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I'm struggling to get from the news headlines why Kwasi Kwarteng was sacked. Wasn't Liz Truss the actual policymaker? Did the fact that they're friends mean that he had more autonomy to make his own decisions? Or is a Chancellor expected to have their own policy? Maybe it was meant as a desparate statement to her party in a hope that they won't dispose her too quickly?

And why Jeremy Hunt was appointed as he didn't do well at all in the leadership contest?

I am interested mainly in facts, but in the absence of those likely explanations are welcome.

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It’s not entirely obvious at first glance, as Kwarteng appears to have been sacked for agreeing with the Prime Minister; he set out in his ‘mini budget’ a slate of fiscal policies which Truss herself had promised during her leadership campaign. Reading between the lines, however, we can glean a little insight.

The Government’s Explanation

The explanation - such as it is - was alluded to in Liz Truss’s brief press conference after the sacking/resignation took place.

Today I have asked Jeremy Hunt to become the new Chancellor.

He is one of the most experienced and widely respected government ministers and parliamentarians.

And later on;

I have acted decisively today because my priority is ensuring our country’s economic stability.

It’s not explicitly spelled out, but Kwarteng appears to have been sacked because the deep friendship between him and Truss is seen as having contributed to the mini-budget mess, and the consequent market instability.

Most of the policies announced in the mini-budget had long been telegraphed by Truss in the Conservative Party leadership debates; scrapping the planned corporation tax increases, scrapping the Health and Social care levy, and so on. This, therefore, should have been priced into the gilt and foreign exchange markets before their official announcement by the Chancellor. What hadn’t been proposed was the abolition of the top rate of income tax. This policy in particular, therefore, was seen as having had the largest contribution to the market instability.

Quite apart from the economic effects of the policy, it had such an effect because - as Truss later revealed - it was not even discussed with Cabinet members before being announced by Kwarteng. It showed to markets that Truss & Kwarteng’s friendship was capable of introducing radical policy changes without the relative safeguards of Cabinet scrutiny. Along with a few other MPs, Truss and Kwarteng co-authored the book ‘Britannia Unchained’, which proposes radical free market economic policies, and it seemed that this was the first step in this direction.

It now appears to be hoped that Kwarteng’s replacement with Jeremy Hunt, who endorsed Rishi Sunak in the leadership race after being knocked out himself, will be seen as an olive branch not only to financial markets - as Hunt is seen as more experienced, and as more of a safe pair of hands than Kwarteng - but also to Truss’s party, as Hunt will become only the second Sunak supporter in her Cabinet. During his brief leadership bid, Hunt supported a corporation tax cut beyond even that suggested in the mini-budget, so it's possible Truss regards him as a fellow free market economist without Kwarteng's baggage from the last few weeks.

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Q: Why is Kwasi Kwarteng sacked?

The so called mini-budget which he developed together with Liz Truss was poorly received by the public and the market. It was not just unpopular, but also doing real-time damage to the UK economy.

Someone has to take the blame, and that person is not going to be Liz Truss. So she made the very ruthless - but politically correct - decision to pin the accountability on Kwarteng and chopped his head off to salvage her credibility.

She had to do it to defend herself against the opposition in Parliament, but also critics within her own party who are deeply angry at her mismanagement, which is probably contributing to their slump in opinion polls (if a general election happens today Labour would win by a landslide). Some Conservatives are already publicly talking about finding a new leader.

So her message is simple: "It was Kwarteng's idea all along, don't blame me."

Q: Why is Jeremy Hunt appointed as Chancellor?

Jeremy Hunt belongs to the centrist / moderate wing of the Conservative Party, which is sometimes framed as in opposition to... shall we say, the not so moderate wing that Boris Johnson and Liz Truss belongs in.

Appointing Hunt as Chancellor signals that Truss understands she needs to soften her approach. People currently think she is overheating the situation, and doubling-down would appear nothing short of pure insanity. Choosing Hunt as Chancellor shows she wants to be seen as adaptable, responsible, and not-insane.

You are right that Hunt performed poorly in the leadership contest. But keep in mind that he lost the race to Boris Johnson, which tells you a lot about who he is not. Ironically, this probably made him the perfect candidate to replace Kwarteng because he is now basically a pedigree moderate within the Conservative Party.

