Liz Truss defends £30bn tax cuts as ‘affordable’ in bid for No. 10

Liz Truss has defended her plans for tax cuts costing at least £30bn a year as “affordable” when the economic policies of the Tory prime ministerial candidates came under scrutiny.

Former Chancellor Rishi Sunak would not cut personal taxes until the fall of next year so as not to fuel inflation.

But Mrs Truss, the Secretary of State, pledged an emergency budget to immediately reverse the increase in national insurance under her proposals to boost growth.

The financial plans of the last prime ministerial candidates became increasingly divisive as they competed for the votes of the Tory membership needed to win the race for No. 10.

Secretary of State and Tory leadership candidate Liz Truss speaks to the press during a visit to the Little Miracles charity in Peterborough to discuss pressures on the cost of living and her vision to ease the burden on familiesSecretary of State and Tory leadership candidate Liz Truss addresses the press during a visit to the children’s charity Little Miracles in Peterborough (Stefan Rousseau/PA)

Robert Joyce, deputy director of the Institute for Fiscal Studies (IFS) think tank, estimated Ms Truss’ tax cuts at “more than £30 billion a year – and possibly significantly more”.

The plans “mean higher borrowing or less government spending, or a combination,” he said, though their impact remains unclear as Ms. Truss’s plans “have yet to be worked out.”

“Without spending cuts, the tax promises would likely lead to current tax rules being broken, and Ms. Truss has hinted that tax rules may change,” Joyce added.

But Ms. Truss defended her plans to scrap the planned corporate tax hike and suspend green taxes on utility bills as “no gamble.”

“My plans don’t go beyond the main room. I’m very clear that they are about £30bn in cost, and that is affordable within our current space,” she told broadcasters on a visit to Peterborough.

“But what’s not affordable is raising taxes, slowing growth and putting them in a much worse position.”

Election Schedule for Conservative Leaders(PA images)

In his pitch to Conservatives after MPs chose the last two candidates, Mr Sunak argued that only he can beat Labor in a general election.

But Ms. Truss hit back, saying the Tories would have a hard time winning under the current economic policies written by Mr Sunak when he was in issue 11.

Ms Truss said: “I think the problem is that if we continue with our current economic policies, which are expected to lead to a recession, it will be very difficult for conservatives to win elections.

“We are in economic difficulties, the whole world is in economic difficulties. It is not a time for business as usual.”

Mr Sunak has vowed not to cut taxes until rising inflation is under control, fearing that such a move could exacerbate the crisis.

Liz Truss and Rishi SunakRivals Liz Truss and Rishi Sunak (PA)

It emerged Thursday that he does not believe he will be able to cut personal taxes until at least the fall of 2023, a position that is likely to anger the right-wing Tory even more.

The IFS noted that its plans see the tax on track to its highest sustained level in 70 years.

Mr Sunak insisted he was a “Thatcherite” when he sought to allay Tory members’ concerns that he supported a high-tax, large-state approach.

Some fear Mr Sunak has lost his chances by stepping down as chancellor, a move that has infuriated some conservatives by bringing about the demise of Boris Johnson.

Ms Truss insisted she would have liked Mr Johnson to have continued as Prime Minister, describing his track record as “extremely positive”.

Mr Sunak was the parliamentary party favourite, winning 137 votes to Ms Truss’s 113 from the Tory MPs.

But bookmakers put the Secretary of State at the forefront, with early indications that she is more popular with Tory members ahead of a summer of campaigns.

A small, non-representative poll of 730 members on Wednesday and Thursday saw Ms Truss once again in the lead.

About 49% of respondents said they would support the Foreign Minister, while 31% chose Mr Sunak. The rest were undecided or said they would not vote.

The pair competed to win the support of local politicians on Thursday as they took part in a private hustings for the Conservative Councilors’ Association.

They will then tour the UK to take part in 12 hustings for the Tory members who will vote for their next leader, the result of which will be announced on September 5.

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