Government “in meltdown” after further mini-Budget U-turn, Ashworth says

Jonathan Ashworth has accused the government of being “in meltdown” following the sacking of Kwasi Kwarteng as Chancellor and Liz Truss’ announcement of a further U-turn on the plans set out in the mini-Budget.

The Prime Minister revealed today that the government would not be going ahead with its proposal to scrap a planned increase in corporation tax, one of the measures set out in the Chancellor’s fiscal statement last month.

Kwarteng was sacked as Chancellor earlier today amid the ongoing economic turmoil that has followed the mini-Budget. Former Health Secretary Jeremy Hunt will succeed him in the role.

Interviewed on BBC News, the Shadow Work and Pensions Secretary said: “Let’s be clear what has just happened, Liz Truss has sacked her Chancellor for carrying out the policies of Liz Truss.

“A set of policies that led to turmoil on the markets, which led to a run on pension funds and soaring mortgage rates for homeowners across the country.”

Ashworth declared that the government is “in meltdown”, telling viewers that Labour is the only party that can “offer economic stability and certainty to homeowners across the country”.

“This is clearly a disastrous set of decisions from a disastrous Budget, and actually, what we need is not just a change of Chancellor. We need a change of government,” the Labour frontbencher added.

In the press conference this afternoon, the Prime Minister said: “It is clear that parts of our mini-Budget went further and faster than markets were expecting.

“So the way we are delivering our mission right now has to change. 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.”

Truss said she was “incredibly sorry” to lose Kwarteng as Chancellor, adding: “He is a great friend, and he shares my vision to set this country on the path to growth.”

On Hunt as the new Chancellor, the Prime Minister said: “He’s one of the most experienced and widely respected government ministers and parliamentarians. And he shares my convictions and ambitions for our country.”

She announced that Hunt will set out the government’s medium-term fiscal plan at the end of October, which Kwarteng had previously been due to deliver.

The plan is expected to be used, alongside fresh forecasts for the economy and public finances from the Office for Budget Responsibility (OBR), to outline how the Conservatives will fund the tax cuts set out in the mini-Budget.

Kwarteng faced criticism for not providing an OBR analysis of the government’s plans alongside the mini-Budget. Following his statement, the pound crashed to its lowest level to date against the dollar, and government borrowing costs soared.

The Bank of England announced on Tuesday that it was taking emergency action for a third time since the mini-Budget in an attempt to calm the markets.

The government has already been forced to U-turn on its plans to scrap the 45% rate of income tax on earnings over £150,000, a move announced in Kwarteng’s statement.

According to the BBC, a group of senior Tory MPs plans to publicly urge Truss to resign next week. A source told BBC Newsnight’s political editor Nicholas Watt: “These are serious people. The PM will find it difficult to survive.”

Keir Starmer declared following Truss’ press conference that the Prime Minister’s “reckless” approach has “crashed the economy” and “undermined Britain’s standing on the world stage”.

The Labour leader added: “We need a change in government. With my leadership, Labour will secure Britain’s economy and get us out of this mess.”