The October 2022 Conservative Party leadership election was triggered by Liz Truss's announcement that she would resign as Leader of the Conservative Party and Prime Minister of the United Kingdom, amid an economic and political crisis.
In the July–September 2022 Conservative Party leadership election, Truss was elected to succeed Boris Johnson, who resigned after a string of controversies that severely damaged his personal reputation. Truss and her chancellor, Kwasi Kwarteng, announced large-scale tax cuts and borrowing in a mini-budget, which was widely criticised and largely reversed, having led to financial instability. Truss dismissed Kwarteng without explanation on 14 October and appointed Jeremy Hunt to succeed him. On the evening of 19 October, MPs voted to reject a motion which would guarantee parliamentary time for a bill to ban fracking in the UK. The vote was controversial as it was unclear whether a three-line-whip had been issued to Conservative MPs, ordering them to vote against it. Following these events, together with mounting criticism and loss of confidence in her leadership, Truss announced on 20 October her intention to resign as party leader and as prime minister, which made her the shortest-serving prime minister in British history.
Following a change of rules by the 1922 Committee, each potential leader needed the support of at least 100 MPs to be a candidate in the vote, with a deadline of 2 pm on 24 October to secure enough nominations. Two candidates put their names forward: Penny Mordaunt, Leader of the House of Commons and Lord President of the Council, and Rishi Sunak, former Chancellor of the Exchequer. Johnson was expected to enter the contest; it was stated he had exceeded the required number of MP backers but nevertheless decided not to stand. On 24 October, Mordaunt withdrew from the contest less than two minutes before the deadline for nominations, leaving Sunak the only candidate in the contest and enabling him to become party leader without a ballot of MPs or party members. He assumed the premiership on 25 October. In his victory speech, Sunak paid tribute to Truss and said that she "was not wrong" to want to implement growth and "admired her restlessness to create change", but admitted that "some mistakes were made" and promised to place economic stability and confidence at the heart of his government's agenda.
Background
Boris Johnson premiership and scandals
In the 2019 Conservative Party leadership election, Boris Johnson was elected to succeed Theresa May after she had been unable to secure a majority for her Brexit withdrawal agreement. After having lost his working majority to defections and his own suspensions of rebel Members of Parliament, Johnson called a general election on a platform of completing the UK's withdrawal from the European Union. In that general election, the Conservative Party won their biggest majority in Parliament since 1987, and Johnson was able to pass a revised version of May's withdrawal agreement.
Less than two months after the 2019 general election, cases of COVID-19 had reached the UK, and Johnson himself was hospitalised with the disease in March 2020. The government responded to the pandemic in March 2020 by enacting emergency powers and widespread societal measures including several lockdowns, and approved a vaccination programme which began in December 2020. Reception for Johnson's leadership during the COVID-19 pandemic was mixed. The media later reported that there had been social gatherings by the Conservative Party and government staff which contravened COVID-19 restrictions. Johnson was personally implicated, and he, his wife Carrie Johnson, and the Chancellor of the Exchequer Rishi Sunak, were given fixed penalty notices by the police in April 2022, becoming the first prime minister to be sanctioned for a criminal action while in office. Public dissatisfaction over the events led to a decline in public support for Johnson, the government led by him, and the Conservative Party as a whole.
The publishing of the Sue Gray report in May 2022 and a widespread sense of dissatisfaction led in June 2022 to a vote of confidence in his leadership among Conservative MPs, which he won. In late June 2022, the Conservative MP Chris Pincher resigned as deputy chief government whip after an allegation was made that he had sexually assaulted two men. Johnson initially refused to suspend the whip from him, and his spokesperson said Johnson had not been aware of "specific allegations" against Pincher. On 4 July, Johnson's spokesperson said that Johnson was aware of allegations that were "either resolved or did not proceed to a formal complaint" at the time he appointed him. Several ministers resigned on 5 July, including Sunak and health secretary Sajid Javid. Following dozens of government resignations, Johnson announced on 7 July his intention to resign.
Leadership election to succeed Johnson
Voting in the July–September 2022 Conservative Party leadership election took place between 13 July and 2 September. After a series of MP ballots, the list of candidates was narrowed down to Liz Truss, who served as Foreign Secretary and Minister for Women and Equalities under Johnson's leadership, and Rishi Sunak, who served as Chancellor of the Exchequer until 5 July. Truss launched her bid to succeed Boris Johnson on 10 July 2022. During the leadership election, Truss pledged to cut taxes by scrapping the National Insurance rise that had previously been announced in April 2022, scrapping the recent corporation tax rise and she also promised to remove green energy levies. During the campaign, when asked whether French President Emmanuel Macron was a friend or foe, Truss replied that the "jury was out" and that she would judge Macron based on his "deeds not words". During a hustings event, Truss suggested that it would be best to ignore the "attention seeker" Scottish First Minister Nicola Sturgeon before rejecting the possibility of a second independence referendum for Scotland.
Truss finished second in the fifth round of voting amongst the Conservative Parliamentary Party on 20 July 2022 with 113 votes behind Sunak with 137 votes, qualifying her for the final vote amongst the membership. She defeated Sunak in the members' vote with 57.4 per cent of the vote against Sunak's 42.6 per cent. She was elected on 5 September 2022, assuming office on 6 September 2022. She became the fourth consecutive Conservative Party prime minister since 2010, and the third female prime minister, following Margaret Thatcher and Theresa May. Following the announcement there were protests in London.
Liz Truss premiership and scandals
On 5 September, Truss was elected to lead the party, and assumed the premiership on 6 September. Truss made her first speech as prime minister in Downing Street on 6 September. In the speech she thanked and praised Johnson, and focused on economic growth, similar to during her campaign. Truss also stated the need for an energy plan as well other foreign policy statements. Loud music was played outside Downing Street by protesters as Truss spoke.
