Rishi Sunak’s final election gamble: I’ll cut taxes by £17bn and migration by 50%

Rishi Sunak drew comparisons with his predecessor Liz Truss and her disastrous mini budget as he unveiled a manifesto containing £17bn of tax cuts.

The grand unveiling at the Silverstone Formula 1 racetrack was seen as a last chance for Mr Sunak to turn around his party’s flagging fortunes in an election campaign which has been filled with missteps and seen the Tories stuck at around 20 points behind Labour.

It came on a day when a YouGov poll showed that Reform UK was closing in on the Tories just one point behind, with 17 per cent to the Conservatives’ 18 per cent.

A Redfield and Wilton poll also revealed that Nigel Farage was ahead of Mr Sunak as a “best leader of the opposition to a Labour government”, with 28 per cent against 27 per cent.

But Mr Sunak’s manifesto drew criticism from economists and was lampooned by Labour, whose analysis suggested it amounted to at least £71bn of “unfunded pledges”, including the £17bn of tax cuts.

Shadow chancellor Rachel Reeves claimed that this would add £4,800 to people’s mortgage payments, based on a forced interest rate hike from the borrowing she claimed would be necessary to fund the Tory manifesto promises.

Meanwhile, Conservative MPs and candidates were frustrated over a failure to include a plan to leave or reform the European Convention of Human Rights (ECHR) or get rid of targeted levies such as inheritance tax.

There are suggestions that an alternative Tory manifesto could be launched next week as a challenge to Mr Sunak.

However, many were pleased by the help for “white van man” in the way 4 million self-employed people will be exempted from national insurance.

The new controversial £4,800 figure of additions to people’s mortgages over five years – which Labour conceded was based on the average mortgage rather than all mortgages – drew comparisons with the disputed claim the Tories made about Labour having to put up taxes by £2,000 per household as a result of their promises.

When challenged on this by The Independent, Ms Reeves insisted that she would tackle voter apathy by “being honest with voters” and accounting for how all Labour’s pledges will be paid for “line by line”.

But while she joined the Tories in ruling out Labour putting up income tax, national insurance or VAT, she refused to rule out other tax rises, including a raid with capital gains tax. Ms Reeves insisted that currently “there are no plans” to increase capital gains and insisted that she “wants to be tax cutter”.

But her focus was on Tory pledges, which she said would lead to a Liz Truss-style meltdown in the economy.

She pointed to Conservative manifesto plans to abolish national insurance for the self employed, cut 2p off national insurance for employees, guarantee state pensions with a “triple lock plus” against tax rises, and extend child benefit to households with a joint income of up to £120,000.

Other pledges included spending 2.5 per cent of GDP on defence by 2030, 8,000 more police officers, a help to buy scheme for first-time buyers, and compulsory national service for school leavers.

At the campaign launch at Silverstone in Northamptonshire, the prime minister focused much of his speech warning of tax rises under Labour.

But on his party’s own plans, Mr Sunak said: “We are cutting taxes for workers, for parents and pensioners, and we are the party of Margaret Thatcher and Nigel Lawson, a party, unlike Labour, that believes in sound money.”

He set out plans to slash immigration as he responded to political pressure from the right of his party and concerns about the threat posed by Reform UK.

Mr Sunak was questioned on the promise to halve migration with no fixed timetable after 14 years of failing to bring it down.

He acknowledged that “migration has been too high in recent years” but said: “Our plan is this: we will halve migration as we have halved inflation, and then reduce it every single year.”

Ms Reeves said Labour analysis suggested the Tory plans required an extra £17.4bn of borrowing in 2029-30, and a total of £71bn over the whole five-year period.

That could result in the Bank of England putting up interest rates by 56 basis points, resulting in someone with an 85 per cent mortgage on the average house in England facing £4,800 in extra mortgage payments over the next five years.

She told the central London press conference: "[Mr Sunak] said he was the antidote to Liz Truss. Instead, he's cosplaying Liz Truss by again doing what the Conservatives did in that mini-budget with £71bn of unfunded commitments."

The former Bank of England economist warned that after the mini-budget "mortgage rates spiralled and people found themselves paying – the 1.5 million re-mortgaging this year alone - paying £240 extra".

"So we know what happens when unfunded commitments are made,” she said. “You can't believe that those commitments are actually going to happen, but what you can guarantee is the financial market turbulence and the higher mortgage rates that they bring."

Ms Reeves said the £12bn of welfare savings the Tories claimed would pay for their tax cuts had either already been accounted for by the Office for Budget Responsibility or could not be delivered.

A Conservative spokesman said: "Once again Reeves is confusing facts and fiction on numbers.

"Rachel Reeves's chaotic and panicked dossier is full of complete nonsense and capped off with the extraordinary claim that it will cost the taxpayer £5.7bn to cut the civil service back to pandemic levels."

But Labour’s shadow chancellor was supported by the director of the Institute for Fiscal Studies (IFS), Paul Johnson, who questioned Tory claims that they can make £12bn of savings through government efficiency, welfare cuts and clamping down on tax avoidance.

He said: “[There are] £17bn of tax cuts, £6bn more for defence. These costs are definite. The savings from controlling welfare, reducing tax avoidance/evasion, cutting civil service jobs, may be achievable but are uncertain. Saving £12bn from projected disability benefit bill will be very tough. “

Labour is set to launch its manifesto on Thursday.