Kwasi Kwarteng: has Liz Truss sacked chancellor of the exchequer with budget U-turn- will Rishi Sunak step in?

Kwasi Kwarteng has been sacked as Chancellor by Prime Minister Liz Truss, who is expected to announce a U-turn on some of her tax cuts later today (14 October).

Kwarteng earlier returned to Number 10 Downing Street in London for crisis talks with Liz Truss amid Tory Party turmoil and intense speculation that he may be forced to further scrap major sections of his unpopular mini budget.

The Chancellor was attending the annual conference of the International Monetary Fund (IMF) in Washington DC, but had to cut his visit short as Conservative MPs questioned if he and the Prime Minister could survive the coming days. It has now been made clear that Kwarteng has been unsuccessful, but as for Truss - only time will tell.

Here is everything you need to know.

Why did Kwasi Kwarteng fly back to London?

Following reports that the ousted Chancellor was planning to abandon elements of his £43 billion tax giveaway outlined in last month’s “mini budget”, financial markets returned to some normalcy after days of chaos. But the economic situation remains delicate, with the Bank of England’s emergency rescue package to protect pension funds from collapse set to expire today (14 October).

So the government has arguably been left with no choice but to reverse some of their policies, with Kwarteng returning to the UK to hold crisis talks with the Prime Minister.

Over the past few days, there have been stories of feverish planning among Tory MPs at Westminster to oust the Chancellor and his Prime Minister Liz Truss, amid speculation that Truss’ two main competitors for the Tory leadership during the summer - Rishi Sunak and Penny Mordaunt - could be appointed at the helm of a new administration.

A spokesperson for the Treasury said: “After completing a successful series of meetings at the IMF, the Chancellor is returning to London today to continue work at pace on the medium-term fiscal plan.”

Nadine Dorries lashed out at senior Tories reportedly exploring the possibility of replacing Prime Minister Liz Truss with a joint ticket of Rishi Sunak and Penny Mordaunt, accusing them of trying to “overturn democracy”.

The former Cabinet minister tweeted: “Those absurdly called grandee MPs (men) agitating to remove Liz Truss are all Sunak supporters. They agitated to remove @borisjohnson and now they will continue plotting until they get their way. It’s a plot not to remove a PM but to overturn democracy. #BackLiz”.

What has Kwasi Kwarteng said?

Kwarteng has posted his departure letter to the Prime Minister on Twitter. He wrote: “You have asked me to stand aside as your Chancellor. I accept.

“When you asked me to serve as your Chancellor, I did so in full knowledge that the situation we faced was incredibly difficult, with rising global interest rates and energy prices. However, your vision of optimism, growth and change was right.”

He also seemingly backed some of his previous decisions, writing, “As I have said many times in the past weeks, following the status quo was simply not an option. For too long this country has been dogged by low growth rates and high taxation-that must still change if this country is to succeed.”

But he admitted the “ economic environment has changed rapidly” since the mini budget announcement on 23 September, and said he looks forward to “supporting you and my successor to achieve [the Medium-Term Fiscal Plan] from the backbenches.”

Before leaving the US, Kwarteng said that he stood by his economic growth strategy, and reiterated his commitment to outlining his plan to get public finances back on track in a statement on 31 October.

But few MPs feel he can afford to wait so long, and in a later interview with The Daily Telegraph, Kwarteng merely answered "let’s see" when asked if he could back down on his promise to cancel the planned corporation tax hike. Many have predicted that the planned increase on the levy on corporate profits from 19% to 25% is predicted to be the first element of Kwarteng’s fiscal strategy to go if the expected U-turn occurs.

Has the Chancellor been sacked?

Kwarteng has confirmed Truss “asked him to stand aside” as Chancellor - something he said he has “accepted”. He posted his full letter to the Prime Minister on Twitter, which he concluded by saying: “We have been colleagues and friends for many years. In that time, I have seen your dedication and determination. I believe your vision is the right one. It has been an honour to serve as your first Chancellor.”

It comes after he departed Downing Street at around 12:30pm (14 October), following a meeting with the Prime Minister. Downing Street has not yet commented on the news.

Prior to the news however, international trade minister Greg Hands insisted Liz Truss and Kwasi Kwarteng’s positions were safe as he sought to emphasise that UK financial markets are not the only ones in turmoil. Asked if the Chancellor’s job is tenable, Hands told Sky News: “Totally. I mean, Kwasi Kwarteng himself said yesterday he is 100% sure he will still be in position. I know the Prime Minister has got total confidence in Kwasi Kwarteng.”

He added that Kwarteng is “an incredibly capable person, a very, very bright person who makes good judgement calls”.

But Conservative peer Lord Ed Vaizey, the former minister for culture, said Kwarteng cutting his trip to the US short is “not a good sign”. Also speaking to Sky News, he said: “It’s not a good sign, it doesn’t look like the government is in control,” adding, “I’m afraid the Chancellor coming back a day early doesn’t fill one with confidence.”

Former Labour leader Ed Miliband meanwhile said the Conservative Party should be “hanging its head in shame” as Kwarteng flies home. He told Sky News: “This is a government in meltdown and an economic policy in tatters and frankly I think the Conservative Party should be hanging their head in shame at what it’s putting the country through. This is about people’s livelihoods, people’s homes, people’s mortgages.

“It is not a global phenomenon, there’s no other finance minister who is rushing back on a aeroplane early from the IMF meetings, there’s no other countries where its central bank have had to have an emergency buying spree, there’s no other country where it’s economic policy is falling apart at the seams.”