Liz Truss accuses Rishi Sunak of 'project fear' as Tory contenders clash again

The economy was once again a dividing line in the Tory leadership race, as Libby Weiner reports

Tory infighting continued as Rishi Sunak and Liz Truss clashed bitterly over tax and spending plans in their race to become the next prime minister.

Former chancellor Mr Sunak claimed there is “nothing Conservative” about Ms Truss’s approach and it would lead to mortgage interest rates going up to 7%.

Foreign Secretary Ms Truss in turn suggested her rival would lead the country into a recession.

Ms Truss said she would put an economic growth plan in place “immediately” if she becomes prime minister, along with imposing a temporary moratorium on the green energy levy.

The increase in national insurance would also be reversed, Ms Truss said.

Mr Sunak said he would like to make sure that his government “always” has policies in place to support through the cost-of-living crisis.

In one of the more fiery clashes during their head-to-head televised debate on the BBC, Ms Truss accused her leadership rival of “project fear” as he criticised her plans to cut tax – a nod to an argument from the Remain campaign ahead of the Brexit referendum.

Former chancellor Mr Sunak replied: “I remember the referendum campaign, there was only one person on the side of remain, project fear, and it was you.”

The foreign secretary then said: “Maybe I’ve learned from that.”

Ms Truss has supported the Remain campaign in 2016, while Mr Sunak backed Leave – something he has been quick to remind voters over the course of the leadership battle.

Rishi Sunak interrupted Liz Truss. Credit: PA

Back to scrutinising their plans, Ms Truss said her plans would see the government start paying down the debt in three years’ time, with Mr Sunak countering: “You’ve promised over £40 billion of unfunded tax cuts – £40 billion more borrowing.

“That is the country’s credit card and it’s our children and grandchildren, everyone here’s kids will pick up the tab for that. There’s nothing Conservative about it.”

Ms Truss later said: “No other country is putting up taxes at this moment, the OECD has described Rishi’s policies as contractionary. What does contractionary mean?

“It means it will lead to a recession. We know what happens when there’s a recession. I grew up in Paisley and Leeds in the 1980s and 1990s.

“I know what it’s like when people have to struggle when you have high unemployment and people don’t have work to go to.

“We cannot allow that to happen.”

Did Rishi Sunak do enough to sway the minds of Tory members? Carl Dinnen breaks down what Monday's debate means for the race to Downing Street

Mr Sunak spoke over Ms Truss and warned inflation was a problem in the 1980s and it is a “problem we have now”, adding: “We need to get a grip on inflation.

“If we don’t do that now, it’s going to cost all of you and everybody watching at home far more in the long run.

“Liz, your plans, your own economic adviser has said that will lead to mortgage interest rates going up to 7%, can you imagine what that’s going to do for everyone here and everyone watching, that’s thousands of pounds on their mortgage bill?

“It’s going to tip millions of people into misery and it’s going to mean we have absolutely no chance of winning the next election either.”

Ms Truss highlighted Mr Sunak wants to raise corporation tax this autumn at a time of a “global economic crisis”.

She later said: “This Chancellor has raised taxes to the highest rate in 70 years and we’re now predicted a recession. The truth is in the figures.”

'It was a lively, rambunctious debate, but Rishi Sunak was the clear winner': Dominic Raab gives his verdict

Meanwhile, when it came to Boris Johnson, who will be stepping down as prime minister to make way for one of the two candidates, Ms Truss gave his premiership a seven out of ten - while Mr Sunak gave him full marks.

But Ms Truss said “I just don’t think it’s going to happen” when asked if she would give Mr Johnson a role in her cabinet if she wins the Tory leadership election and becomes prime minister.

She added: “Having spent time with him this week on foreign affairs, I very, very much suspect that he would not want a future role in the government, I think he needs a well-earned break from what has been a very difficult few years.

“After all, he was seriously ill with Covid, we haven’t even talked about that, and that was a terrible moment when we didn’t know what was going to happen, he has faced real challenges that no leader would have expected to face, the appalling war in Ukraine, so I simply don’t think that is really an option.”

“I just don’t think it’s going to happen," she went on to say. "I think that what’s done is done, the party has made the decision, I have told you my views of that, I have now put myself forward as a candidate because I think I’m the right person to do the job and I don’t believe that he would want further involvement.”

On whether he would have Mr Johnson in his cabinet, Rishi Sunak said: “The simple answer from me is no, I think we need to look forward at this point, that’s why I want to be prime minister.”

'Frankly I'm not going to talk about some tittle-tattle': Therese Coffey played down the importance of Nadine Dorries' earlier remarks about Rishi Sunak's clothes

The two Tory leadership hopefuls were also asked about Culture Secretary Nadine Dorries - who is backing Ms Truss - criticising Mr Sunak’s expensive wardrobe, while praising the foreign secretary's more modest clothes. The former chancellor said: “I think in the Conservative Party, we judge people by their character and their actions.

“I’m proud of my record as chancellor in helping some of the most vulnerable people over the last couple of years. And I wasn’t born this way."

Ms Truss failed to “disown” Ms Dorries' remarks, saying: “I am not going to give Rishi fashion advice. I mean, I have said he is a very well-dressed man. I’m not going to give him fashion advice.

“And I don’t think this is really the key issue in the campaign, frankly, you know, we have had a really serious discussion about the importance of growing the economy, and what will help achieve that.

"That’s what people in Stoke-on-Trent [the location of the debate] want to hear about. They don’t want to hear about Rishi and my fashion choices.”

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The debate came just hours after a Conservative peer claimed Boris Johnson “does not want to resign” and “wished that he could carry on” as prime minister.

Lord Cruddas of Shoreditch, a former Conservative Party treasurer, said the comments were made to him by Mr Johnson over lunch at Chequers on Friday.

A Number 10 spokeswoman said: “The prime minister has resigned as party leader and set out his intention to stand down as PM when the new leader is in place.”

Both candidates ruled out a job for Mr Johnson in their cabinet, with Ms Truss saying she believes he “needs a well-earned break” before eventually adding: “I am sure he will have a role, I am sure he will be vocal but he will not be part of the government.”

Mr Sunak was more direct in his reply by saying: “The simple answer for me is no.”