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.

Jeremy Hunt said every government department would be asked to make spending cuts. Reuters

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

Britain's Prime Minister Liz Truss during Prime Minister's Questions in the House of Commons in London, addressing Parliament for the first time since abandoning her disastrous tax-slashing economic policies. Here, 'The National' looks at her time in power so far. AFP

Liz Truss speaks to Grant Shapps at Downing Street as he is appointed Home Secretary, after the resignation of Suella Braverman. Photo: Simon Dawson / No 10 Downing Street

A mural by artist Ciaran Gallagher in Belfast is updated to reflect Liz Truss's current political troubles. PA

Britain's new Chancellor of the Exchequer Jeremy Hunt announcing tax and spending measures at the House of Commons in London, with Liz Truss sitting on the bench behind him. AFP

Liz Truss gives a speech after sacking Kwasi Kwarteng as chancellor of the exchequer. Reuters

A protest by climate change group Extinction Rebellion in central London. Ms Truss has said the group is part of an 'anti-growth coalition' with trade unions and the main opposition Labour Party. AFP

Ms Truss has come under increasing pressure during her short time as prime minister. AFP

An Extinction Rebellion protest outside Downing Street on the day Mr Kwarteng was removed from the government. AP

Ms Truss with members of the England women's football team and the European Championship trophy in Teddington, south-west London. Getty

Ms Truss arrives for a meeting of the European Political Community at Prague Castle in the Czech Republic. AP

Ms Truss and her husband Hugh O'Leary wave after her keynote speech at the Conservative Party conference in Birmingham. AP

Liz Truss gives a speech at the Conservative Party Conference. EPA

Ms Truss meets with Mr Kwarteng, chancellor of the exchequer at the time. Photo: Andrew Parsons / CCHQ

Ms Truss and Mr Kwarteng visit a construction site for a medical innovation campus in Birmingham. AFP

Ms Truss meets US President Joe Biden for talks at the UN headquarters in New York. PA

Ms Truss delivers a speech at the 77th session of the General Assembly at the UN headquarters in New York. AP

The British prime minister holds a bilateral meeting with Turkish President Recep Tayyip Erdogan in New York. Reuters

Ms Truss meets French President Emmanuel Macron at the UN headquarters in New York. Reuters

Ms Truss speaks to the media during her visit to the Empire State building in New York. AP

Britain's new leader speaks during the state funeral of Queen Elizabeth at Westminster Abbey, London. PA

Ms Truss and her husband Hugh O'Leary observe a minute's silence at Number 10 Downing Street following the death of the queen. Reuters

Britain's Labour Party leader Sir Keir Starmer and Ms Truss leave after a service for the reception of Queen Elizabeth's coffin at Westminster Hall in the Palace of Westminster. AFP

Ms Truss joins the Speaker Lindsay Hoyle and selected MPs to take the oath and swear allegiance to King Charles III in the House of Commons chamber. PA

King Charles during his first audience with Ms Truss at Buckingham Palace, London, following the death of Queen Elizabeth. Getty Images

Ms Truss gives a reading during a service of prayer and reflection, following the passing of Queen Elizabeth, at St Paul's Cathedral in London. Getty Images

The British prime minister makes a statement outside 10 Downing Street in London following the queen's death. Bloomberg

Ms Truss speaking during her first weekly Prime Minister's Questions session at the House of Commons in London. AFP

Front pages of a selection of British national newspapers, each leading with a story about Ms Truss becoming Britain's new prime minister. AFP

People walk past an image in central London of Ms Truss on the side of a protest bus calling for a citizens' assembly. Reuters

Ms Truss holds her first Cabinet meeting at 10 Downing Street. Reuters

Ms Truss speaks at Downing Street on the day she took over as prime minister from Boris Johnson. EPA

Ms Truss poses with her husband Hugh O'Leary at Downing Street before entering as prime minister for the first time. EPA

Ms Truss is welcomed by staff in Downing Street as she enters the famous prime ministerial offices for the first time. Andrew Parsons / No 10 Downing Street

New Health Secretary Therese Coffey and Number 10 staff shelter from a downpour as they wait for Ms Truss to arrive in Downing Street. PA

Liz Truss makes a speech outside 10 Downing Street, London, after meeting Queen Elizabeth II and accepting her invitation to become prime minister and form a new government. PA

Queen Elizabeth II greets the newly elected leader of the Conservative Party, Ms Truss, at Balmoral Castle in Scotland. The queen invited Ms Truss to become prime minister and form a new government. Getty Images

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.