Jeremy Hunt has taken his scalpel to Liz Truss’s budget – now the real pain starts | Gaby Hinsliff

Emergency surgery on Trussonomics was vital, but years of grind now lie ahead

Jeremy Hunt did his best to deploy a reassuring bedside manner. But the Conservative party’s surgeon came bearing bad news. He had seen the X-rays, and it all had to come out. Not just the obviously gangrenous parts of Liz Truss and Kwasi Kwarteng’s budget, like her corporation rate tax cut or the abolition of the 45p tax rate, but pretty much everything still within reach of his scalpel. Goodbye indefinitely, proposed penny off basic income tax; farewell, IR35 reforms to benefit self-employed contractors. Even Truss’s energy bill bailout – the one thing that was still popular when everything else had turned sour – will be universal only until next spring, after which it will be capped and targeted towards the most vulnerable.

More painful for the country, however, may be the news that this emergency surgery is just the start. There would be hard decisions on tax and spending to come in his full statement on 31 October, Hunt warned. In March 2020, Rishi Sunak promised to do “whatever it takes” to get us through Covid, which meant spending billions. Now Hunt is promising grimly to do whatever is necessary to restore market confidence, which means very much the opposite.

The new chancellor’s friends insist he isn’t after Truss’s job, even though he ran for it in the summer and is pretty much now doing it in all but name. Watching this statement, that seemed for a moment believable, for this was not the fiscal package of someone out to court popularity. By next April, middle-class traditional Tory voters will be facing soaring mortgages – spring will see peak numbers of borrowers coming off cheap fixed deals – just as their protection against soaring fuel bills ends, and they’re unlikely to reward the man who did it to them. But then again, perhaps Hunt is past caring about popularity with actual voters, since that’s arguably no longer the route to power in Britain.

Wake up, roll over, check the bond markets. This never used to be the morning routine for Westminster watchers but gilt yields are becoming a more accurate predictor of what’s about to happen than chuntering backbenchers. Politics now is just noise, the frantic buzz of flies battering themselves against a window, as Tory MPs argue about how to dispatch another broken leader. But economics is the signal, steady and clear, regardless of whether Truss stays or goes or who replaces her. The guiding purpose of British politics over the next five years, whether under Labour or Conservative rule, will be filling the £72bn black hole she blew in the public finances and restoring credibility with international lenders. Had she not sacked Kwarteng, an anonymous aide helpfully informed the Sunday papers, Truss would have faced the kind of Monday-morning rout on the bond markets that risked turning Britain into a “third world country”.

We are now the kind of country whose prime minister and chancellor are chosen to placate the markets – which as any Greek or Italian knows, means the kind of government forced to worry at least as much about their international creditors as their electorates, and prone to creating dangerously angry democratic deficits as a result. Truss was only ever elected prime minister by a handful of Tory members, and even they no longer have what they voted for.

But that’s tomorrow’s problem. Today’s was whether the sacrifice of Kwarteng would appease the gods and so far, at the time of writing, so good: pound up, bond yields down, message received and understood. Trussonomics is dead and there will be no more lurching changes of direction from Hunt, a naturally consensual operator willing to listen to the City and to his own civil servants at the Treasury, who is also capable of going on the telly without inadvertently precipitating some calamity that adds several hundred quid to your mortgage. The way he kept repeating the word “stability”, meanwhile, suggests that whatever Tory MPs or indeed a deeply humiliated Truss herself may want, Hunt and the circle of Sunak-backers around him think she has to stay on for now, if only to avoid the immediate chaos of a leadership contest or general election that may well fail to deliver a mandate for such bitter economic medicine.

