Kwasi Kwarteng could have resigned today. If he had done so, his message to the world would have been that’s there’s no point being “in office but not in power”. And make no mistake: after the coming withdrawal of the Corporation Tax cut, in the wake of the withdrawal of the cut in the top rate of income tax, in office but not in power is exactly where he would have been.
Instead, Liz Truss has sacked him. It isn’t clear as I write whether he clung to office – despite the loss of power – or was willing to resign. If the latter was the case, but the Prime Minister fired him anyway, we shall know the full story soon enough (there is no statement for Kwarteng yet). But in either event, “greater love hath no man than this, that he lay down his friends for his life”.
For Truss will not only believe, first, that she needs a different Chancellor to execute this U-turn but that, second, the markets, the media and Conservative MPs may be appeased by his head on a spike – and not now come for her. The proof of that pudding will be in the eating.
Either way, it’s reasonable to assume that here is another example of a political friendship that has gone horribly wrong. Truss effectively pinned responsibility for the top rate tax cut on Chancellor. They are reported to have fallen out over bringing forward the medium-term fiscal plan from next year to November.
And one version of events is that it was the Prime Minister, rather than Kwarteng, who insisted on the dismissal of that pillar of “Treasury orthodoxy”, Tom Scholar (now replaced by that other pillar of Treasury orthodoxy, James Bowler. We will soon enough know both Truss and Kwarteng’s side of the story. As Ben Sixsmith puts it, “the Kwarteng Substack is going to be great.”
I said last month that sacking her Chancellor wouldn’t solve the Prime Minister’s problems, and it may for the moment be worth reproducing what I wrote. Besides, Truss is holding a press conference at 14.00, so we will have more information then – including perhaps the name of the third Conservative Chancellor of the Exchequer within a single year.
I’m sorry that Kwarteng’s Chancellorship has come to such a grisly end. Big, bold and brainy, he was regarded for many years by the Party’s powers-that-be as a bit of a loose cannon. I’ve always found him a breath of fresh air. Anyway, back for the moment to September 29, when I wrote that
“Getting rid of Kwarteng would solve nothing, for three reasons. The first is the least damaging. Namely, that I doubt the forthright Chancellor would go quietly.
It’s reasonable to believe that he would have plenty to say about the Treasury, the Bank – and perhaps the Prime Minister. His conversation with her before the Government folded over a public spending announcement later this year is claimed to have been lively. She might not emerge with her reputation enhanced.
Second, junking Kwarteng wouldn’t suddenly clear the economic skies. For the first duty of whatever poor mutt succeeded him would be to announce tax rises immediately, thus enraging Party activists, and a spending review forthwith – and so maddening many of their constituents, as NHS and pensions spending comes under pressure.
Finally, what would be the point of Truss staying if Kwarteng left, taking the Government’s growth plan with him? She would be a broken shell of a Prime Minister. The programme on which she won the Tory leadership election would no longer exist. We would have Truss people but Sunak measures. Demonic laugher would echo from Richmond, Yorkshire.”