Rishi Sunak to reject 'fairy-tale' immediate tax cuts as rivals pledge reductions worth billions

The former Chancellor and MP for Richmond is the only contender in the crowded contest to replace Boris Johnson not to promise immediate tax cuts but is expected to say that such reductions are not financially prudent until inflation is under control.

However, he will pledge to cut taxes when he judges the nation has reached that point. “Once we have gripped inflation, I will get the tax burden down,” he will say in a speech on Tuesday. “It is a question of ‘when’, not ‘if’.”

Inflation is now running at 9.1 per cent and the Bank of England has warned it could reach 11 per cent within months. The Government’s inflation target is two per cent.

Mr Sunak, who has the highest number of declared supporters among Tory MPs at around 40, will use his speech in central London to argue of the need to confront difficult economic realities.

“We need a return to traditional Conservative economic values – and that means honesty and responsibility, not fairy tales,” he will say. “I have had to make some of the most difficult choices in my life when I was chancellor, in particular how to deal with our debt and borrowing after Covid.

“I certainly won’t pretend now that the choices I made, and the things I voted for, were somehow not necessary. Whilst this may be politically inconvenient, it is the truth. My message to the party and the country is simple: I have a plan to steer our country through these headwinds.”

In the increasingly bitter contest, Culture Secretary Nadine Dorries has accused Mr Sunak of planning "his campaign to the letter" while serving as Chancellor under Boris Johnson. In an interview with GB News, she accused Mr Sunak of working on his leadership bid rather than focusing on his ministerial duties.

It comes as a poll of more than 800 Tory supporters conducted by the ConservativeHome website put Trade Minister Penny Mordaunt as the current frontrunner with 20 per cent and Kemi Badenoch, who resigned as Equalities Minister last week, in second with 19 per cent. Mr Sunak is third with 12 per cent, with Liz Truss and Suella Braverman both on ten per cent.

Today’s campaign will also see Jeremy Hunt pledge to cancel “unthinkable” planned cuts to the size of the Army, while Tom Tugendhat will set out a 10-year economic growth plan to improve productivity.

Attempts to win over Conservative MPs and members saw leadership contenders announce a raft of planned tax cuts yesterday which Labour leader Sir Keir Starmer branded “an arms race of fantasy economics” involving a collective £200bn worth of uncosted commitments.

Mr Hunt expressed a desire to “cut all taxes”, Ms Truss said she would start reducing taxes “from day one”, Attorney General Suella Braverman claimed there is “no alternative but radical tax cuts” and Chancellor Nadhim Zahawi pledged to cut income tax in 2023 and 2024. Former Health Secretary Sajid Javid’s plan included scrapping the national insurance levy to fund health and social care services he previously backed.

Mr Javid, who worked in banking, refused to say where he had been based for tax purposes when asked if he used tax havens - and struck out against the "poisonous" turn the campaign is taking.

He warned the Conservatives face “electoral oblivion” if they do not change, as he urged colleagues to “pull together”.

“I’m sorry to say that, looking at some of the stories in the weekend press, it’s not been our best start,” Mr Javid said, in a speech in Westminster.

“Poisonous gossip, attack memos, allegations thrown around.

“This isn’t House Of Cards or Game Of Thrones. And the people who are here just because they enjoy the game are in the wrong place.”

Mr Sunak's position on tax cuts is being backed by former Tory chancellor Lord Lamont.

Ahead of the launch event in central London, Lord Lamont said: “The country faces an extremely serious economic situation.

“To weather the storm requires a high degree of competence, matched by the courage to make really tough decisions. The public understand this better than many politicians and will respond.

“Tax cuts unmatched by spending cuts achieve nothing. Yes, the tax burden needs to be reduced, as Rishi also believes, but only as and when the public finances allow.

“Mrs Thatcher often said dealing with the deficit comes even before reducing taxes. Deficits are just delayed taxation.

“Rishi has the skill, determination and ideas to get us through this difficult period into more prosperous times.”

One of the key backers of Ms Truss accepted that public spending would need to be reduced to fulfil pledges of tax cuts.

Business Secretary Kwasi Kwarteng warned of possible “very dim prospects” if growth is not created to avoid “stagflation”, where slow economic growth coincides with high inflation.

“And that’s why we need to put incentives in the economy, and the way to do that isn’t by raising tax,” he told BBC Radio 4’s Today programme.

He conceded “there needs to be spending reductions” to fund tax cuts, but refused to say which services would be hit.

Winner to be announced on September 5

The Tory leadership contest will not conclude until September, it has been announced.

Sir Graham Brady, chairman of the 1922 Committee, said nominations to be leader of the Conservative Party will close today. A first ballot of MPs will take place on Wednesday and candidates will be expected to have 20 supporters.

Candidates must win at least 30 votes from party colleagues to progress. A second ballot is planned for Thursday.

If the number of candidates has not then been narrowed down to two, ballots are expected to begin again on Monday next week. A new leader will be announced on September 5 after party members decide between the final two candidates.

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