Race for Downing Street drives tax policy split into UK Conservatives

Rishi Sunak wants continuity of the economic policies he introduced as finance minister, promising to keep his focus on fixing the public finances, despite the risk of a recession, while foreign minister Liz Truss is bucking economic orthodoxy by saying her expensive plans to reverse most of Sunak’s tax increases would lower, not fuel, surging inflation

Differences over how to revive Britain’s slow-growth, high-inflation economy could hardly be starker within the ruling Conservative Party as the two remaining contenders to become its new leader, and thereby prime minister, clash over tax.

Rishi Sunak wants continuity of the economic policies he introduced as finance minister, promising to keep his focus on fixing the public finances, despite the risk of a recession.

The former hedge fund partner, who helped to trigger the leadership race when he quit the Treasury this month, has dismissed as “fairy tales” the promises of tax cuts made by other would-be successors to Boris Johnson.

By contrast, foreign minister Liz Truss is bucking economic orthodoxy by saying her expensive plans to reverse most of Sunak’s tax increases would lower, not fuel, surging inflation.

“This certainly represents a genuine choice for those who will elect the next prime minister,” the Institute for Fiscal Studies, a non-partisan think-tank, said.

So far there is no clarity on whether the different stances on tax would mean less spending - at a time when services from health to defence are crying out for more money and public workers are striking for more pay - or more borrowing.

“Those pledges will have implications beyond the tax system, and these remain unclear,” the IFS said.