Tory leadership hopefuls clash over cost of living, as Truss insists on tax cuts over 'handouts' to help families

The Conservative leadership hopefuls have clashed over how best to help households amid the cost of living crisis, with Liz Truss ruling out direct support and insisting instead on tax cuts - an approach her rival has called "simply wrong".

Ms Truss, the Tory frontrunner, has rejected "handouts" to help households through the worse income squeeze in 60 years.

However, her opponent Rishi Sunak has hit back and said: "We need to get real about this situation.

"It's simply wrong to rule out further direct support at this time as Liz Truss has done and, what's more, her tax proposals are not going to help very significantly people like pensioners or those on low incomes, who are exactly the kind of families that are going to need help."

He also said he would "go further" than the support of up to £1,200 for people he announced as chancellor if he becomes prime minister once there is "certainty about exactly what bills are going to be in the autumn".

During a campaign visit to the West Midlands on Saturday, Ms Truss took a swipe at her rival's economic legacy, blaming it for the expected recession.

The Foreign Secretary told reporters: "Under the plans at present, what we know is Britain is headed for a recession.

"That is not inevitable, but we need to avoid that by making sure our economy is competitive, that we're encouraging businesses to grow and that we are keeping taxes low."

"Having the highest taxes for 70 years is not going to deliver that economic growth, and it's leading our country to a recession."

Tax cuts could fuel inflation - predicted to top 13%

Earlier this week, in an interview with the Financial Times, Ms Truss insisted she would press ahead with tax cuts, despite claims they would fuel inflation - already forecast to top 13%.

Asked how she intended to help households facing spiralling energy bills this winter, she insisted the answer was tax cuts and supply-side reforms.

Former Deputy Governor of the Bank of England Charles Bean told Sky News Ms Truss's plans "are not particularly well targeted in terms of dealing with people who are most hit" by the energy price spike.

He added: "The existing package that previous chancellor Rishi Sunak put in place had more conscious targeting towards poorer households and I think it's pretty clear that any fiscal manoeuvre we have at the moment should be primarily directed towards them rather than more broadly."

Tory voters swing behind Truss

Ms Truss has taken a seven-point lead as best prime minister against Rishi Sunak (27% to 20%) and a 26-point lead among 2019 Conservative voters (48% to 22%).

Research from Opinium found on all leadership attributes, 2019 Tories are more positive about Ms Truss than two weeks ago and more negative about Mr Sunak.

A third of all voters (34%) think the government should keep taxes and spending on public services about where they are now, while 26% think there should be an increase in both.

Frontrunner denies video leak

Liz Truss has declined to say whether her campaign was involved in the leaking of a video in which Rishi Sunak spoke about working to divert funding from deprived urban areas towards more prosperous towns.

The Tory leadership contender was asked during a visit to the West Midlands whether her team had anything to do with leaking her rival's controversial comments.

She told reporters: "I'm running a positive campaign.

"My campaign is about how we unleash the potential of Britain, how we get the economy going in these difficult times, how we get investment into fantastic places like the West Midlands."

Speaking in Southampton after a visit to the Isle of Wight today, Mr Sunak said he "stand[s] by absolutely" what he said, citing the island as an example of a community that feels it does not get the support it needs under the funding formula.