Although austerity has effectively been imposed on this government, it still has a choice as to whether the belt-tightening is done primarily via spending cuts or tax rises. Hunt has hinted that he won’t repeat the Cameron/Osborne variant, in which spending cuts primarily affecting the poor did the heavy lifting. But he’s no Tory wet, and his final package is likely to include a lot of painful real-terms cuts to public services on which the most vulnerable rely, unconvincingly rebranded as “efficiency savings”. Years of grind lie ahead as Britain is called out not just for the madness of making Truss prime minister but before that the madness of Brexit, and perhaps also a more longstanding sense of decline.

For a good decade now, Britain has been behaving like an economic superpower without quite having the receipts to show for it. Other G7 countries emerging from an expensive pandemic have similarly unhealthy-looking debts, but the collapse in market confidence reflects deeper doubts about Britain’s political ability to get itself out of a hole, or even perhaps to grasp that it’s in one. A painful readjustment looms not just of the public finances, but of Britain’s idea of itself. This, as the doctor didn’t quite say, is going to hurt.

  • Gaby Hinsliff is a Guardian columnist

Contributor

Gaby Hinsliff

The GuardianTramp

Related Content

Article image
Before he slashes services even further, Hunt should look at the state of the UK | Polly Toynbee
The last thing the country needs is another dose of austerity, says Guardian columnist Polly Toynbee

Polly Toynbee

17, Oct, 2022 @5:54 PM

Article image
Sorry, Jeremy Hunt – we older people want to work. But bosses just don’t want us to | Dorothy Byrne
The chancellor says that Britain needs us oldies back in employment, but the discrimination we face is an outrage, says Dorothy Byrne

Dorothy Byrne

01, Feb, 2023 @8:00 AM

Article image
With Liz Truss’s wild energy gamble, big politics is back | Gaby Hinsliff
The new prime minister is writing a blank cheque for multiple billions to cover the costs of something she cannot control, says the Guardian columnist Gaby Hinsliff

Gaby Hinsliff

09, Sep, 2022 @1:00 PM

Article image
The Guardian view on budget tax cuts: stealing from the public | Editorial
Editorial: For the chancellor to yield to his rightwing obsessives would be bad economics and bad politics

Editorial

29, Feb, 2024 @6:42 PM

Article image
Osbornomics is finally dead: just ask Jeremy Hunt and Boris Johnson | Larry Elliott
The men vying to be prime minister have promised the kind of spending for which they once lambasted Labour, says the Guardian’s economics editor Larry Elliott

Larry Elliott

11, Jul, 2019 @5:00 AM

Article image
Boris Johnson’s cash splurge is totally reckless. Yet it could win an election | Aditya Chakrabortty
His plan for tax cuts and spending commitments makes no economic sense. But don’t underestimate its effect on voters, says Guardian columnist Aditya Chakrabortty

Aditya Chakrabortty

03, Jul, 2019 @5:00 AM

Article image
The Guardian view on Liz Truss’s U-turn: a fading premiership won’t be missed | Editorial
Editorial: After a budget reversal, the prime minister is sticking with her party – the trouble is, it’s not sticking with her

Editorial

17, Oct, 2022 @5:53 PM

Article image
Hunt’s budget may be economic fantasy, but he’s set a political trap for Labour | Rafael Behr
Rishi Sunak’s small-state ideology misjudges the needs of the economy and the mood of the country, says Guardian columnist Rafael Behr

Rafael Behr

22, Nov, 2023 @6:00 AM

Article image
Beware Hunt’s hype. There’s more poverty ahead and his budget did nothing to change that | Aditya Chakrabortty
The statement will be remembered for the childcare pledge, but there was nothing to meet the scale of Britain’s economic malaise, says Guardian columnist Aditya Chakrabortty

Aditya Chakrabortty

15, Mar, 2023 @6:19 PM

Article image
Sunak and Hunt’s last stand? Our panel responds to the Tories’ spring budget
Will the tax cuts at the heart of the chancellor’s make-or-break budget give his party any hope?

Frances Ryan, Katy Balls, Sahil Dutta, Aurora and Mariana Mazzucato

06, Mar, 2024 @2:42 PM