Liz Truss’s tax-cutting plans would be ‘sugar rush boom’, says Rishi Sunak

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Rishi Sunak has claimed rival Liz Truss’s plans for vast tax cuts would create a “sugar rush boom” as he denied his way of tightening fiscal policy would lead to a recession.

The Tory leadership hopeful was grilled on the economy, immigration, and his wife’s tax status for nearly half an hour by veteran political journalist Andrew Neil, with whom Ms Truss has so far declined to sit down.

Amid stern questioning, he also claimed Tory manifesto promises were broken because of the pandemic.

Early on, Mr Sunak used the Channel 4 interview to take a fresh swipe at Ms Truss’s approach to tax, an issue that has dominated the bitter race for No 10.

Neil challenged the former chancellor over his plans to tighten fiscal policy at a time when “the global economy grinds to a halt, as monetary policy has been tightening”, suggesting he would “ensure a recession”.

Mr Sunak said: “I think it’s absolutely the right thing to do to not put fuel on the fire of the inflation problem that we already have.

“What we should do is focus on long-term growth because that’s what we need, sustainable growth, not a sugar rush boom that will make us feel better for months, but then it runs out of control, let inflation get set into the system, let the Bank of England have to react with even higher interest rates.”

Mr Sunak said a recession was “not the forecast of the majority of most independent forecasters here in the UK”.

He reiterated his priority was to “get to grips with inflation as quickly as possible because inflation makes everybody poorer”.

Mr Sunak also defended his policy to hike national insurance thresholds as “undoubtedly, objectively progressive” when Mr Neil suggested it penalised workers, and denied that his pledge to cut VAT on energy bills was a U-turn that demonstrated “bad judgment”.

Neil asked him: “In February you told the Commons that cutting VAT on energy bills would, these are your words, ‘disproportionately benefit wealthy candidates’.

“Now, as your campaign fails to gain traction among Tory members, you propose to suspend VAT on energy bills – not just bad judgment but lack of consistency.”

Mr Sunak replied: “No, absolutely not. I’ve always said from the beginning that as we knew more about what energy bills would actually be in the autumn that I will stand ready to do more.”

He also claimed Tory manifesto promises were broken because of Covid.

The former chancellor told Neil that raising taxes and an increase in debt had come amid a “once-in-a-century event”.

He said: “You made a very pointed comment about breaking manifesto promises… without recognising that we had a set of manifesto promises about fiscal policy – taxes, borrowing and spending.

“Do you know what happened? We got hit by a pandemic. A once-in-a-century event and that meant things changed.”

On immigration, the former chancellor said there was a “finite amount” of asylum seekers the UK can accommodate.

He rejected Mr Neil’s assertion that his proposed cap on the number of asylum seekers accepted each year is “unsavoury”, as he argued for an “orderly” and “controlled” system for taking people in.

Mr Neil pressed him on why he wanted to turn away “even legal asylum seekers”.

Mr Sunak replied: “Because there is a finite amount of asylum seekers that we are able to integrate and accommodate.

“At any moment in time, Andrew, there are probably a billion people that would love to move to the UK because this is an amazing country, so we clearly can’t accept all of those.”

The millionaire ex-chancellor looked uncomfortable as he batted away questions about his wife’s previous non-domiciled tax status – an arrangement which reportedly saved her millions, saying: “I’m the one running for office and not my wife.”

Mr Sunak was seeking to regain his footing in the leadership race after rival Ms Truss won a major endorsement from Defence Secretary Ben Wallace.

Asked during a visit to Norfolk on Friday if she was confident she was now set to win the contest, the Foreign Secretary said: “I’m not at all complacent. I’m fighting for every vote across the country.”

In a thinly veiled swipe at the former chancellor’s record, she said it would be “risky” for the country to continue along the current economic path.

Ms Truss said the way to get growth is to “help people and businesses keep more of their own money”, saying the “number one priority should be avoiding recession”.

Mr Sunak's seemingly uphill battle in his bid to become prime minister suffered further setbacks as rival Liz Truss won a major endorsement from former Tory leadership rival Tom Tugendhat, who described them as being “founded on true Conservative principles” as he came out in support of her.

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She said: “What is risky is carrying on on the same economic path, which is currently forecast to lead us to recession. That is the risk.

“What I’m talking about is unleashing opportunity, unleashing growth, keeping taxes low. That will see the economy grow, and it will see us being able to pay back our debt quicker.”

Asked if she would be watching Mr Sunak’s Channel 4 interview, Ms Truss said she would be marking her wedding anniversary.

She told reporters: “It’s my wedding anniversary today. So I’ll be celebrating 22 years of being married to my husband.”

They were questioned separately on an array of policy areas in hustings with Tory members on Thursday, the first of 12 sessions for the party faithful across the country to grill the final two contenders, before voting for the next Tory leader and prime minister closes on September 2.