Three senior members of Margaret Thatcher’s government have said that the former prime minister would not have approved of Liz Truss’s plans to slash taxes if she reaches 10 Downing Street.
The comments came as both Ms Truss and her rival Rishi Sunak evoked Lady Thatcher’s memory in their bids for the support of the 160,000 Conservative members who will choose the new party leader and PM.
Sunak on Saturday used a visit to the former premier’s hometown of Grantham to denounce Ms Truss’s plans for £30bn of immediate tax cuts funded by borrowing as “immoral”, and to insist that Thatcher would delay any such move until inflation was under control.
But Ms Truss said that the most important thing to her about the “fantastic” Thatcher was her willingness to “challenge the groupthink” on the economy.
“There were 364 economists that objected to Mrs Thatcher’s plan, and what we are doing at the moment, the economic policy at the moment is not delivering the economic growth we need,” she told the Mail on Sunday.
However, three members of Lady Thatcher’s last cabinet have now spoken out to say that the “Iron Lady” – who was PM from 1979-90 and remains a totem to today’s Conservative members – would have taken a dim view of Truss’s plans.
Norman Lamont, who was chief secretary to the Treasury under Thatcher and went on to serve as chancellor, told The Observer: "Mrs Thatcher strongly believed that cutting the deficit came before cutting taxes. She also believed that deficits were simply deferred taxation."
Sir Malcolm Rifkind, Scotland secretary in Thatcher’s cabinet and later foreign secretary, said he was as "certain as I can be that she would be very unimpressed by funding tax cuts through increased borrowing, even if it wasn’t at a time of high inflation - but certainly when it is".
He added: "She believed that tax cuts should be funded either by economic growth that was already producing more revenue, or by cuts in public spending. That’s what Thatcherism means. I think every single Tory, as well as lots of other people, believe in the desirability of tax cuts. But no Conservative would ever see it as an ideological imperative."
And Chris Patten, who was environment secretary under Thatcher before being appointed party chair by her successor John Major, told the paper: "Margaret Thatcher was a fiscal Conservative who did not cut tax until we had reduced inflation. She was honest and did not believe in nonsense."
Ms Truss has said that, if elected Tory leader on 5 September, she will reverse Mr Sunak’s 1.25 per cent hike in National Insurance contributions, scrap a planned rise from 19 to 25 per cent in corporation tax and suspend green levies on energy bills.
Mr Sunak yesterday warned that immediate tax cuts risked stoking inflation and forcing up mortgage interest rates at a time when the UK’s debt stands at a historic high.
"Not only do I think it’s the wrong thing for the economy, I also believe that it’s immoral because there is nothing noble or good about racking up bills on the country’s credit card that we pass on to our children and grandchildren," he said.
A spokesperson for Truss said: "Liz’s plans for tax cuts will reward people for their hard work and effort, allowing them to keep more of their hard-earned money. You cannot tax your way to growth."
