conference which you were in the press seat for. Let’s hear a bit more of what Liz Truss had to say when she was setting out the sacking of Kwasi Kwarteng, the hiring of Jeremy Hunt, and this big shift in policy.

Liz Truss
As prime minister I will always act in the national interest. This is always my first consideration. 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.

Sebastian Payne
I wouldn’t say it was the most confident or reassuring performance, George, watching it on television, but it did feel as if she was very confident what she was saying. She was saying it was very difficult. And she only took, I think, three or four questions from the press and then stormed out the room afterwards.

George Parker
Yeah, I think the whole press conference lasted about 8 minutes, according to my timing of it. I think it looked worse on television, actually, strange than it did in the room, because there was this point where she was looking around the room trying to find the journalists who wanted to call for questions, and it just made her look slightly lost, I suppose — it’s, that one way of putting it. But yes, she left the podium. Her press team left immediately afterwards. There was no briefing. There were a whole load of questions unanswered. It was a pretty cursory event, given the scale of what she just announced. And I don’t think you would’ve done very much to settle the nerves of her own party, and I think that’s where the story will now move to over the next few days. I mean, the markets may be stabilised slightly by the fact that the government now seems to be engaging with economic reality. But Tory MPs now will be looking at this and thinking: is this really sustainable? What is the point of Liz Truss? Now if she’s to have to abandon this whole well, at least a large part of our low tax agenda, I think it’s going to be a very tough weekend for her coming up. And I’m told that Liz Truss and her new chancellor, Jeremy Hunt, will meet at Chequers over the weekend to thresh out some of the details of what’s going to go into that statement at the end of the month. The medium term fiscal plan. But there are some big questions unanswered. But she’s talked about this down payments on spending cuts. What exactly are they going to be? And there’s a lot of details to be hammered out over the next couple of weeks for sure.

Sebastian Payne
Camilla, saw that you were tweeting quite approvingly of the choice of Jeremy Hunt as chancellor on Friday (laughter) morning as Kwasi Kwarteng landed into Heathrow airport. The rumours, first of all, started off that she might call on Sajid Javid, who was very briefly chancellor under Boris Johnson and lots of other names, did the round, but pretty quickly the feeling in Whitehall delighted that Downing Street had chosen Jeremy Hunt. And of course there weren’t that many credible people you could have gone for. And I guess on the one hand, he’s a former foreign secretary, former health secretary. He’s been an MP since 2005, and crucially, he’s from the left side of the Tory party, the opposite economic wing to where Liz Truss is. On the other hand, I don’t think he has a single jot of Treasury experience.

Camilla Cavendish
I thought he was a really good appointment. He’s a grown up, he’s very experienced. But in fact what’s happened I think in the last few years is because he was the runner up to Boris Johnson. He wasn’t in that cabinet. So he’s been on the outside chairing the Health Select Committee and sounding sort of increasingly wise. And I think sometimes people in politics mature really well if they’ve sometimes got a chance to have done a lot of jobs and then stand back. So I think he’s a very good appointment. She’s reached across the party, as you say, to pick someone she might not always agree with. He does believe in low tax. They’re not completely at opposite ends, but he does come from a different part of the party. The only question I think is I’m not sure that will be quite enough to solve the problem I mentioned earlier, which is that she basically vindictively left out all the Sunak backers from her cabinet, but it was a positive sign. I just don’t think it’s enough to save her.

Sebastian Payne
Well, Chris, going back to this question of credibility, how has the appointment of Jeremy Hunt and the reversal gone down with markets and how is that going to play out when things get going again early next week?

Chris Giles
Well, I think we don’t know exactly. It’s not gone down brilliantly with markets so far because I think there’s lots of unanswered questions. So the pound is down today, down more than the euro against the dollar. So it’s again, it’s a sterling issue, not just the dollar strength issue. And the crucial issue is not so much the currency. It’s more what’s happening in government bond markets and the interest rate on government bonds is up again. In fact, really quite a lot up so far. So the market reaction in the afternoon on Friday is not good.

Sebastian Payne
And then, George, let’s finally end on this question about whether Liz Truss can survive and her allies have been trying to shore up her position. And James Cleverly, the foreign secretary, an early backer of her leadership, warned that getting rid of her would not solve the situation.

George Parker
We’ve got to recognise that we do need to bring certainty in the markets. I think that changing the leadership would be a disastrously bad idea, not just politically but also economically. And we are absolutely going to stay focused on growing the economy.

Sebastian Payne
So on that, George, the question now is what brings more stability: keeping Liz Truss or getting rid of her?

