Coup Complete: ‘De Facto’ Prime Minister Hunt Reverses Truss Measures Including Tax Cuts, Slashes Fuel Bill Support

The last vestiges of the Liz Truss era were swept away Monday morning, even as she still officially remained in power, by Jeremy Hunt, officially Britain’s new finance minister but as increasingly widely thought, the de facto leader.

Speaking in a fleeting five-minute and 20-second briefing from Westminster on Monday morning, Jeremy Hunt — appointed as Chancellor of the Exchequer, the UK’s finance minister position, but evidently now leading the government — briskly ran through the few remaining elements of the government programme of Prime Minister Liz Truss, announcing all of them would be scrapped or severely curtailed.

 

Liz Truss became Prime Minister 42 days ago, selected by her party in a torturously long leadership election on a platform of cutting taxes and regulation to get the economy growing, hence short-circuiting the coming recession and seeing the UK outgrowing its competitors abroad. However, when these policies were actually announced, including some tax cuts, cancellation of planned tax rises, and an enormous bailout programme intended to shield UK consumers from anticipated soaring energy prices this winter, Truss and her then-Chancellor Kwasi Kwarteng were immediately dismissed as cranks.

Two weeks of angry noises from the fiscal establishment and UK media saw Truss fire her right-hand-man Kwarteng and drop some key policies, but this apparently has not been enough.

Announcing the dismantling of the Truss programme for growth, Hunt said the Prime Minister had “listened” and had agreed to cancel the cut to corporation tax — a tax on the income of businesses — among others. He said:

Firstly, we will reverse almost all the tax measures announced in the growth plan three weeks ago… we will no longer be proceeding with the cut to dividend tax rates, the reversal of off-payroll working reforms… the new VAT-free shopping scheme for non-UK visitors, or the freeze on alcohol duty rates.

Abolition of the health and social care levy and a cut to stamp duty (property purchase tax) survived Hunt’s purge.

While giving lip service to the importance of tax cuts for ordinary working people, Hunt nevertheless said the extremely modest — one penny in the pound — cut to basic-rate income tax paid by millions of ordinary Britons would be cancelled “indefinitely”. These measures will take a further £32 billion from individuals and businesses a year, Hunt said.

The flagship policy of the Truss government was a major subsidy to energy prices for homes and businesses starting this winter, a cushion for the blow of a deeply volatile energy price market. That this won’t be scrapped is not a surprise, after all countries across Europe are instituting very similar packages of support, but it will be curtailed. Rather than lasting two years, the support will now end in April.

Warning that changes would not end at cancelling tax cuts now, Hunt said there were actually tax rises on the horizon. He said: “There will be more difficult decisions, I’m afraid, on both tax and spending as we deliver our commitment to get debt falling as a share of the economy over the medium term.”

Now her entire government programme has been disassembled, the question remains what is left for Prime Minister Liz Truss in government. If she resigns now or in the coming weeks, Truss will be the shortest-serving UK Prime Minister ever: even those previous short reigns that went before were caretakers or single parts of considerably longer periods of government punctuated by periods in opposition.

But what appears to be clear is that while Truss bears the official office of Prime Minister, she is no longer calling the shots. They have alluded to this themselves, with Downing Street spokesmen referring to Truss as the ‘chairman’ of a company and Hunt as the Chief Executive. Sir Roger Gale, described as a senior Tory by the Daily Telegraph, has put the new situation into the starkest terms possible, remarking Jeremy Hunt is now the “de facto” leader of the United Kingdom, with the Prime Minister reduced to the status of a puppet.

While it is evident that a certain number of Conservative Members of Parliament want Truss to go, a clearly larger number seem to recognise that yet another leadership competition so close to the next UK general election would sign the party’s death warrant.

Whether Hunt ’emerges’ as Prime Minister now or remains the de facto leader behind the Truss puppet, there are longer-term questions of his legitimacy. Puppet governments are not exactly known in the United Kingdom, and in his two previous attempts to become leader, Hunt has been categorically rejected by both his Parliamentary Colleagues and the wider Conservative Party in the country. If he completes this coup, who will Hunt claim to represent?