Kwarteng’s ‘shock and awe’ entrance leaves Treasury | Kwasi Kwarteng

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Kwasi Kwarteng’s “shock and awe” approach to taking over as chancellor has sent jitters among civil servants, 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 finance ministry.

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

They said it was proof that he was willing to imitate Liz Trusswho said earlier this week that she was willing to be unpopular in order to push through what she believed were the right changes for the country.

A finance minister said the building was “still angry and really shocked” by Scholar’s sudden departure and really lacked its gravitas as Kwarteng rushes through a brand new economic direction and fluctuating tax cuts without the full cost being disclosed.

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

A third Whitehall insider suggested Scholar could have “shot up” that Kwarteng was plowing ahead with significant tax changes despite the lack of evidence on costs, as the Office for Budget Responsibility is not expected to release a forecast on Friday. “It seems a bit like we’re avoiding getting our own homework marked,” sighed one Tory MP.

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

Liz Truss greets Kwasi Kwarteng with a hug in July 2022
A former financial insider said the friendliness of Kwarteng and Truss was a problem as there should be healthy tension between No 10 and No 11. Photo: Toby Melville/Reuters

Giles Winn, who was a special adviser to former chancellor Philip Hammond, recalled how Kwarteng was then a parliamentary private secretary – a ministerial assistant who was supposed to be their “eyes and ears” among colleagues.

“The leadership contest exposed a deep division in the party over fiscal policy that has kind of been obscured by other events,” Winn said. “The chancellor will be the key to healing this rift over time – and I will certainly be aware of that, Kwasi.”

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

“There needs to be a healthy tension between the prime minister and the chancellor,” he said. “It is natural for a prime minister to want to spend money on things, but the chancellor must have an eye on the long term and not let the debt swell out of control. You need a chancellor who will push back and fight against that corner in the meetings with the Prime Minister.

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

A former senior Treasury official also expressed alarm at the interplay of the government’s tax cut while the Bank of England raised interest rates amid fears Britain could slip into recession. “There will be considerable concern about the strategy and where the public finances are going,” they added.

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

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

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