Truss lays into Rishi: Leadership hopefuls clash over tax hikes

Truss lays into Rishi on tax rises: Leadership hopefuls clash over cost of living as Sunak’s Tory rivals vow to spike the hike in the first of three TV debates

• Liz Truss warned ‘you cannot tax your way to growth’ in the first of three debates
• The former Chancellor said her plans to borrow more were just ‘a fairytale’
• Elsewhere, Tom Tugendhat scored highly with viewers as Mordaunt stumbled 

The Tory leadership race exploded into life last night as Liz Truss and Rishi Sunak clashed over tax in the first live television debate.

In an extraordinary showdown, the Foreign Secretary savaged the former chancellor over his hike to national insurance.

Miss Truss warned ‘you cannot tax your way to growth’ as she also criticised a corporation tax rise planned for next year. Mr Sunak told her: ‘Borrowing your way out of inflation isn’t a plan, it’s a fairytale.’

But she hit back: ‘I think it is wrong to put taxes up.’

In the 90-minute debate on Channel 4, Mr Sunak attempted to defend his record in No 11 as he attacked his rivals over their plans for tax cuts.

Stressing the need to grip inflation, he told them: ‘We cannot make it worse, inflation is the enemy that makes everyone poorer. It erodes your savings, it erodes your living standards, it means that those of you who have mortgages will see your interest rates go up higher and higher.

The debate on Channel 4 saw extraordinary spats over tax cuts, transgender rights and the cost of living

Rishi Sunak got into a heated argument with Foreign Secretary Liz Truss over taxes, telling her borrowing money to provide tax cuts is a ‘fairytale’

Meanwhile Tom Tugendhat came out on top with viewers, earning applause and laughs from the overwise deathly-silent audience

‘I don’t think the responsible thing to do right now is launch into some unfunded spree of borrowing and more debt, that will just make inflation worse.’

But Miss Truss insisted that reversing the national insurance rise, which was introduced in April, could be paid for by borrowing more like other countries such as US, Canada and Japan.

‘They have taken a sensible decision that at this time of a global economic crisis, just when we’re trying to help businesses grow, when we’re trying to help families, it is not the right time to put up taxes.’

Mr Sunak replied: ‘There’s no such thing as Covid debt.

‘Debt is debt and the answer to too much borrowing can’t be yet more borrowing.’

After the former chancellor accused Penny Mordaunt of making ‘double-digit billion pound promises’ on cutting VAT on fuel and increasing income tax thresholds, the trade minister hit back: ‘Two things, Rishi, that you haven’t realised – I know you know people are going to need more help this autumn, but actually people need help now and you are going to have to do something on taxation.

‘Next April we are going to be one of the most uncompetitive nations in terms of our tax competitiveness… that cannot be allowed to happen.’

And rival candidate Tom Tugendhat revealed that when Mr Sunak was chancellor, he asked how the rise could be justified and was told it was because Boris Johnson wanted it.

Miss Truss insisted that reversing the national insurance rise, which was introduced in April, could be paid for by borrowing more like other countries such as US, Canada and Japan

Penny Mordaunt (right) gave a safe and rather muted appearance, while Kemi Badenoch (left) performed better than many expected

‘You set up your position and I asked why on earth this was going to be necessary, you told me because the boss wanted it,’ said the army veteran. A snap poll found the public believed Mr Tugendhat had performed best in the TV debate. A survey of 1,159 voters, conducted by Opinium, showed more than a third (36 per cent) backed him.

Some 25 per cent said Mr Sunak was best, ahead of Miss Mordaunt and Mrs Badenoch both on 12 per cent and Miss Truss on 6 per cent.

The bruising debate also saw Miss Mordaunt accused of not telling the truth on her record on trans rights. The Tory leadership hopeful, who is now favourite at the bookies, was targeted by rivals Miss Truss and Kemi Badenoch in a pincer movement.

Asked about her time as minister for women and equalities, Miss Mordaunt insisted that she had ‘never been in favour of self-ID’, whereby a trans person could legally change their gender without, for example, a medical diagnosis. But asked if she accepted this account, Mrs Badenoch, who resigned as equalities minister this month, responded: ‘My understanding was that [a] previous minister who had done the role had wanted self-ID and that was something that I reversed with Liz.’

Miss Mordaunt hit back: ‘That’s not correct and this will all be on record in government.’

The Iron Lizzie’s Maggie homage 

Liz Truss made a conscious fashion statement at the Tory leadership contest debate last night.

Sporting a white pussy-bow blouse, the foreign secretary was reminiscent of Margaret Thatcher who wore an identical outfit for her 1979 election broadcast.

Miss Truss has previously recreated iconic images of Mrs Thatcher including being snapped riding in a tank in Estonia last year.

Mrs Thatcher was famously pictured in a tank while visiting troops in West Germany in 1986.

Liz Truss wore an almost identical blouse and jacket to Margaret Thatcher in 1979

But Mrs Badenoch insisted: ‘It is on record.’

Miss Truss, who succeeded Miss Mordaunt as minister for women and equalities, said when she ‘started in the job, there was a plan to move forward on self-ID’.

In the wide-ranging debate, the five candidates also discussed Mr Johnson. They all turned on him and declined to say he was honest. Asked to give a yes or no answer, Mr Sunak replied: ‘I tried to give him the benefit of the doubt for as long as possible and I reached the conclusion that I couldn’t. There were a number of reasons that I resigned but trust and honesty was part of that.’

Asked the same question about whether the Prime Minister was an honest man, Tom Tugendhat was applauded by the audience as he replied: ‘No.’ Earlier, at an online hustings organised by the Conservative Home website, the candidates were all asked about their own ‘greatest weakness’.

Mrs Badenoch said hers was ‘allowing my sense of humour to look like I’m flippant about issues’, while Mr Sunak said he works hard and strives for perfection. Miss Truss said she has in the past been ‘excessively over-enthusiastic’.

Mr Tugendhat, who has made his military background a central pillar of his campaign, said: ‘I know this is going to surprise you but I may talk about the Army a little too much, which is possibly a weakness.’

Miss Mordaunt said: ‘I was tempted to say Burmese cats as I have four and introducing them into No 10 might present some challenges with Larry.’ All five candidates will take part in another television debate on ITV at 7pm tomorrow, with a further showdown on Sky News on Tuesday.

The next round of voting by Tory MPs will take place on Monday, with subsequent rounds if required until there are just two candidates, who will then battle it out over the summer to win the support of Conservative members.

Their choice of the next prime minister will be announced on September 5. Mr Johnson will then formally tender his resignation to the Queen.

Additional reporting: Sophie Huskisson and Alice Wright

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