Key elements of Liz Truss’s mini-budget have been reversed by her new chancellor (Picture: PA)

Liz Truss watched in silence as new chancellor Jeremy Hunt told MPs he had shredded her Trussonomics strategy of tax breaks – and warned the country to brace itself for big spending cuts instead.

Mr Hunt – appointed after the prime minister fired ally Kwasi Kwarteng only three days before – also revealed her two-year energy bill cap for families would now last only six months until a rethink.

‘We will reverse almost all the tax measures in the growth plan three weeks ago,’ Mr Hunt said as Ms Truss stared straight ahead. She had earlier sent Commons leader Penny Mordaunt in her place to face an urgent question from Opposition leader Sir Keir Starmer.

To taunts her boss was ‘hiding under a desk’, Ms Mordaunt said the PM was attending to ‘very serious matters’.

It emerged she was actually meeting Tory backbench chief Sir Graham Brady, who would oversee any new leadership contest. He flew back from holiday as more of her MPs demanded she go – and as a poll gave Labour a record 36-point lead over the Tories – suggesting the SNP could win more seats and be the official opposition after the next general election.

Redfield and Wilton Strategies put Labour on 56 per cent, the Tories on 20 and the Liberal Democrats on 11. That could see the Tories win just 22 seats, behind the SNP on 42, the Lib Dems on 47 and Labour on 515.

Jeremy Hunt addresses the Commons (Picture: UK Parliament/Jessica Taylor)

Veteran Tory MP Sir Charles Walker said: ‘I can’t think of a time that there has been such a monumental foul-up. I’m so cross. I’ve had enough and I think quite a few of my colleagues have had enough. If she doesn’t go right now, it will not be her decision.’

Ms Truss took her seat on the front bench moments before Mr Hunt delivered his address – adding to a statement released yesterday morning in a bid to calm financial markets.

‘We need to do more, more quickly, to give certainty 
to the markets about our fiscal plans,’ he said, adding that he 
had reversed her planned basic rate income tax cut from 20p to 19p indefinitely. The move went further than a U-turn as it broke a promise by previous PM Boris Johnson and former chancellor Rishi Sunak to bring it in by 2024.

After instantly ditching her corporation tax freeze on Friday, he also abandoned cuts to dividend tax rates and VAT-free shopping for tourists, dropped a planned freeze on alcohol duty and a reform of self-employed tax rules.

He insisted the tax changes would save £33billion – but warned the PM’s promise of no new taxes would also go.

Penny Mordaunt stood in for the PM earlier in the day (Picture: UK Parliament/Jessica Taylor)

He said he was demanding every cabinet colleague came up with spending cuts by the end of the week. He hinted at a windfall tax on energy companies – another huge U-turn – suggested axing the triple-lock on pensions was now ‘on the table’ and would not say if benefits would rise with inflation.

But cuts to stamp duty and national insurance will stay, as will the end of a cap on bankers’ bonuses, which he said would raise more money. He said he backed Ms Truss’s aim of growth and insisted cuts would not be as harsh as austerity when the Tory and Lib Dem coalition took over from Labour in 2010, after the financial crash.

But the former health secretary told MPs: ‘This government will take the difficult decisions necessary to ensure there is trust and confidence in our national finances. That means decisions of eye-watering difficulty.

‘Every one of those decisions will be shaped through core compassionate conservative values and prioritise the needs of the most vulnerable.’ Markets reacted well to his words. The pound rose two cents against the dollar and the cost of government borrowing fell.

Mr Hunt and Ms Mordaunt – touted as successors to the PM along with Mr Sunak – both professed loyalty to her.

The chancellor said she ‘backed him to the hilt’ in his decision to tear up her plans. Ms Mordaunt apologised for the way the mini-budget had been received but praised the PM’s U-turn. ‘The decision would have been a very tough one politically and personally,’ she said, but was taken ‘in the national interest’.

Ms Truss is due to at prime minister’s questions tomorrow, hours before Mr Brady’s 1922 committee discusses a potential rule-change which could see her deposed after ten weeks in office.

Shadow chancellor Rachel Reeves said of the U-turns: ‘An arsonist is still an arsonist, even if he runs back into a burning building with a bucket of water.’

And forlorn Tory backbencher Ben Bradley tweeted: ‘Right back where we started – just far less popular.’

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Awkward times in the Commons.