Liz Truss has defended her plans to cut taxes costing at least £30billion a year as ‘affordable’ as the economic policies of Tory candidates for prime minister come under scrutiny.
Former Chancellor Rishi Sunak did not plan to cut personal taxes until at least the fall of next year to avoid fueling inflation.
But Ms Truss, the Foreign Secretary, has promised an emergency budget to immediately reverse the rise in National Insurance as part of her proposals to boost growth.
The financial plans of the final candidates for the post of Prime Minister were increasingly divided as they battled for the Tory member votes needed to win the race for No 10.
Robert Joyce, deputy director of the Institute for Fiscal Studies (IFS) think tank, estimated Ms Truss’ tax cuts at “over £30bn a year – and possibly much more”.
The plans “mean higher borrowing or less government spending, or a combination”, he said, although their impact remains uncertain as Ms Truss’ plans “have yet to be fleshed out”.
“Without spending cuts, the tax promises would likely lead to the violation of current fiscal rules, and Ms. Truss hinted that fiscal rules could change,” Joyce added.
But Ms Truss defended her plan to scrap the planned corporate tax hike and suspend green levies on energy bills as ‘not a gamble’.
“My plans don’t go beyond the wiggle room. I’m very clear they’re around £30billion in cost, and those are affordable within our current margin,’ she told broadcasters during a visit to Peterborough.
“But what’s not affordable is to raise taxes, stifle growth, and end up in a much worse situation.”
In his speech to Tory members after MPs selected the final two candidates, Mr Sunak argued that he alone was capable of beating Labor in a general election.
But Ms Truss hit back, saying the Tories would struggle to win under the current economic policy written by Mr Sunak when he was at No 11.
Mr Sunak has pledged not to cut taxes until soaring inflation rates are brought under control, fearing such a move could deepen the crisis.
It emerged Thursday that he doesn’t believe he can cut personal taxes until at least the fall of 2023, a view that is expected to further anger the conservative right.
The IFS noted that its plans see the tax heading to its highest sustained level in 70 years.
Mr Sunak insisted he was a ‘Thatcherite’ as he sought to address concerns from Tory members that he backed a big, high-tax state approach.
Some fear Mr Sunak has wasted his chances by stepping down as chancellor, which has angered some Tories by contributing to the downfall of Boris Johnson.
Ms Truss insisted she would have liked Mr Johnson to remain Prime Minister, describing his record as ‘extremely positive’.
Mr Sunak was the parliamentary party favourite, winning 137 votes to Ms Truss’ 113 among Tory MPs.
But bookmakers have put the Foreign Secretary ahead, with early indications suggesting she is more popular with Tory members ahead of a campaign summer.
A small, unrepresentative poll of 730 members on Wednesday and Thursday again saw Ms Truss in the lead.
Some 49% of those polled said they would support the foreign minister, while 31% chose Mr Sunak. The others were undecided or said they would not vote.
The couple fought to win the support of local politicians on Thursday when they took part in a private election campaign for the Association of Conservative Councilors.
They will then tour the UK to take part in 12 hustings for Conservative members who will vote for their next leader, with the result announced on September 5.