Ms Patel, who did not publicly back any candidate in the summer-long contest to replace Boris Johnson, told Sky News’ Beth Rigby Interviews programme that it was “vital” for Ms Truss to stick to the 2019 manifesto.
Last month’s tax-cutting mini-budget and the reversal of the ban on fracking have raised questions about how much stock can now be placed in the 2019 manifesto that swept Mr Johnson to a majority.
Nadine Dorries, another former Cabinet minister, had also been among those suggesting Ms Truss may need to seek a new mandate if she diverted too far from the 2019 manifesto.
Ms Patel, asked if Ms Truss should stick with those commitments from three years ago, said the Government was elected on that basis. She added: “It is vital and it’s imperative that we continue to deliver on that.
In the same interview, she also suggested the Government could be forced into a further U-turn over the mini-budget. Asked if Ms Truss’s commitment not to raise corporation tax should be reversed to calm the markets, she said: “There is an irony to this. In that market forces will probably dictate some of these changes now. The market is going to dictate this, primarily because we want to see stability. Stability is absolutely crucial, for everyone to carry on living their lives, for the institutions to function, but actually for the British people to have the stability that they need in their lives as well. And by that, as well, I mean mortgages, interest rates and all those crucial, crucial levers.”
Ms Patel may not be bright but she’s not stupid - even she sees which way the wind is blowing …
Is this not the same as the “Absolutely no shame over tax cut u-turn” thread? I fully acknowledge that this is a major political incident and if this second u-turn happens then it must come close to sealing the resignment of Kwarteng. But it is even more serious in the context of the previous u-turn. Both together make the mini-budget / not-a-budget-honest look like the biggest policy gaffe of living memory.
The pound, which initially held firm earlier on Friday, also lost ground. The moves came as Liz Truss sacked her chancellor, Kwasi Kwarteng, and said a rise in corporation tax would now go ahead.
However, some economists warned that the latest developments might not be enough to restore the UK’s credibility.
“It’s unlikely that the removal of Kwasi Kwarteng as chancellor and the new plans to cancel the cancellation of the rise in corporation tax from 19% to 25% from next April will be enough on their own to regain the full confidence of the financial markets,” said Paul Dales, Chief UK economist at Capital Economics.
He also pointed out that despite another U-turn on the 45p tax cut, there are still unfunded tax cuts of about £25bn left over from the mini-budget - down from £45bn originally.
The cost of government borrowing rose across a range of bonds traded on the financial markets following the announcement. The interest rate - or yield - on bonds due to be repaid in 30 years’ time climbed to 4.85%. They had hit 5.17% on 28 September in the aftermath of the mini-budget when Mr Kwarteng set out one of the biggest tax cuts packages seen in decades but did not explain how they would be funded.
Meanwhile, the yield on bonds due to be repaid in five years’ time, which underpins the cost of new five-year fixed rate mortgages, jumped to 4.35%. The pound - which had jumped on Thursday as speculation mounted about a possible U-turn - also sank by more than 1% to just under $1.12 on Friday before clawing back some losses.
Investec economist Ellie Henderson described markets as “dizzy” over the series of policy reversals and changes.
“Markets seem unconvinced that today’s announcement was enough to fully restore confidence in the UK government,” she said.
Markets react positively ahead of new chancellor Hunt statement >
London’s stock market has opened higher, which, according to Victoria Scholar, head of investment at Interactive Investor suggests is a sign of optimism towards the new chancellor.
The FTSE 100 index, which ranks the largest listed companies in the UK, hit a two-year low last week. But this morning it has gained 0.59% (up 40.64 points at 6,899 points).
Housebuilders like Barratt Developments and Taylor Wimpey have seen a boost, as well as the bank Standard Chartered.
The wider FTSE 250 index also rose 0.87%.
The cost of government borrowing has also fallen this morning - a sign of confidence in Hunt’s decision to speed up the announcement of revised economic and spending plans.
Sneak preview from Jeremy Hunt’s diary after meeting Truss:
Ms Truss’s difficulties were an addition to my distressed state of mind. In my forlorn state I became quite attached to the family, and used to walk about, busy with Ms Truss’s calculations of ways and means, and heavy with the weight of Ms T’s debts. On a Saturday night, which was my grand treat—partly because it was a great thing to walk home with six or seven shillings in my pocket, looking into the shops, and thinking what such a sum would buy, and partly because I went home early—Mr. Truss would make the most heart-rending confidences to me; also on a Sunday morning, when I mixed the portion of tea or coffee I had bought overnight, in a little shaving-pot, and sat late at my breakfast. It was nothing at all unusual for Ms. Truss to sob violently at the beginning of one of these Saturday-night conversations, and sing about Jack’s delight being her lovely Nan, toward the end of it. I have known her to come home to supper with a flood of tears, and a declaration that nothing was now left but a jail; and go to bed making a calculation of the expense of putting bow-windows to the house, “in case anything turned up,” which was her favourite expression. And Mr Kwartang was just the same.
The pound rose and government borrowing costs fell as investors welcomed the news that Chancellor Jeremy Hunt is reversing almost all tax measures set out in the mini-budget.
Sterling extended early morning gains against the dollar, and is now trading at around $1.13.
The news also saw the interest rate - or yield - on UK government bonds fall, making government borrowing less expensive.
The yield on bonds due to be repaid in 30 years’ time, which dropped when markets opened on Monday morning, fell further after Hunt’s statement, to 4.35%.
Meanwhile, the yield on bonds due to be repaid in five years’ time, which underpins the cost of new five-year fixed rate mortgages, also fell to 3.86%.
The drop in yields suggests financial markets are welcoming the changes to economic plans.
Somehow the markets seem to have bought the Hunt plan. Which basically to ditch the so called mini-budget. This is surprising as one of the biggest issues with Truss’ plans was they required a massive increase in borrowing. And to address the problems created by Truss’ plans simply being announced the UK had to spend billions - that is, borrow billions more simply to address the reaction to a proposal. It is truly insane what Truss has done.
