Liz Truss has 'listened and changed', UK's new chancellor says

Jeremy Hunt promises fiscal restraint after replacing Kwasi Kwarteng

Liz Truss sacked her former chancellor Kwasi Kwarteng on Friday. Getty

Britain's Prime Minister Liz Truss has “listened and changed” after the mayhem unleashed by her policies forced her to drastically switch course, her new chancellor has said.

Jeremy Hunt said the government's new aim was to reassure markets that it could account for “every penny” of its tax and spending plans.

It came as former minister Crispin Blunt became the first Conservative MP to break cover and openly call for Ms Truss to be ousted.

Ms Truss sacked Mr Hunt's predecessor Kwasi Kwarteng after his announcement of £40 billion ($44.7bn) in unfunded tax cuts flopped spectacularly with markets, voters and MPs.

With Mr Kwarteng's tax cuts for businesses and top earners already cancelled, Mr Hunt did not rule out a further U-turn on the basic rate of income tax.

But he dismissed the suggestion that he is now the driving force in Downing Street as he takes an axe to Ms Truss's tax-cutting agenda.

“The Prime Minister is in charge,” Mr Hunt told the BBC programme Sunday with Laura Kuenssberg.

“She’s listened. She’s changed. She’s been willing to do that most difficult thing in politics, which is to change tack.”

But he said: “Some of the ways she’s tried to do things in the last few weeks haven’t worked as planned.”

Mr Hunt is scheduled to set out a new budget plan on October 31 with the aim of restoring fiscal discipline.

Former Conservative ministers have complained that the party's reputation for sound economic policy has been left in tatters by the chaos of the past month.

The market turmoil caused by Mr Kwarteng's mini-budget pushed up government borrowing costs and at one point saw the pound drop to a record low against the dollar.

Rising mortgage costs are another growing concern after the Bank of England signalled it could increase interest rates again to quell inflation.

Mr Hunt said he would retain as many of Mr Kwarteng's tax cuts as possible but did not guarantee that the basic rate of income tax would drop from 20 to 19 per cent as planned.

“Spending is not going to increase by as much as people hoped and, indeed, we’re going to have to ask all government departments to find more efficiencies than they had planned. Taxes are not going to go down as quickly as people thought, and some taxes are going to go up,” Mr Hunt said.

“So it’s going to be very, very difficult and I think we have to be honest with people about that.”

In another shift of tone from Mr Kwarteng's business-friendly stance, Mr Hunt said ministers would lead a “compassionate Conservative government” that looks after vulnerable people.

“Top of our mind when we’re making these decisions will be struggling families, struggling businesses, the most vulnerable people and we’ll be doing everything to protect them,” he said.

Liz Truss — in pictures

Ms Truss's position is already under threat only 40 days since she took office, with Westminster awash with rumours of a plot to oust her by Tory MPs.

Critics have questioned how Ms Truss can stay in office when the tax-cutting policies she campaigned on during the Conservative leadership race are largely dead in the water.

"I think the game is up and it’s now a question as to how the succession is managed," Mr Blunt told Channel 4.

"If there is such a weight of opinion in the parliamentary party that we have to have a change, then it will be effected."

Former leadership candidates Rishi Sunak and Penny Mordaunt, and Defence Secretary Ben Wallace, have been mentioned as potential unity candidates to replace her.

The opposition Labour Party on Sunday renewed its calls for an early general election, which polls suggest would lead to a change of government.

“I don’t see how the Conservative Party keeps believing it can change chancellor or even leader without the public having their say,” Labour's business spokesman Jonathan Reynolds told Sky News.