George Parker
I mean, Liz Truss is telling colleagues that she thinks it would be extraordinary now for the party to hold another leadership contest. And she thinks it’s time for the party to unite. She hopes that the appointment of Jeremy Hunt will show she’s reaching out to other parts of the party. I think the question facing many Tory MPs is: is the situation irredeemable? I think many of those concluded, yes, it is. I mean, rather than having some sort of honeymoon period, Liz Truss’ approval ratings’ now is almost subterranean. That’s very hard to see how they recover. I think the question is at what point this crystallises because as you and I know Seb it’s not easy to organise a leadership coup. You have to agree what the alternatives are and whether you can do it in an orderly fashion without going through another two month chaotic process by taking it out of the membership in the country. So I think those are complicated things. I think Liz Truss has bought herself a bit of time. But I think, you know, in the next few months, if not sooner, maybe the next few weeks, there will be a new attempt to try to oust her because many Conservative MPs can see their seats, which they previously assume to be safe, now in grave peril. And nothing concentrates the minds like the prospect of being out of work with in two years' time. So I don’t think she’s any safe by any stretch of the imagination. It can be a really, really tough few weeks for her. And I think her position certainly hasn’t been stabilised really by what’s happened this week.

Sebastian Payne
And Camilla I’ve been doing the phone calls around Tory MPs and the feeling is that even though many of them I think were reassured by the appointment of Jeremy Hunt, they feel her particular personal performance at that press conference has probably made matters worse. They’ve all been very agitated and fulminating in various tones, but it’s still not clear the mechanism here because really either the Cabinet would have to turn on her and say, Look, you’ve got to go. I don’t really see that happening because the Cabinet is full of people who are very close to Liz Truss and are big allies of her project or it’s going to be Tory MPs. And technically Liz Truss is protected by the rules the 1922 committee when she can’t be challenged for a year. But the conversations I’ve been having suggest that if over half of Tory MPs went to Graham Brady over the coming days and said she’s got to go, he would be forced to move and he would go to Downing Street and do pretty much what he did for Boris Johnson and Theresa May and say, look, your support’s gone. No one wants you. Either you go and resign in an easy way or we’ll change the rules and heave you out. How do you feel it’s gonna pan out and do you think she’ll make it till Christmas?

Camilla Cavendish
I don’t think she will make it till Christmas. I can’t see how this goes. She didn’t redeem herself at all on Friday. Her statement was she didn’t, she just . . . it was just lacking in everything. She didn’t explain properly why she’d sack the Chancellor, she did the least she could possible. The markets had already priced in that she would reverse some corporation tax, so they had already forced her hand. She gave no hint of what else she was going to do. She insisted that it was right for her to stay to ensure economic stability. And she made no apology, whatever. And so I think there is a strong possibility Seb, as you suggested, that a large number I’m not sure half, but a large number of MPs will go to Graham Brady and they will say she has lost all confidence. She’s also lost her agenda. So this is slightly different to the Boris Johnson situation. She has lost her agenda. She never had a mandate and now she’s lost confidence, too.

Sebastian Payne
Well, finally, Chris, to use that old maxim about John Major’s government, it feels very much like Liz Truss is in office but no longer in power because as you were saying earlier, you’ve still got these spending cuts that could potentially be more U-turns to come on her economic agenda. And each time that happens, more and more power and authority will filter away from her. And it just feels a matter of when, not if, Tory MPs decide that the pain of getting rid of her is less than the pain of keeping her in place.

Chris Giles
You know, she’s not in control of events. The markets are in control. And this is the first time for actually many decades that the markets are really since the 1990s where the markets have forced the exit of a very senior minister and the government is entirely in hock now to whatever the bond market does. The bond vigilantes are back. They are in control of this government and I don’t think that they think they can continue. So I think it’s going to get very difficult, even more difficult over the days and weeks ahead.

Sebastian Payne
And last word to you. George, I know how much you enjoy making predictions in public (laughter) about what’s going to happen. What do you think? Do you think Camilla’s right, that Liz Truss will not make it to Christmas? How quickly and exactly, how do you think this comes to a head?

George Parker
Well, I think you’re right. I mean, I think that the party has to coalesce around a plan, a plan which would involve some kind of coronation. Some people have talked about the idea of running a contest, leadership contest among the MPs with an understanding that among the two candidates that one of them drops out at the final stage so that the contest doesn’t go out into the country, but it’s tough. I mean, because you have to the party has to be confident that it doesn’t end up with their leaders even less electable than Liz Truss at the end of it. So look, I mean, I think we’re still in quite the early stage working out how a coup would take effect. Do I think she’ll still be there at Christmas? I would say yes, but I can’t say with any great certainty. I think she might be able to stagger on to the new year. But I agree with Chris. I think the force of economics and politics are gonna be too, will overwhelm a prime minister who now finds herself in such a weak position.

Sebastian Payne
Well, I think we can all agree the only thing we’re certain of is there’s gonna be more instability. It’s not going to get easier for Liz Truss. And there are many, many hard choices ahead. Well, George, Chris and Camilla, thank you so much for joining us late on Friday. That’s it for this week’s episode of Payne’s Politics. If you enjoyed the podcast, then we’d recommend subscribing. You can find us through all the usual channels to receive episodes as soon as they’re released. We also like positive reviews and nice ratings.

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Payne’s politics was presented by me, Sebastian Payne, and produced by Anna Dedhar and Howie Shannon. The sound engineers were Breen Turner and Jan Sigsworth. Until next time. Thank you for listening.

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