Liz Truss or Kwasi Kwarteng? The blame game has started – and it ain’t pretty

After Black Wednesday 2022, it’s only natural that everyone – from the man in the Dog and Duck, to the current occupant of No 11 – is looking for the culprit

The blame game has begun, and it ain’t pretty.

After the run on the pound, the run on the pension funds and the multibillion-pound cost to the British economy, I suppose it’s only natural that everyone – from the man in the Dog and Duck, to the current occupant of No 11 – is looking for the culprit.

Conservative peer Lord Daniel Hannan was first out of the traps yesterday, with an article for Conservative Home headlined: “No, the pound isn’t crashing over a trifling batch of tax cuts. It’s because the markets are terrified of Starmer.”

When I put that to Sir Keir Starmer himself, he snorted with derision.

The financial secretary to the Treasury, Andrew Griffith, tried a different tack when he was pushed out of the door to talk to broadcasters, after the Bank of England started to spend a cool £65bn to stop pension funds collapsing yesterday.

“All major economies” are suffering volatility, he explained. Vladimir Putin’s war was afflicting “every major economy”, he said, repeating the phrase three times to check we’d got the point.

Conservative MP Sir John Redwood had another theory when I spoke to him on Channel 4 News last night. I think it’s worth quoting at length to get the full impact.

He said: “I think you have to understand this began with the Federal Reserve Board big increase in interest rates and statement that it wanted to see American rates go considerably higher. That led to a bond rout, first of all hitting the American markets, and that poured over into the UK and European markets. And then, at exactly the point where all that was happening, the Bank of England decided that it would start a sales campaign of some of the bonds it owns itself. And that was the accelerant to the decline in the British bond market.”

A sales campaign? Interesting stuff.

A fair few of his colleagues vehemently disagree with this take, and some are now beginning to say it publicly. “It’s certainly not the international situation,” the chair of the Treasury select committee Mel Stride said, laying blame instead on Trussonomics.

Before Friday’s mini/mega-Budget, Russia could indeed be blamed for soaring inflation, and therefore the prospect of higher interest rates to try to deal with it. But many Tory MPs are now holding the new prime minister and her chancellor responsible for the speed with which mortgage interest rates are now being adjusted, the additional costs on food imports and the way pensions were quite suddenly put in jeopardy.

Some privately want Truss to sack Kwasi Kwarteng. Others want her to go herself – and it’s worth remembering a majority of Tory MPs never wanted her in No 10 in the first place.

Will they vote against the finance bill? We’ll see. And talk of letters of no confidence once again going in remains, for now, just talk.

So it will be left to the British public to decide who to blame when a general election is held. That’s unlikely now to come sooner than the end of 2024.

Recent opinion polls giving Labour a double-digit lead suggest the last few days may have cost the Tories their reputation for economic competence, just as Black Wednesday 30 years ago brought about the Major government’s demise.

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One veteran Tory MP told me last night he doesn’t believe his party will recover from this – “and really it doesn’t deserve to... this is what happens when you let your party membership choose the PM. We needed a pragmatist not an ideologue.”

So that’s one more thing to blame: the Conservative Party leadership rules, introduced by Lord Hague. He said recently he now deeply regrets his innovation.

None of this, though, will be of much comfort to the homeowners facing the likelihood of having to hand their keys back to the bank. If the Conservatives will take time to recover from this financial shock, so too will the country and its citizens.

Cathy Newman is presenter and investigations editor of ‘Channel 4 News’