A leading Tory leadership candidate today threatened to cut the health service and the schools department by 20% in a fresh wave of austerity.
New Chancellor Nadhim Zahawi, who is bidding to replace Boris Johnson as Prime Minister, promised swingeing public service cuts if he gets into Downing Street.
Multi-millionaire property tycoon Mr Zahawi said the move would fund tax cuts.
But he was ridiculed by Labour for suggesting education department cuts would fund… a pay rise for teachers.
It comes as nearly a dozen Tory leadership hopefuls frantically try to outbid each other with tax cuts before the field is whittled down by the end of this week.
Boris Johnson had previously vowed to cut a fifth of civil service jobs, asking departments to model staff cuts of 20%, 30% or 40% by March 2025.
Today Mr Zahawi said he had managed to get 20% of cost reductions as Education Secretary, and if he was Prime Minister, he would go through the models from “each department” to get “as close to that number” as possible.
Asked if it would include the health services and Department of Health he told Sky News: “I can tell you there's none better than [new Health Secretary] Steve Barclay in being able to focus his laser like focus on looking at where efficiencies… and making sure he delivers those cost savings that the health department.”
Asked if he thought there was “flab” in the health service he replied: “I think it's only right that across government we do this exercise. It's an important exercise.”
Asked again to confirm he meant a 20% cut in “every department” he said: “Well, that's what I want to make sure we get to - that will give me the headroom to be able to deliver tax cuts which I want to deliver.”
Mr Zahawi said he was “looking at what more I can do” on plans to bring down income tax from 20p to 19p from 2024, a business rate review, and wants to bring down corporation tax despite plans to raise it from 19% to 25% on some profits next year.
“Nothing’s off the table”, he said, but he insisted he would not need an emergency budget.
As of 8.30am today Mr Zahawi was fifth-placed among 11 hopefuls with 14 MP backers. The Tories’ 1922 Committee will meet tonight to decide the rules of the contest and could set tough thresholds for knockout stages this week.
MPs will whittle down the candidates to two before July 21, followed by a summer of hustings and a vote by the Tory party membership.
Frontrunner Rishi Sunak has insisted he must be responsible but his rivals are battling to cut taxes - despite many of them voting tax hikes through in government.
Foreign Secretary Liz Truss announced her candidacy overnight saying: “I would start cutting taxes from day one to take immediate action to help people deal with the cost of living.”
Millionaire rival Jeremy Hunt - who plans to slash corporation tax from 19% to 15% - today said he wants to "cut all taxes" and reducing Government department running costs is "something we should always be looking at".
Moderate candidate Tom Tugendhat has said he would "lower taxes across every aspect of society" and said he was against a hike in National Insurance.
He argued for "taking the brakes off" the economy as it is the "private sector that generates growth", but did not explain how he would finance the tax cuts.
The director of the Institute for Fiscal Studies (IFS) said “everyone would like lower taxes” but leadership contenders “need to be clear about consequences”.
Paul Johnson added: “We'll need to spend much more on NHS, social care, pensions.
“That must mean tax rises OR a real plan for major surgery to parts of welfare state. Latter may be possible but nobody is talking about it.”
A Labour source mocked Nadhim Zahawi for saying he still wanted to raise starting pay for teachers by 9%, and 7% next year. Other teachers would get 5% over two years. All of these are a real-terms pay cut.
The source said: “Nadhim Zahawi’s proposals are utterly mad - but at least they are honest. The tens of billions of pounds of unfunded spending commitments made by every Tory leadership hopeful would mean dramatic cuts to the NHS, policing and schools.
“Every other candidate should now explain how they will fund their eye watering pledges - simply promising to shake the magic money tree isn’t an answer to the challenges Britain faces.”
Shadow Work and Pensions Secretary Jon Ashworth told Sky News: “Nadhim Zahawi is admitting deep swingeing cuts to the NHS… to the value of the pension.
“At least he’s honest about the cuts agenda. But you’ve got other Conservative politicians who sat in that Cabinet supporting all the tax rises that have been implemented under this Conservative government, saying they’re going to cut taxes by £30bn, sometimes even more than that.
“They have to say where the money is coming from.”
