Liz Truss at a Conservative Leadership Hustings in Birmingham
(Picture: Getty Images)Liz Truss has defended herself against accusations that her proposals of tax cuts would fuel inflation at a Conservative leadership hustings in Birmingham.
Her opponent Rishi Sunak warned that millions of households in the UK could face “destitution” without further aid this winter, and has repeatedly claimed Ms Truss’ tax-cutting agenda could stoke inflation.
Some experts have predicted that inflation could reach as high as 18 per cent next year.
Both candidates clashed over how to best deal with the cost-of-living crisis in the latest leadership hustings at the Birmingham NEC.
Ms Truss, the front-runner in the race, said: “This whole language of ‘unfunded’ tax cuts implies the static model, the so-called abacus economics that the Treasury orthodoxy has promoted for years, but it hasn’t worked in our economy because what we have ended up with is high tax, high spending and low growth.
“That is not a sustainable model for Britain’s future."
The Sunak campaign has attacked Ms Truss’ economic credibility in the final weeks of the race, amid suggestions she will not ask the independent Office for Budget Responsibility (OBR) for a forecast ahead of the measures she is planning for next month, if she becomes prime minister.
Conservative Treasury Select Committee chairman Mel Stride, who is backing Mr Sunak, has written to the Chancellor and the OBR to ask whether work is being carried out to prepare for a potential emergency budget.
During the hustings, the Foreign Secretary also criticised the media for “constantly” suggesting that she has sought to imitate Margaret Thatcher.
However, Mr Sunak, the former Chancellor, welcomed the support of Baroness Thatcher’s cabinet ministers.
“I think unfunded tax cuts are wrong and do you know what?” he said.
“Her (Thatcher’s) chancellor Nigel Lawson agrees with me, the head of her policy unit agrees with me, Norman Lamont agrees with me
He also warned that "millions of people are going to face the risk of destitution" if more is not done to help them with energy bills this winter.
He earlier rejected suggestions that he should quit the contest to give Ms Truss a clear path to become prime minister and take charge of the worsening economic situation as soon as possible.
He told broadcasters that tax cuts "may sound attractive at first, but if they risk stoking inflation and actually do nothing to help poorer people and pensioners, then they actually are going to be bad for everyone".
"I don’t want to put fuel on the fire, I don’t think that is the right approach," he added.
