Sajid Javid has resigned as chancellor after refusing to sack his aides in a stunning row with the prime minister.
Rishi Sunak, who was previously chief secretary to the Treasury, will replace Mr Javid.
On a day when there were expectations of only a moderate shake-up of Boris Johnson’s government, Mr Javid sent shockwaves through Westminster by quitting his role.
His departure comes less than four weeks before this year’s budget, meaning Mr Javid will leave the Treasury without ever having delivered the set-piece fiscal announcement.
Sky News understands Mr Javid was offered the chance to keep his role but resigned following a dispute with Downing Street over his close aides.Advertisement
The prime minister demanded the chancellor sack all of his special advisers following turbulence between Number 10 and the Treasury in recent weeks.
The chancellor refused and as a result both sides decided to part company.
Sky News political editor Beth Rigby revealed Mr Javid was told he was the “best person” for the job, but the price was getting rid of his advisers as well as having a new advisory unit between Number 10 and Number 11.
Sky News economic editor Ed Conway said: “I can’t think of another example of a chancellor who’s been effectively removed from office in recent years, let alone just before the budget.
“The budget is a really big moment for the government, which is changing its economic strategy.
“A lot of people have been looking towards the Treasury, looking towards Sajid Javid trying to get a sense of what this new government’s economic strategy is going to be in the post-Brexit era.
“They are shocked.”
Labour’s shadow chancellor John McDonnell claimed the events amounted to a power-grab by Mr Johnson’s chief adviser Dominic Cummings.
He said: “This must be a historical record with the government in crisis after just over two months in power.
“Dominic Cummings has clearly won the battle to take absolute control of the Treasury and install his stooge as chancellor.”
In a wider shake-up of his government, Mr Johnson had earlier sacked eight ministers.