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Kwarteng’s ‘shock and awe’ entrance leaves Treasury reeling

Close-up of Kwasi Kwarteng departing 10 Downing Street in June 2022
Kwasi Kwarteng has been keen to immediately put a new stamp on the department. Photograph: Andy Rain/EPA

Kwasi Kwarteng’s “shock and awe” approach to taking over as chancellor has sent jitters rippling among officials, with concerns raised that his close relationship with the prime minister and the two most senior civil service roles remaining unfilled could mark a turbulent time for the Treasury.

Amid fears about the UK teetering on the brink of recession, the aftershocks of Tom Scholar’s sacking as permanent secretary have left many civil servants feeling raw and concerned about the leadership at the Treasury.

They said it was proof he was willing to emulate Liz Truss, who earlier this week said she was willing to be unpopular for the sake of driving through what she thought were correct changes for the country.

One Treasury official said the building was “still angry and really shellshocked” by the sudden departure of Scholar and was really missing his gravitas as Kwarteng rushes through a completely new economic direction and swingeing tax cuts without full costings being made public.

Another said that staff were “very, very upset” at the way Scholar was treated – with some even said to have been “in tears” and what they believed was a “shock and awe” approach to asserting control.

A third Whitehall insider suggested Scholar could have “kicked up a fuss” about Kwarteng ploughing ahead with significant tax changes despite the lack of evidence around costings, given the Office for Budget Responsibility is not expected to release a forecast on Friday. “It looks a bit like we’re avoiding having our own homework marked,” sighed one Tory MP.

The roles previously occupied by Scholar and his former deputy, Charles Roxburgh, remain unfilled. Two director generals have been co-opted to lead the department.

Liz Truss greets Kwasi Kwarteng with an embrace in July 2022
One former Treasury insider said Kwarteng and Truss’s friendliness was a problem as there should be a healthy tension between No 10 and No 11. Photograph: Toby Melville/Reuters

Giles Winn, who was a special adviser to former chancellor Philip Hammond, recalled how Kwarteng was at the time the parliamentary private secretary – a ministerial aide meant to be their “eyes and ears” among colleagues.

“The leadership contest exposed a deep division in the party over fiscal policy, which has kind of been glossed over by other events,” Winn said. “The chancellor will be key to healing that divide over time – and Kwasi will I’m sure be well aware of that.”

Winn added keeping the party together would be “front of mind” for Kwarteng, but that a closeness between him and Truss extending back many years may make life more difficult for Treasury officials.

“There needs to be a healthy tension between the prime minister and chancellor,” he said. “It’s natural for a PM to want to spend money on things but the chancellor needs to have an eye on the longer term and not letting debt swell out of control. You need a chancellor who’s going to push back and fight that corner in those bilats with the PM.

“Kwasi has a much closer relationship with the PM, and now they might just pick up the phone and have a conversation, or meet up for a drink and chat without policy officials in the room.”

A former senior Treasury official also voiced alarm over the interplay of the government cutting taxes while the Bank of England raised interest rates, amid fears the UK could fall into recession. “There will be considerable concern about the strategy and where public finances are heading,” they added.

Another long-serving Treasury civil servant noted the elevation of the city minister role, which was decoupled from the economic secretary to the Treasury and handed to the financial secretary instead, Andrew Griffiths – beefing up his job to compete for the second most high-profile in the ministerial team.

“The city job being given to a more senior minister tells you a lot about the direction Kwasi’s heading,” they said.

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