Truss was the fifteenth and final prime minister to serve under Elizabeth II, who died two days after appointing Truss. Elizabeth II's death on 8 September caused government business to be suspended during a national mourning period of 10 days. In response to the cost-of-living crisis and energy supply crisis, the Truss ministry announced the Energy Price Guarantee, which reduced energy prices for households, businesses, and public sector organisations.
Truss's economic policies, called "Trussonomics", were advocated by the Free Enterprise Group, a group of Thatcherite-leaning Conservative Party MPs founded by Truss in mid-2011. The policies are based upon the principle of reducing the overall tax burden, as part of a model intended to create a high-growth, free-market economy.
The policies of Trussonomics involve extensive tax cuts in addition to reducing government regulation and repealing employment laws to attract businesses, encourage entrepreneurship, and grow the economy. Proponents of Trussonomics argue that lower taxes would pay for themselves by encouraging economic growth, a theory known as supply-side economics. The tax cuts proposed in the Truss–Kwarteng mini-budget were therefore to be funded by borrowing. The proponents' expectations were that, kick-started by a temporary scheme of lending, tax revenue would eventually increase due to growth in the economy, relieving the need for amassing debt from the tax-cutting measures. Trussonomics was influenced by the economic policies of Ronald Reagan, known as Reaganomics, and of Nigel Lawson, the second Chancellor of the Exchequer under Margaret Thatcher.
In response to a stagnant economy, a mini-budget was announced in September 2022 with "growth" as its key ambition. It led to a run on sterling, a fall in gilt markets, lost confidence among global investors and criticism from International Monetary Fund (IMF). It included measures in several sectors such as taxation, benefits, work and investment, stamp duty, energy, bankers' bonuses, shopping, infrastructure and investment zones. The package which was announced by Chancellor of the Exchequer Kwasi Kwarteng relied heavily on government borrowing. Goldman Sachs, Bank of America and the IMF among others were sceptical that £45 billion unfunded tax cuts could lead to economic growth and pay for itself as the government hoped. Within the budget, Kwarteng removed the 45 per cent rate of income tax paid by those earning more than £150,000 a year, reversed the rise in national insurance contributions and brought forward by a year the reduction in the basic rate of income tax from 20 per cent to 19 per cent planned for 2024 whilst also scrapping the cap on bankers' bonuses.
As part of the mini-budget, Kwarteng announced a cut on stamp duty. Buyers in England and Northern Ireland would pay no stamp duty on the first £250,000 of a property's value, with the previous threshold being £125,000. For first-time buyers, no tax would be paid on the first £425,000. However, experts said that the cut in stamp duty was unlikely to help first-time homebuyers to get on the property ladder and risked pushing up house prices further. Kwarteng refused to allow the Office for Budget Responsibility (OBR) to assess the economic impact of the mini budget prior to its announcement. Conservative MP Mel Stride, a member of the Treasury Select Committee, wanted independent forecasts published to "provide reassurance and confidence to international markets and investors".
Following the mini-budget announcement, the markets reacted badly with the sterling and government bonds dropping significantly in response to a large increase in government borrowing. By 23 September, the pound had hit a 37-year low against the US dollar at below $1.10 whilst the FTSE 100 Index fell by 2.3 per cent. Andrew Wishart, at Capital Economics, said the market reaction to Kwarteng's budget suggested mortgage rates of more than 6 per cent were now a "distinct possibility". The Labour Party accused the Conservatives of gambling on the economy. On 27 September, the IMF also warned the UK government that it should re-evaluate the planned tax cuts announced in the mini-budget as they would heighten inequality and inflation in the country. Additionally, there was a strong public reaction with one YouGov poll on 29 September recording a 33-point lead for the Labour Party ahead of the Conservatives. Truss's personal approval rating were reported as minus 37, falling from minus 7 in one week, with 12 per cent of people describing the mini-budget as a good policy.
In response, Truss and Kwarteng reversed the decision on the removal of the 45 pence of income tax for higher earners on 3 October following a significant backlash. Kwarteng was dismissed by Truss on 14 October 2022, who appointed Jeremy Hunt to succeed him. Later that day, Truss held a press conference which lasted for eight minutes with Truss announcing that the previously planned corporation tax rise that she had campaigned to abandon during the leadership campaign would now go ahead. Truss said she decided on these changes because the mini-budget "went further and faster than markets were expecting".
The implementation of Trussonomics was heavily criticised by members of opposing political parties, with members of the Labour Party describing the policies as "casino economics" and suggesting it would be of greater benefit to the wealthy than those on moderate incomes. Scottish first minister Nicola Sturgeon and Welsh finance minister Rebecca Evans both made statements in opposition to the tax cuts proposed under the September 2022 mini-budget, with some Conservative Party MPs also stating it was wrong to cut taxes. The editorial board of The Guardian criticised Trussonomics for going against the desires of the British voters by lowering taxes, reducing public spending, and increasing interest rates at a time when many in the United Kingdom desired more government investment, the Nationalization of certain industries, and lower levels of inequality.
Internationally, Trussonomics was criticised for its handling of the British economy. The International Monetary Fund (IMF), which acts to stabilise the global economy and sound economic warnings, took the unusual step of issuing a statement in which it openly criticised Truss's economic policies, stating that "the nature of the UK measures will likely increase inequality", and urging Truss's government to "re-evaluate" its tax measures, "especially those that benefit high income earners". U.S. President Joe Biden stated that he believed implementing Trussonomics was a "mistake", saying he disagreed with "the idea of cutting taxes on the super-wealthy". Other world leaders and world media also criticised the mini-budget and Truss's economic policy.