Sunak attacks Truss’s tax plans as 10.1% inflation adds to cost-of-living crisis

Rishi Sunak has warned that Tory leadership rival Liz Truss’s tax plans would add £50 billion to borrowing while failing to give direct support to the most vulnerable in society, as the cost-of-living crisis deepened.

The former chancellor said the Foreign Secretary would be guilty of “moral failure” if she does not focus on the nation’s poorest, and warned her policies could further stoke inflation.

Ms Truss instead insisted “taxes are too high and they are potentially choking off growth”, as she promised an emergency budget to tackle the situation.

The clash in visions at a hustings in Belfast came as spiralling food prices and the cost of other essentials pushed inflation to a 40-year high.

The Office for National Statistics said the Consumer Prices Index measure of inflation hit 10.1% last month, as the Tory party faced criticism for focusing on the race to replace Boris Johnson rather than announcing fresh support.

Mr Sunak said this autumn and winter he would “especially” support the most vulnerable in society, as he warned “millions of people are at risk of a very tough time”.

He told party members: “What I will not do is pursue policies that risk making inflation far worse and lasting far longer.

“And especially if those policies seem to amount to borrowing £50 billion and putting that on the country’s credit card then asking our kids and our grandkids to pick up the tab, because for me that’s not right, it’s not responsible, and it’s certainly not Conservative.”

He alleged that Ms Truss’s plan is to say “well I believe in tax cuts, not direct support” while announcing changes that would see someone on her salary receive £1,700 of help.

Someone on the national living wage would get a tax cut of £1 a week, he said, while it is worth “precisely zero” for a pensioner who is not working.

“If we don’t directly help those vulnerable groups, those on the lowest incomes, those pensioners, then it will be a moral failure of the Conservative Government and I don’t think the British people will forgive us for that,” Mr Sunak said.

He also vowed to be “much tougher” on the welfare system, arguing that one of the main problems facing firms is “getting access to workers and getting people to actually work”.

He said: “I strongly believe that part of the answer to this problem is being much tougher on our welfare system to get people off benefits and into work.

“If there are hours to do, if there is a job going, people should have to take the job as opposed to just being able to stay on benefits, and that is the change that I want to bring.”

Ms Truss alleged that less revenue would be raised for the public purse if taxation remains too high because businesses are less likely to invest and people are less likely to set up businesses or “go into work”.

The frontrunner in the race told Tory members: “I think we have got to the stage in our economy where taxes are too high and they are potentially choking off growth.”

Labour hit out at Mr Sunak’s comments on the welfare system, with shadow work and pensions secretary Jonathan Ashworth accusing the former chancellor of being untrustworthy.

Mr Ashworth said: “On Rishi Sunak’s watch, overall employment shrank compared to pre-pandemic and our economic inactivity rates are still climbing.

“Working people were clobbered with 15 tax rises when he was chancellor and his dud employment schemes failed to deliver the new jobs he promised.

“When it comes to helping people into work you can’t trust a word Rishi Sunak says.”

During the Northern Ireland leg of the UK-wide battle for Downing Street, the contenders both faced questions on how they would get powersharing back up and running in Stormont.

The Democratic Unionist Party has refused to re-enter a devolved Executive in protest against the post-Brexit trading arrangements for goods crossing the Irish Sea.

Ms Truss said progress through Parliament on her controversial Northern Ireland Protocol Bill, which would allegedly break international law, will “see powersharing re-established”.

She insisted the legislation is “absolutely legal” and vowed to be “very clear” with US House of Representatives speaker Nancy Pelosi over the Northern Ireland Protocol, amid fears in Washington that the UK’s action threatens the Good Friday Agreement.

Mr Sunak said there is “probably not an enormous amount of disagreement” between the rivals on the subject, as he too backs the legislation.

But he said the Bill “will take time to pass” so he will negotiate with the EU, France and the Republic of Ireland to seek a swifter resolution if possible.

“If that negotiated outcome is there it will be far quicker than waiting for the Bill to pass, so it’s worth at least trying – but be in no doubt about my resolve to fix the situation with the protocol, which I think will unlock the powersharing and bring people back together,” he said.

It comes as Jacob Rees-Mogg, the minister for Brexit opportunities, suggested a cost-saving push in Whitehall could have gone further if it was not for Mr Sunak.

In the latest attack on the former chancellor by a senior Truss supporter and Johnson loyalist, Mr Rees-Mogg claimed a “tight control on spending and an emphasis on reducing fraud” had saved £3.5 billion between 2020 and 2021.

Mr Rees-Mogg, who is also the minister charged with government efficiency, wrote in the Telegraph: “Earlier this year, the Efficiency and Value for Money Cabinet Committee was established with a mission to save the taxpayer over £5.5 billion each year.

“This was sadly under-utilised by the former chancellor, but it must be a vital tool in the next prime minister’s arsenal for cutting waste and inflation.”