Sunak pledges income tax cuts as he battles for votes in Tory leadership bid

The former Chancellor, who has strongly criticised his rival for promising “morally wrong” tax and spending plans which would increase borrowing, dismissed suggestions his own plan to cut income tax was motivated by the need to gain ground in the election.

Mr Sunak has committed to taking 4p off income tax within seven years if he becomes prime minister, in a last-ditch attempt to win over Tory members before they start receiving their ballots this week.

Cutting the basic rate from 20p in the pound to 16p would amount to a 20% tax reduction, the largest cut to income tax in 30 years.

Consistent

Mr Sunak insisted his plan was “consistent” with his record in office and his leadership campaign, which has largely focused on the need to get inflation under control rather than tax cuts, insisting it could be funded by the proceeds of economic growth.

“I want to make sure that we can pay for it, I want to make sure that we can do it alongside growing the economy, so that’s the vision that I have,” he said.

The Foreign Secretary has promised around £30 billion of tax cuts within weeks of taking office if she wins, as part of a package to help people struggling with the rising cost of living.

Ms Truss has promised to tackle economic orthodoxy and overcome resistance from the Treasury to implement her tax-cutting plans.

But Mr Sunak laughed off the suggestion he was endorsing Treasury orthodoxy, telling BBC Radio 4’s Today he “ripped up the rulebook” as chancellor to implement the furlough scheme during the pandemic.

“Today, what you saw from me was an exciting, radical but realistic vision about how to cut taxes for working people over the coming years.

“What people saw from me in the pandemic was a chancellor who moved with incredible speed and radicalism and boldness to tackle what was a significant economic challenge.

“What you will get from me as prime minister is that same set of energy to tackle all the problems that we face – that’s why I’ve been talking about the NHS backlogs, reforming public services, confronting some of the woke culture and political correctness, tackling illegal migration.

“I want to get on and fix those challenges and I want to build an economy which takes advantage of the opportunities of Brexit, bringing the same degree of radicalism that I brought to the other aspects of my job to growing the economy and then cutting people’s taxes.”

Loyalty

Mr Sunak also took aim at Ms Truss and her allies over their loyalty to Boris Johnson.

“I do think there is a risk that people are looking at the last few months of the Government with slightly rose-tinted glasses about what it was really like, because it wasn’t working as it should and crucially the Government found itself on the wrong side of a very serious ethical issue and – for me – also going down the wrong economic path,” he said.

In response to Mr Sunak’s tax plans, Treasury Chief Secretary Simon Clarke, a supporter of Ms Truss, said: “We cannot afford to wait to help families, they need support now. Liz will cut taxes in seven weeks, not seven years.”

A Truss campaign source said it was “a shame” Mr Sunak had put up taxes rather than cut them as chancellor and “the public and Conservative Party members can see through these flip flops and U-turns”.

Ms Truss’s campaign gained further momentum with the endorsement of Nadhim Zahawi, the latest party heavyweight to get behind the frontrunner.

The Chancellor praised Ms Truss’s “booster” economic approach while implying that his “doomster” predecessor in the Treasury subscribed to the “status quo” and a “stale economic orthodoxy”.

Ms Truss and Mr Sunak take their campaigns to Exeter on Monday evening as they continue to seek support from members in visits around the country.

The endorsement of Mr Zahawi, a former leadership rival who had earlier indicated he would not publicly back a contender, followed that of former Northern Ireland secretary Brandon Lewis and senior Tory Tom Tugendhat.

Mr Sunak’s bid for the premiership was given a boost by the endorsement of Damian Green, the chairman of the One Nation group of Conservative MPs, who said he trusted the former chancellor to “unify the party” and “conjure up a solution” to crises.

Tax has dominated the bitter race for No 10, with Mr Sunak advocating prudence with the nation’s finances, while Ms Truss is pledging large tax cuts of more than £30 billion, paid in part by more borrowing.

Mr Sunak previously faced accusations of a U-turn when he last week vowed to temporarily slash VAT on energy bills.

Ms Truss’s latest policy announcement focused on farming, which she vowed to “unleash” from EU regulations in order to improve the nation’s food security.

The Foreign Secretary also promised to tackle the labour shortages, partly caused by post-Brexit freedom of movement restrictions, which have often forced farmers to leave fruit rotting in the fields and cull healthy pigs.

Ms Truss, a former environment secretary who will meet farmers on a campaign stop in the south-west of England ahead of the hustings, said: “The pandemic and cost-of-living crisis have shown it is more vital than ever for us to ensure we have a high-quality and affordable supply of British food…

“I will cut the red tape that is holding (farmers) back and hitting them in their pocket”.

Both candidates will face a grilling in the second of 12 official hustings over the summer in Exeter at 7pm.

Although Conservative members have the chance to vote as early as this week, they have until the beginning of September to cast their ballot, with the winner announced on September 5.