Rishi Sunak: what did former chancellor say about Liz Truss’ tax cuts during Tory leadership campaign 2022?

The current economic crisis was signalled by Rishi Sunak as he came up against the Prime Minister during the Conservative leadership contest earlier this year

Prime Minister Liz Truss has faced the wrath of opponents and some of her own MPs after her newly-promoted Chancellor Kwasi Kwarteng announced one of the most major shake-ups in British economic policy.

The controversial ‘mini-budget’ announced by Mr Kwarteng on Friday (23 September) was criticised for benefitting the richer in society, at a time of struggle for those on much lower wages. Tax cuts and removing the cap on banker’s bonuses meant that those earning more will benefit proportionally more from the new policy change.

Not only did the major policy announcement garner criticism, but the markets also responded similarly, with the Pound Sterling crashing against the US Dollar to an all-time low. In response to this, the Bank of England announced that it will “not hesitate” to intervene in the situation, including increasing interest rates if needed.

However, the response to the Prime Minister’s tax cuts plans was signalled by none other than Ms Truss’ former leadership opponent, Rishi Sunak, during the race earlier this year. But what did the former Chancellor of the Exchequer say about her economic policy?

Throughout the Tory leadership campaign, Rishi Sunak warned that Liz Truss’s tax-cutting plans. (Credit: Getty Images)

What did Rishi Sunak say about Liz Truss’ tax cuts?

Amid the campaign for the Tory Party leadership, both Mr Sunak and Ms Truss attempted to get party members on side by putting forward their plans to fix the cost-of-living crisis.

Mr Sunak, who - as Chancellor under Boris Johnson - introduced many of the main economic policy changes in the past few years including a National Insurance rise, stuck to his guns and told members that they couldn’t risk raising inflation any further. Meanwhile, Ms Truss promised voters that she would cut taxes and scrap the planned National Insurance rise to put more money back in the pockets of the public.

However, the former Chancellor was scathing in his verdict of Ms Truss’ plans, which proved popular enough for her to win the contest with 57.4% of the votes. Throughout the campaign, Mr Sunak referred to the former Home Secretary’s economic policy as a “moral failure”.

Speaking at a hustings event in Belfast on 17 August, Mr Sunak said: “Liz’s plan is to say ‘well, I believe in tax cuts, not direct support’. I don’t think that’s right because a tax cut for someone on her salary means 1,700 of help.

“For someone working really hard on a national living wage, in the care sector, that tax cut is worth about £1 a week. For a pensioner, who is not working, that tax cut is worth precisely zero.

“That’s not a plan that I think is right for our country. If we don’t directly help those vulnerable groups, those on the lowest incomes, those pensioners, then it will be a moral failure of the Conservative government and I don’t think the British people will forgive us for that.”

During a debate on Channel 4 in July, Mr Sunak told Ms Truss that the country would not be able to “borrow its way out of inflation.” In a heated exchange with his opponent, he said: “I don’t think the responsible thing to do right now is to launch into some unfunded spree of borrowing and more debt, that will just make inflation worse, it will make the problem longer.”

Ms Truss responded telling her counterpart that inflation rates have continued to soar as a result of failure in monetary policy. Mr Sunak retorted: “Liz, we have to be honest – borrowing your way out of inflation isn’t a plan – it’s a fairy tale.”

What have Rishi Sunak’s supporters said about Liz Truss’ tax cuts?

Mr Sunak’s assessment of the policy has led to his strongest supporters criticising the recent mini-budget announced by Mr Kwarteng. Huw Merriman, chairman of the Transport Select Committee, had supported Mr Sunak throughout his campaign and has said that he hopes to be “proven wrong” by the reaction to the policy, including the party tanking in polls against Labour.

He said: “Those of us who backed Rishi Sunak lost the contest but this poll suggests that the victor is losing our voters with policies we warned against. For the good of our country, and the livelihoods of everyone in our country, I still hope to be proven wrong.”

George Osborne, who served as Chancellor of the Exchequer under David Cameron  also criticised Ms Truss’ “schizophrenic” economic policy. Speaking to Channel 4, the former politician said: “Fundamentally, the schizophrenia has to be resolved – you can’t have small-state taxes and big-state spending.”

Will Rishi Sunak vote for Liz Truss’ tax-cutting policy?

Upon conceding defeat in the Tory leadership race, Mr Sunak told reporters that he would not accept a seat in Ms Truss’ cabinet if offered. This was due to their drastically different views on policy.

He added that he would return to the backbenches as an MP. However, when asked if he would vote for policies as a backbench member of parliament, Mr Sunak said: “Of course, I’m going to support a Conservative government. I believe very strongly in the Conservative party, and I want it to do well, and I will always, whether as a minister or as a backbencher, always support a Conservative government because I believe that’s the best thing for this country.”

He did not explicitly refer to whether he would back the extraordinary tax-cut plans, meaning that the jury is still out on whether he will back his government on the mini-budget.