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    I don't buy the scapegoat explanation given she was the one that proposed the policies and he was just implementing them - might work on politically unengaged people but not on the bond markets or MPs. Hunt was also not against Johnson in the most recent leadership contest.
    – Silver Fox
    Oct 14, 2022 at 19:01
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    @LongBongSilver You are probably correct, in as much as public opinion very much identifies her as being just as responsible, if not more so. However the decision about who got sacked was hers, and she isn't going to resign willingly. This is just her attempt to attach as much blame to Kwarteng as possible and then jettison it along with him, in the hope that it lets her survive. Oct 14, 2022 at 21:10
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    @LongBongSilver that's why this is unlikely to help her. But since this was clearly her policy in the first place, and that policy is now the problem, her options are a) fall on her sword and cement her legacy as the worst prime minister in British history, of b) try and blame Kwarteng, and there's a slim chance that she might just survive it she can tough out the next week or two. B isn't much of a plan, but nor is A.
    – PhillS
    Oct 14, 2022 at 23:54
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    @LongBongSilver Like others said, I agree it's not a very effective strategy but I don't think she has any other option. She's caught off-guard because she genuinely thought the mini-budget would be well received by the market, and everything that follows is just damage control, scooping water out of a sinking boat with teaspoon. Oct 15, 2022 at 0:46
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    @LongBongSilver: Getting bogged down on why the scapegoat is a valid scapegoat is boring. The more interesting question is on why Hunt. Whether Truss bought an ally in Hunt proactively or whether she was forced to fill the 2nd most important position in her cabinet with someone who is going to stay outside her core circle -- that will have an effect in the events going forward. Also, after everything said, I would question the sanity of any chancellor who made such a budget. There is something to be said of what Kwateng failed to do by following Truss to a tee.
    – Argyll
    Oct 15, 2022 at 3:48
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According to The Guardian, Truss did this as part of "a desperate attempt to restore her crumbling political authority," with the appointment of Hunt "an apparent move by Truss to reach out more broadly to Conservative MPs":

Hunt’s appointment appears to be a response to criticism from Tory MPs that Truss’s initial cabinet was chosen for loyalty rather than competence and experience, being packed almost entirely by those who supported her in the leadership race....

Earlier, sources had said the prime minister wanted Kwarteng to “carry the can” over her climbdown as she sought to calm the markets and the nerves of jittery Tory MPs....

The prime minister’s own position is seemingly in such peril, with Tory MPs actively plotting her downfall, that she concluded sacking the chancellor was essential for her political survival.

That said, Kwarteng may well be a scapegoat:

Whitehall insiders said the pair had held different views on how far the government should go in reversing key elements of its plan to steady the markets and placate anxious Conservative MPs.

They said Kwarteng had been pushing for a full retreat on the corporation tax policy, raising it from the current 19% rate to the planned 25%, while the prime minister had wanted to go for just a fraction of the rise.

One Treasury insider said Kwarteng had all along been “more prepared to U-turn” than Truss on corporation tax and previously the 45p rate, despite him largely getting the blame for the policies.

However, Downing Street insiders said Truss was expected to fully retreat on the plan.

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Kwasi Kwarteng was sacked for the simple reason that Liz Truss needed a fall guy to pin the blame on for the disastrous and nonsensical "budget" that the two of them cooked up together. The fact that Kwarteng is known to be a close friend of hers made his ousting even more necessary - to demonstrate that she is taking sufficient measures to undo the mess she has made.

Jeremy Hunt was brought in to replace Kwarteng because while the latter has only three years of government experience in somewhat minor roles, Hunt has served in various high-level posts since 2010, and is perceived as a "safe pair of hands" who's unlikely to make the same sort of drastic changes and mistakes that Kwarteng has.

In short, replacing Kwarteng with Hunt is an act of desperation by a Prime Minister who has demonstrated herself to be incompetent in her role, and is now desperately trying to convince both the markets and the rest of the Tory party that she is not. Whether she succeeds remains to be seen.

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It is more of signaling to stabilise the market than a political blame game/scapegoat that many thought so. In fact, firing Kwasi would not absolve Liz Truss of her "mistakes" and instead make her look "weak" or "betrayer" in eyes of voters/parties. Nevertheless, she had to do it to eliminate lingering concerns in the gilt market of any possible future "u-turn" on the recent "u-turn" by Kwarteng, a staunch supporter of her initial policies. Also, she installed a competitor, Jeremy Hunt, who might be seen by market as a more convincing "independent" check against any future policies. As many main-stream media / analysts had already said, she has to do more than simply u-turning the policies, which include increasing tax rates higher than before, to reverse the impact. Firing Kwarteng is an attempt to minimise the extent of tax rate increases and to maximise market confidence. Just like speeches from FOMC, any verbal cues do significant "magical" jolts to the market in the short-term. Why not right?

The act of scapegoating is meaningless when anyone/public can easily assume it is "scapegoating", which is why Liz Truss wouldn't have done it just to scapegoat Kwarteng. She must be real stupid to do it with the intention of scapegoating for political reasons.

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  • I don't agree that everyone will see the Kwarteng firing as meaningless simply because it could be interpreted as scapegoating. But that doesn't even matter, because it's "free." Truss was faced with the choice of give up or fire Kwarteng and hope that saves her; choosing the first option can only increase the chance that she gets the boot.
    – cjs
    Oct 16, 2022 at 7:28
  • These days whether someone believes you doesn't matter. Your supporters will support you and your opponents will oppose you regardless of what you say and do to a large extent. Sacking Kwarteng gives Truss something she can say she did to fix things. Whether anyone believes it doesn't matter even a little bit.
    – Eric Nolan
    Oct 17, 2022 at 11:02

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