Liz Truss and Rishi Sunak fight over tax cuts as Blue-suited ghost of Thatcher looms

The taxing issue of who will be the next Prime Minister has the two remaining Tory candidates both channelling the blue-suited ghost of Margaret Thatcher.

Former Chancellor Rishi Sunak insisted he was the heir to the Iron Lady as he sought to convince Tory members he believed in cutting taxes.

While rival Foreign Secretary Liz Truss, who has pledged to slash taxes, was forced to deny she was modelling herself on Thatcher as she battles to succeed Boris Johnson.

Economic policy is the key dividing line in the second round of the ­leadership contest, where around 160,000 Conservative members will pick the next leader. But Mr Sunak does not expect to be able to cut taxes until autumn next year at the earliest, the Mirror understands.

Right-winger Ms Truss has pledged to hold an emergency budget to slash taxes that would cost an eye-watering £30bn a year.

Foreign Secretary Liz Truss, who has pledged to slash taxes, was forced to deny she was modelling herself on Thatcher (AFP via Getty Images)

By contrast, Mr Sunak has repeatedly warned against cutting taxes while inflation spirals to a 40-year high. But he insisted: “My values are Thatcherite. I believe in hard work, family and integrity.

“I am a Thatcherite, I am running as a Thatcherite and I will govern as a Thatcherite.” Ms Truss denied she was modelling herself on Thatcher, despite copying her outfits and posing like her in a tank.

“It is quite frustrating female politicians always get compared to Margaret Thatcher while male ­politicians don’t get compared to Ted Heath,” she told GB News.

The British conservative leader, Margaret Thatcher, also known as The Iron Lady, pictured in 1980 (Mondadori via Getty Images)

Conservative leadership candidate Rishi Sunak leaves an office building in London (REUTERS)

A YouGov poll put her on 62% to Mr Sunak’s 38% – a huge 24% lead going into the six-week run-off.

But Mr Sunak thinks Tory demands for immediate tax cuts are at odds with mainstream voters, a friend said.

He has warned about letting Labour attack the Tories over “fantasy economics”, accusing Ms Truss of “socialism” in a recent TV leadership debate.

Foreign Secretary and Tory leadership candidate, Liz Truss meeting staff and children during a visit to the children's charity (PA)

But she admitted to the BBC her plans will cost around £30bn a year.

Robert Joyce, of the Institute for Fiscal Studies think tank, said her cuts could cost “considerably more”.

One Truss ally said: “The guns are going to be out. They don’t call Liz the human hand grenade for nothing”.

An ally of Mr Sunak hit back: “She’s a bit weird, that’s going to come out”.