Rishi Sunak has pledged to slash taxes by 20% by the end of the decade in a last-gasp pitch to Conservative members with the first ballots set to drop in the leadership race.
But in one of his strongest attacks yet on the frontrunner, Liz Truss, Sunak warned party members against an “act of self-sabotage” that could cost the party the election and to be wary of major spending pledges and tax cuts which he has previously dismissed as fantasy economics.
“I would urge them to treat with caution any vision that doesn’t involve any difficult trade offs and remember that if something sounds good to be true – then it probably is,” he said.
Simon Clarke, the chief secretary to the Treasury who worked under Sunak, said households could not afford to wait seven years. Clarke, a key ally of Truss, said: “Liz will cut taxes in seven weeks, not seven years … People are facing the biggest cost of living crisis in decades and the tax burden is at its highest level in 70 years.”
The former chancellor made the pledge having faced internal criticism from backers for his narrative of restraint versus Truss’ tax-cutting ambitions.
In the announcement on the day party members will begin receiving their ballots, Sunak said he would cut the basic rate of income tax to 16p by the end of the next parliament, which he said would represent the largest cut to income tax in 30 years.
Truss – whose campaign gained the support Sunak’s replacement as chancellor, Nadhim Zahawi, on Sunday night – has said she will cut taxes “on day one” of becoming prime minister. She pledged to reverse the national insurance rise pushed through by Sunak in the Treasury as well as halting the planned corporation tax rise next year, another Sunak proposal.
Sunak has said he will cut income tax by 1% from 2024 – a pledge made as chancellor – but said his number one priority is to tackle inflation and getting borrowing under control.
But on Monday he said he would go further should the Conservatives win re-election in 2024, and cut income tax down to 16p – costing around £6bn a year.
Sunak called the pledge “the biggest income tax cut since Margaret Thatcher’s government” and said it was a realistic promise in the current economic climate.
“I will never get taxes down in a way that just puts inflation up,” he said, promising to “always be honest about the challenges we face.”
In a coded attack on Truss, Sunak said the party’s future in power was in peril. “Winning this leadership contest without levelling with people about what lies ahead would not only be dishonest – it would be an act of self-sabotage that condemns our party to defeat at the next general election and consigns us to a long period in opposition.
“I would urge them to treat with caution any vision that doesn’t involve any difficult trade-offs and remember that if something sounds too good to be true – then it probably is.”
Sunak’s campaign said the 1p cuts would be paid for by increased Treasury receipts via projected economic growth forecasted by the Office for Budgetary Responsibility. But the UK is still projected to experience the lowest growth in the G20 – apart from Russia – and have the worst growth in the G7 at around 0.5%.
A Truss campaign source called the pledge “another U-turn” following Sunak’s previous pledge to cut VAT on energy bills – a policy he rejected in office.
“He has also made it conditional on getting growth first – knowing full well that his corporation tax rises are contractionary,” the source said. “The public and Conservative party members can see through these flip-flops and U-turns.” Sunak’s campaign hit back saying it was “not a u-turn” and consistent with his pledge to “grip inflation, grow the economy and then cut taxes”.
Truss will spend today in the south-west with a pledge to remove further regulation on farming – without giving further specifics – but promising also a short-term expansion to the seasonal workers scheme.
MPs backing Sunak have privately voiced fears that he will not have time to regain public momentum before members begin voting in the coming days. Though the contest is set to run until September, the majority of members are likely to cast their ballots in the coming days immediately after they are received.
MPs who have canvassed constituents say they believe the race is much closer than the public polling picture has suggested so far – polls by YouGov of Tory members put Truss more than 20 points ahead of her rival.
But backers of Sunak pointed to a poll of Tory councillors by Savanta ComRes which put Truss on 31% and Sunak on 29%. Around 32% were still undecided.