Liz Truss ‘hanging by a thread’ as PM, says Lord Hague, after corporation tax U-turn and axing of chancellor

Prime Minister insists she will stay on as leader as she fights for survival of premiership
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Liz Truss’s premiership is “hanging by a thread”, former Tory leader William Hague has said, after the Prime Minister U-turned on major parts of the disastrous mini-budget and sacked her Chancellor.

The Prime Minister said on Friday she was “determined” to stay on in her role despite her credibility to lead the country being called into question.

During a press conference Ms Truss confirmed corporation tax will rise next year, despite plans to keep it at current levels being a flagship policy of her leadership campaign.

She walked out of the briefing after taking just four questions from journalists, who all focused on whether she could continue as Tory leader and whether she should apologise for the damage her economic polices have done to the Tory party’s reputation.

Kwasi Kwarteng, who cut short his trip to Washington for the International Monetary Fund (IMF) conference to fly back to London on Friday morning, was forced out as Chancellor and replaced by Jeremy Hunt as she attempted to shore up her faltering premiership.

On Friday evening Ms Truss appeared to be facing an uphill battle to save her job.

Lord Hague, who led the Tory Party in opposition from 1997 to 2001, told Times Radio her time as PM “hangs by a thread” saying “It’s been a catastrophic episode.”

“These were her policies too. And plenty of warning was given by many of us about what would happen if we had unfunded tax cuts and whether it would be financially and politically sustainable,” he said.

“It’s going to be very hard for her to continue. She is in a vulnerable position,” former Conservative MP and Treasury David Gauke added.

Former Tory Chancellor, Philip Hammond, warned the events of the past weeks had wrecked the party’s reputation for fiscal discipline, and had her growth agenda “in tatters”.

A current Tory MP and former minister described Ms Truss’s press conference to the BBC as “a car crash - don’t think she can survive this”. Another MP said: “It was just bizarre. I don’t know where we go from here. It’s dreadful. The great and good of the party need to tell her to go.”

Sky News reported that a “substantial” number of letters of no confidence in Ms Truss were submitted by Conservative MPs on Friday to the backbench 1922 committee.

Ms Truss is technically immune from a leadership challenge for a year under the party’s rules having only just taken office.

But there is a belief that the chairman of the 1922 Committee Sir Graham Brady of backbench Tory MPs could change this if a large enough number of letters go in.

A snap poll following the sacking of Mr Kwarteng suggested that seven in 10 people don’t think Ms Truss can regain the trust of the public. Savanta ComRes asked 1,088 adults for their opinions on Friday afternoon. It found that 71% think Liz Truss cannot regain the trust of the British public, while just 16% think she can and 13% don’t know.

Allies of the Prime Minister were attempting to shore up her position on Friday evening, with Deputy Prime Minister, Thérèse Coffey, holding a Zoom call with Tory MPs.

Senior Conservative Sir Bernard Jenkin tweeted: “We must now be calm. Rash talk of ditching the PM, or calls for a general election, will not calm the financial markets.”

Shrewsbury and Atcham MP Daniel Kawczynski added: “We are British and are not going to throw this lady under a bus when she has started an incredibly difficult job and is handling some very serious economic problems.

“Any Tory MP who challenges her, I hope the [local party] association remembers his or her conduct - it would be wrong and immoral.”

Ms Truss said earlier she was “incredibly sorry” to lose Mr Kwarteng from her cabinet and paid tribute to her “great friend”.

She added that Mr Hunt - who will give his first interviews as the new chancellor on Saturday morning - “shares my vision”, and hailed his experience as a former cabinet minister.

Announcing plans to increase taxes on businesses she said: “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. This will raise £18billion pounds per year.”

Mr Hunt, she said, would deliver the Medium-Term Fiscal Plan at the end of this month as planned.

This is the second major U-turn on policies announced in the mini-budget following the collapse of the pound against the dollar as the markets continued to be spooked over Britain’s economic policies.

At the beginning of the month, the Government reversed plans to scrap the 45p rate of income tax for the highest earners.

When quizzed over whether she still has credibility to govern following the back-pedalling, Ms Truss said: “What I’ve done today is make sure we have economic stability.”

She added that it has been “a very difficult time globally”.

Ms Truss also insisted she was “determined” to stay on as PM.

“I’m absolutely determined to see through what I promised,” she said. “To deliver a higher growth, more prosperous United Kingdom to see us though the storm we face.

“We’ve already delivered the energy price guarantee, making sure people aren’t facing huge bills this winter.

“It was right, in the face of issues we had, that I acted decisively to ensure we had economic stability - that is vitally important to people and businesses wright across out country.”

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