RISHI Sunak and Liz Truss have clashed noisily and repeatedly in the first head-to-head TV debate of the Tory leadership debate, arguing over the cost of living, tax, and China.
Mr Sunak accused Ms Truss of being prepared to “tip millions of people into misery” with economic plans that could see interest rates jump to seven per cent.
In a bruising exchange, the former Chancellor said his rival’s desire to fund £30billion of tax cuts through borrowing would worsen and prolong inflation, force the Bank of England to raise interest rates, and so add thousands of pounds to mortgages.
He said: “We get this short term Sugar Rush of unfunded borrowing to fund tax cuts that would be followed by the crash of higher prices and higher mortgage rates.”
He said Ms Truss was peddling “the same old let’s have our cake and eat it”.
The Foreign Secretary dismissed his comments as “scare-mongering” and the tactics of “Project Fear”, and attacked him for raising taxes to their highest level in 70 years.
She also said Mr Sunak’s plans would take the country into “recession”, accusing him of “negative, declinist language” rather than thinking creatively about stimulating growth.
The confrontation took place in front of an audience of Conservative voters in the red wall seat of Stoke-on-Trent.
Mr Sunak was applauded more often by the studio audience, but Ms Truss got the biggest clap for saying she woud keep her promises as Prime Minister, citing Mr Sunak’s decision to break the Tory manifesto pledge not to raise taxes as an example of abusing voters’ trust.
Mr Sunak, the self-confessed underdog in the race to replace Boris Johnson in No10, repeatedly interrupted Ms Truss in an attempt to regain the initiative.
In an early clash over tax, he seized on a recent interview by MsTruss’s economics guru, Professor Patrick Minford, in which he said it would be a good thing if interest rates were to increase to five to seven per cent.
Warning Ms Truss’s tax cuts would see an inflationary “borrowing spree”, he said: “Your own economics adviser has said that that would lead to mortgage rates, interest rates going up to 7%. Can you imagine what that is going to do for everyone here and everyone watching?
“That’s thousands of pounds on their mortgage bill. It’s going to tip millions of people into misery. And it’s going to mean that we absolutely have no chance of winning the next election either.”
Ms Truss said Mr Sunak’s dogged following of Treasury “orthodoxy” made him akin to the former Labour chancellor and prime minister Gordon Brown.
Ms Truss said: “If we follow Rishi’s plans we are heading for a recession.”
She said that the Covid pandemic was a once-in-a-century event and repaying the debt as quickly as possible was the wrong thing economically.
“We didn’t do that after the Second World War. We shouldn’t do that now. And crashing the economy in order to pay a debt back quicker is a massive mistake,” she said.
Asked the right time to cut taxes, Mr Sunak said: “We all took a decision to protect the economy and support the NHS through Covid, and of course we all knew there was a bill that we needed to pay for that, so the question is, should we pay that bill ourselves or do we put it on the country’s credit card and pass the tab to our children and grandchildren to take care of.
“Now, I don’t think that’s right, I don’t think it’s responsible and it’s certainly not Conservative and that’s what I wouldn’t do as prime minister.”
Ms Truss said: “Under my plans, we would start paying back the debt in three years time, so I’m not putting it on the never never.”
Mr Sunak interrupted saying “that’s simply not right”, adding: “You promised almost £40 billion of unfunded tax cuts…that is the country’s credit card.”
Ms Truss said: “Rishi that is not true, under my plans, we would start paying down the debts in three years time, Covid was a one in 100 years event, no other country is putting up taxes at this moment, the OECD has described Rishi’s policies as contractionary.”
Mr Sunak was vague on how to help families with energy bills, which could rise to £3,200 in the autumn, saying he would do more if necessary, but offered no specifics.
However Ms Truss said she would act “immediately” by reversing the increase in National Insurance and have a temporary moratorium on the green levy on fuel bills.
She said she would also put in place a growth plan for the economy, taking advantage of “post-Brexit opportunities”.
On China, each candidate accused the other of being prepared to cosy up to the country, and only recently taking a harder line.
Both promised to publish their full tax affairs if they became Prime Minister.
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