The final five candidates in the Conservative leadership race have clashed over their tax plans in a fiery first TV debate.
While former Chancellor Rishi Sunak dismissed tax cut pledges by his rivals as an “unfunded spree of borrowing and more debt”, Foreign Secretary Liz Truss hit back, saying: “You cannot tax your way to growth.”
Penny Mordaunt said “people need help now” and without a change in the tax burden, the UK will become “one of the most uncompetitive nations” by next April.
But Mr Sunak insisted he had been right to take the “difficult decisions” in the Treasury, such as increasing National Insurance to pay for health and social care, and promising reductions now was a “fairy tale”.
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In the 90-minute debate on Channel 4, the runners were also asked the yes or no question if Boris Johnson was an honest man.
While most gave longer answers than requested, Kemi Badenoch said “sometimes”, while Tom Tugendhat flatly said “no”.
It was the first of three TV debates the competitors will face in the race to become the next Tory leader and the next prime minister of the UK.
Who came out on top?
A snap poll from Opinium on who performed best put Mr Tugendhat as the winner with 36% of the vote, followed by Mr Sunak on 24%.
Both Ms Mordaunt and Ms Badenoch received 12% of the vote, but Ms Truss trailed on 7%.
But Mr Sunak has led each round of voting among Tory MPs so far, and Mr Tugendhat has been at the bottom.
The next debate will fall on Sunday evening on ITV, while Sky News will host its own at 8pm on Tuesday, hosted by Kay Burley.
And the candidates will be whittled down further on Monday, when a third round of voting will take place.
The final two leadership hopefuls will emerge by the end of next week and then face a summer of hustings – with Conservative Party members getting the chance to decide who should become the next prime minister.
A winner will be announced on 5 September.
Tax – to cut or not cut?
The exchanges became most tense when the five Tory MPs were asked about their tax plans, which has been a running issue throughout the contest so far.
Mr Sunak – who resigned as chancellor last week – stood by his record in the Treasury, saying rather than focusing on tax, “inflation is the enemy that makes everyone poorer”.
He added: “I don’t think the responsible thing to do right now is launch into some unfunded spree of borrowing and more debt, that will just make inflation worse, it will make the problem longer.”
But Ms Truss, who has pledged to stop the planned rise in corporation tax and pause green levies to reduce the tax burden, said she would spread the COVID debt over a longer period to cover the cost and blamed the Bank of England for the current record rates of inflation.
She said: “We need to be bold, we need to do things differently, we need to cut taxes, we need to unleash growth, and we need to unleash the potential of all of the people across our great country.”
Mr Sunak replied: “Borrowing your way out of inflation isn’t a plan, it’s a fairy tale”, adding: “There is no such thing as COVID debt… debt is debt.”
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Ms Mordaunt has made some tax pledges, such as cutting fuel duty, and claimed green levies were “clobbering families and businesses [so] need to be looked at”.
She was challenged by Mr Sunak on how she would pay for her plans, and said the UK needed to tackle the “barriers to investment coming in, things that are stopping innovation” and that would result in more cash in the Treasury’s coffers.
Many of the candidates who had voted for the rise in NI, including Ms Truss, promised to scrap it if they got into power, but Mr Sunak insisted he would stand by the measure, despite it not being as “politically convenient” conviction.
But Mr Tugendhat said the ex-chancellor only brought it in “because the boss wanted it”, and stuck by his decision as the only member of the panel to vote against it.
“I was the only one here who didn’t vote for the National Insurance rise and now it appears everybody agrees with me,” he added.
Calls for growth
On overall tax policy, he said he would like the public to “keep more” of their money, but “public services are incredibly important to all of us” and they needed funding.
But Ms Badenoch, who like Ms Truss wants to pause green levies, said “you don’t necessarily” have to cut public services to fund tax cuts “if you have the growth”.
Speaking after the debate, Labour’s Pat McFadden said: “Britain doesn’t need another prime minister incapable of being straight with the British public. But the Tory wannabes all lined up to offer billions of pounds of unfunded tax cuts without saying whether the money would come from more borrowing or more cuts to public services.
“It has never been clearer that Britain needs a fresh start with Labour.”
Other issues were also brought up , including tackling the cost of living crisis, creating a green economy and supporting the NHS.
Ms Mordaunt was also pressed on her standpoint over self-identification for trans people, having come in for criticism in recent days after accusations she had changed her position.
She denied she had ever backed it, adding: “I am a woman, I am a biological woman, if I had a mastectomy I would still be. But I am also legally a woman.”
Ms Mordaunt said some people who are born male are issued with a document legally recognising them as a woman, “but that does not mean they are identical to me”.