Tories row over ‘fantasy tax cuts’, as Javid strikes out at ‘poisonous’ battle

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Sajid Javid criticised the campaign’s ‘poisonous gossip’ as he formally launched his leadership on a sweltering day (Stefan Rousseau/PA) (PA Wire)
Sajid Javid criticised the campaign’s ‘poisonous gossip’ as he formally launched his leadership on a sweltering day (Stefan Rousseau/PA) (PA Wire)

Tories vying to replace Boris Johnson have fought over announcing uncosted “fantasy tax cuts”, as one contender struck out at the “poisonous” battle.

Sajid Javid, whose Cabinet resignation began the cascade that forced the Prime Minister out, warned rivals: “This isn’t House Of Cards.”

He set out an estimated £40 billion of plans to scrap the corporation tax hike and the national insurance (NI) levy he previously backed and to bring forward an income tax cut.

The chairman of the backbench 1922 Committee, Sir Graham Brady, announced the first ballot of Tory MPs will take place on Wednesday, with candidates requiring the support of 20 colleagues to make it on to the ballot paper.

The list of candidates will be whittled down to a final two – with balloting continuing into next week if necessary – who will go forward into a postal ballot of party members with the result to be announced on September 5.

The former health secretary’s proposals came with details on where the money would come from, but other MPs battling for No 10 were criticised for failing to show their workings.

On Monday the Tory bidding war included:

– Chancellor Nadhim Zahawi pledging to cut income tax in 2023 and 2024 and abolish green levies on energy bills for two years.

– Attorney General Suella Braverman arguing there is “no alternative but radical tax cuts” amid a cost-of-living crisis.

– Foreign Secretary Liz Truss vowing to cut taxes “from day one” and scrapping the NI hike that hit in April.

– Jeremy Hunt, who has been both health and foreign secretary, expressing a desire to “cut all taxes” in an interview with BBC Breakfast.

(PA Graphics) (PA Graphics)
(PA Graphics) (PA Graphics)

A row broke out among the campaigns, with Robert Jenrick criticising rivals for pledging unachievable tax cuts at a time when the party’s “credibility” is under strain.

The former Cabinet minister, who is backing ex-chancellor Rishi Sunak, told Times Radio that “announcing fantasy tax cuts to help get through a leadership election, I think, is unwise”.

Labour leader Sir Keir Starmer accused the Tories of plucking £200 billion of uncosted commitments from the “magic money tree” in an “arms race of fantasy economics”.

Tory former chancellor Lord Lamont warned of the leadership contest descending into a “Dutch auction” and that “unfunded, irresponsible tax cuts” would drive up interest rates.

The Conservative peer told Radio 4’s World At One programme: “I’m increasingly concerned because I think there is a danger that this leadership election is going to descend into a sort of Dutch auction of tax cuts which are not necessarily affordable, not necessarily rightly timed.

“There is a danger at this point when the public finances, the amount we are borrowing, is not in a strong state.”

Mr Javid, a former chancellor, formally launched his campaign with a “new Conservative economic plan” to include scrapping the rise in corporation tax from 19% to 25%.

He argued his three tax cuts that he estimated would cost around £40 billion in 2024/25 would be paid under current fiscal headroom and “new efficiencies” in Government.

But he was dogged by questions over his non-domiciled status before entering politics.

Attorney General Suella Braverman (Stefan Rousseau/PA) (PA Wire)
Attorney General Suella Braverman (Stefan Rousseau/PA) (PA Wire)

Mr Javid, who worked in banking, refused to say where he had been based for tax purposes when asked if he used tax havens.

He warned the Conservatives face “electoral oblivion” if they do not change, as he urged colleagues to “pull together”.

“I’m sorry to say that, looking at some of the stories in the weekend press, it’s not been our best start,” Mr Javid said, in a speech in Westminster.

“Poisonous gossip, attack memos, allegations thrown around.

“This isn’t House Of Cards or Game Of Thrones. And the people who are here just because they enjoy the game are in the wrong place.”

Chancellor of the Exchequer Nadhim Zahawi, one of the candidates for Conservative Party leader (Stefan Rousseau/PA) (PA Wire)
Chancellor of the Exchequer Nadhim Zahawi, one of the candidates for Conservative Party leader (Stefan Rousseau/PA) (PA Wire)

Mr Johnson blamed the “herd” for his resignation as Tory leader, but Mr Javid insisted he dramatically quit the Cabinet because it was the “right thing to do”.

“This wasn’t because I could hear the hooves of a herd. If anything, I expected half the herd to turn around and charge at me,” he said.

Eleven candidates have entered the race so far, with Home Secretary Priti Patel and Brexit opportunities minister Jacob Rees-Mogg also believed to be considering runs.

Ms Braverman and Mr Zahawi made speeches at the Thatcherite Conservative Way Forward group as they try to win the support of fellow MPs, before Tory members vote for the next prime minister.

The Attorney General rejected critics’ warnings that cutting taxes too quickly would be the wrong move, arguing “in a cost-of-living crisis with spiralling costs, we know there is no alternative but radical tax cuts”.

Mr Zahawi, who was appointed Chancellor shortly before moving to push Mr Johnson out of office, said tax and spending had been “skyrocketing” for “too many years”.

Foreign Secretary Liz Truss becomes the 10th candidate to launch their campaign (Stefan Rousseau/PA) (PA Wire)
Foreign Secretary Liz Truss becomes the 10th candidate to launch their campaign (Stefan Rousseau/PA) (PA Wire)

He said he would reduce income tax to 19p next year and 18p the following year.

Ms Truss, seen as one of the likely frontrunners, formally entered the race with a slick video under the tagline “Trusted to deliver”.

The Foreign Secretary highlighted her work on trade deals and the controversial Northern Ireland Protocol Bill and said a prime minister with “experience, who can hit the ground running from day one” is needed, in a possible dig at her rivals without Cabinet experience.

She told the Daily Telegraph she would “start cutting taxes from day one”, and would cut the national insurance hike introduced in April, mirroring a pledge of rival Sajid Javid.

One of her key backers, Business Secretary Kwasi Kwarteng, accepted that public spending would need to be reduced to fulfil pledges of tax cuts.

He conceded to BBC Radio 4’s Today programme “there needs to be spending reductions” to fund tax cuts, but refused to say which services would be hit.

Transport Secretary Grant Shapps released a snappy video appealing to the Tory MPs who will whittle down the candidates by touting his experience as a campaigner.

With Conservatives nervous of losing their jobs after Mr Johnson led the party to dire recent electoral performances, Mr Shapps told MPs: “I can help you win your seat.”

Mr Johnson insisted the outcome of the bid to replace him “will be good” despite multiple candidates having worked to oust him, but he declined to back any of the candidates.

“I wouldn’t want to damage anybody’s chances by offering my support,” he told broadcasters during a visit to the Francis Crick Institute in London.

Tom Tugendhat, the chairman of the Commons Foreign Affairs Committee who has never been a minister, pledged to cut taxes on jobs and fuel and painted his candidacy as a “clean start”.

The 1922 Committee of backbench MPs will elect a new executive committee on Monday, before drawing up a timetable for the leadership contest.

An announcement on the schedule for the leadership campaign is expected to follow later that evening.

The process could be tightened so the final two candidates can be voted for by Tory MPs before the Commons enters the summer recess on July 21.

That would give the chosen pair the summer to campaign for the backing of Conservative Party members, who ultimately select the next Prime Minister.

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