Liz Truss and Rishi Sunak have continued to attack each other’s economic plans in the fourth Tory leadership hustings, with the former chancellor saying that unless inflation is brought under control, “we can kiss goodbye to winning that next election”.
The event, which lasted for almost two hours, started with a bang for Ms Truss, who received the backing of Conservative former minister and vice-chairwoman of the 1922 Committee Nus Ghani.
The MP for Wealden in East Sussex introduced the “fair and honest” Foreign Secretary on stage.
Despite Ms Truss’s opening speech being disrupted by shouting climate activists, who were quickly removed from the studio, the hustings continued business as usual.
The economy and the cost of living were once again central to the debate, particularly given the Bank of England’s stark warning on Thursday that the UK faces an outright recession and 13% inflation.
Former chancellor Mr Sunak said that unless inflation gets under control, there is “no hope” the Tories will win the next election, while Ms Truss said the UK must not talk itself into a recession.
Taking a thinly-veiled swipe at his opponent, Mr Sunak told Tory members he is “particularly worried about policies that risk making it (inflation) worse and last longer”.
His comments came as he was asked by the host and former Downing Street adviser Jimmy McLoughlin what his pitch to win a fifth term is going to be.
Mr Sunak said: “Well, the first thing we need to do in order to make sure we can win that election is have got through this inflation problem by then.
“And that’s why I’m particularly worried about policies that risk making it worse and last longer.
“Because this is a problem that isn’t just for this winter. It’s a problem for next winter as well, and beyond.
“Because as the Bank of England said, they are worried about inflation becoming embedded, then there’s no hope that we’re going to win that next election.
“Absolutely none. It’s as simple as that.
“We all heard what they said yesterday, all of you saw the numbers.
“And if we don’t get a grip of this thing and get a grip of it fast, then we can kiss goodbye to winning that next election.
“So the first thing to put ourselves in a position to win is to get through inflation and get through it quickly and not do things worse.”
I know there are difficult forecasts out there, but forecasts are not destiny
Ms Truss said “forecasts are not destiny” and said the UK can create the “British Silicon Valley”.
The Foreign Secretary said: “Fundamentally, what we need to do is we need to show people that there is hope, and there is an optimistic future ahead of us.
“And as I’ve said, we’re brilliant at start-ups, but we need to be better at funding the scale-ups.
“So one of the things I would do is unleash more investment into our economy, through reforming solvency too.
“I met some investors in the city this morning. They told me that if we get on and do that we could release tens of billions.”
She added: “We can create the British version of Silicon Valley, we can create real opportunities.
“We have a talented generation of young people ready to take those opportunities on, but we need to get the growth.
“I know there are difficult forecasts out there, but forecasts are not destiny. And what we shouldn’t be doing is talking ourselves into a recession. We should be keeping taxes low.”
Another stark contrast in their economic policies came when Mr Sunak said what he will do to help businesses grow.
The former chancellor said corporation tax is not the “right tax” to focus on, and instead spoke about the need to reform business taxes to “cut them on the things that make a difference”.
The Foreign Secretary has promised to reverse Mr Sunak’s plans to increase corporation tax from 19% to 25%.
The former chancellor said: “We have had this debate on corporation tax. I don’t want to stick with the failed policies of the past. That’s what some people are suggesting. It hasn’t worked.”
He added: “Investment in this economy today, no better than it was a decade ago, in spite of us doing all those things on corporation tax.
“Because it’s not the right tax to focus on. And that’s where my experience in business, my time as chancellor, my conversations with business, have led me to the conclusion we need to be much more radical.
I don’t want to stick with the failed policies of the past. That’s what some people are suggesting. It hasn’t worked
“We need to reform business taxes to cut them on the things that make a difference.”
In an interview with the Financial Times, Ms Truss said about corporation tax: “I think it’s completely counterproductive to be raising corporation tax.
“I think that will stymie growth and make it harder to pay down debt.”
The Foreign Secretary also told the publication that the mandate of the Bank of England should be reviewed, saying: “One of the issues I want to look at is the control of the money supply and particularly the quantitative easing policy and the impact that’s had.”
In the same interview, Ms Truss was also critical of the culture at the Treasury, which was run by Mr Sunak until he resigned last month.
She said the Treasury was absorbed by the “abacus of economics of making sure that tax and spend add up”.