With his proxy Jeremy Hunt as the real prime minister, Rishi Sunak has won

It is hard to believe the scale of Liz Truss’s U-turn: she has reversed the result of the Conservative leadership election

Jeremy Hunt is in effect our new prime minister. The titular prime minister held a press conference yesterday in which she read out the terms of her surrender. Taxes will go up when she promised they would go down, and public spending “will grow less rapidly than previously planned” when she said she had no plans for cuts.

The new prime minister spoke to the nation this morning and explained what was happening in sentences that followed each other and conveyed meaning. This was such a revolutionary change after the hallucinatory experience of the past 39 days that it should have an instant calming effect on the markets.

“There were mistakes” in the mini-Budget, he said. It was a mistake to cut the top tax rate, and it was a mistake to “fly blind” by failing to get the Office for Budget Responsibility (OBR) to say that “the sums add up”. He said: “The prime minister’s recognised that. That’s why I’m here.”

To say that Hunt made sense where Liz Truss did not is not just my opinion. She actually told the Commons on Wednesday that “it would be wrong … to be raising taxes, because it will bring less revenue in”. Two days later, in her hostage video, she accepted that putting up corporation tax “will raise £18bn per year”.

It is hard to believe the scale of her U-turn. She has reversed not just the main points of Kwasi Kwarteng’s emergency Budget – and more of it will be reversed shortly, as the cut in the basic rate of income tax will be abandoned – and she has reversed not just Kwarteng’s appointment as chancellor. She has reversed her entire premiership, in less than six weeks; she has reversed the result of the Conservative leadership election.

Rishi Sunak has won. His proxy is now the real prime minister, who will now implement the policies that Sunak would have pursued. Except that, as Rachel Reeves, the shadow chancellor, says in one of her deadly snipes from the other side, “the damage has been done”. The public finances are in a worse shape than they would have been if Sunak had actually won. Borrowing costs will now be about £10bn a year higher than they would have been as a direct result of the loss of confidence in the markets caused by Kwarteng’s mini-Budget, according to the Institute for Fiscal Studies.

Tory members, having voted for fairytale tax cuts, find themselves in a morality tale of gritty realism, with a government that may end up raising taxes by more than Sunak planned.

Hunt is in charge. Truss will be allowed to play with her toddler blocks in a side room, but he will make the decisions. He will decide on the balance between tax rises and spending cuts needed to stop debt from rising as a share of national income within five years.

He is in an immensely powerful position, but the period up to his Halloween Budget is his 16 days of maximum power. After that, his leverage will weaken. He may imagine that, if he makes a success of the medium-term fiscal plan, he will be well placed to succeed Truss as the unity candidate. Yet “success” is a mirage. There is a minimum condition for his Halloween statement, which is that the sums must add up and the OBR must put a tick in the margin. But, as Hunt said this morning, this requires “very difficult decisions”, which, as he didn’t say, will be unpopular.

The relief that the country’s immediate future is in the hands of someone who accepts the rules of arithmetic, and who can master the basics of communication, will probably dissipate quickly as the economic crisis deepens. Inflation is high; wages are being squeezed, especially in the public sector; and the threat of rising mortgage costs is building ominously.

Against such a background, the plotting to oust Truss seems tasteless, yet it will continue because the opinion polls are unlikely to turn around, and Tory MPs cannot be blamed for trying to act in their own best interests. Even if Truss is powerless, she will still be there, taking up space and claiming to have taken decisive action when she faces Keir Starmer at Prime Minister’s Questions every week.

Yet we are back to the impasse in which the Conservative Party found itself at the start of this year: resolved – even if many grassroots members have forgotten it – that the prime minister had to go, but unable to agree on who the replacement should be. Eventually, Boris Johnson managed to push his MPs too far, their patience snapped and the party contrived to replace him with someone worse.

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Logically, Truss has been such a disaster that the next change would have to be an improvement. But you can see why Tory MPs might hold back. The rational option would be Sunak as prime minister, Penny Mordaunt as his deputy and Hunt as chancellor, without giving the party members a say in the matter, but who will make it happen?

The situation is reminiscent of the John Major years after the collapse of his economic credibility in 1992. It was apparent that switching to Michael Portillo, who chose to shut up when Major challenged him to put up, or to John Redwood, would make matters worse. The only prospect of saving a few Tory seats from the cataclysm of 1997 would have been to put Michael Heseltine in as prime minister. But no one would make it happen, and Major hugged him close as deputy prime minister instead.

Truss is in a weaker position, so I think they will get rid of her. But not yet. For the time being, Tory MPs have an acting prime minister who can at least stop the party’s reputation from sliding further.