Liz Truss has warned she will make unpopular decisions as prime minister and defended tax cuts that benefit the wealthy as “fair”, despite growing calls to ditch them.
She pledged immediate action will be taken on soaring household bills if, as expected, she wins the keys to No 10 on Monday, with the promise of a plan within her first week.
But despite the gathering storm clouds and warnings her response to the crisis could have to run to tens of billions of pounds, she said: “Britain has been through worse, frankly.”
And she warned the public, who did not get a say in who becomes the new prime minister, that there would be difficult decisions ahead and “not all those decisions will be popular”.
Tax cuts which could hand nearly £2,000 to high earners were fair, she said, because they paid more overall.
But former chancellor Lord Hammond warned that cuts would add to already spiralling inflation and that the Conservatives’ “reputation for competent government” was at stake.
David Davis, on the right of the party, warned Ms Truss she faces a difficult balancing act and cautioned her not to “give low tax a bad name, by going down a route which leads to an increase in interest costs, massive increases in people’s mortgages or a decline in the pound”.
On tax cuts, David Gauke, a former chief secretary to the Treasury, told The Independent: “I think they are the wrong priority at this time, weakening the public finances, increasing our debt interest bills and are not well directed to those who need support most.”
Many Tory MPs privately admit they fear Ms Truss’s tax plans will exacerbate inflation at a time when experts already predict it could reach as high as 22 per cent.
Ms Truss also came under growing pressure over her refusal to set out more details on her plans to ease the crisis over energy bills.
Labour frontbencher Emily Thornberry characterised Ms Truss’s stance as “‘I can’t possibly tell you, I can tell you in a week’. I mean, why not [tell us now]?” she said.
If and when she enters Downing Street, Ms Truss will face the most challenging set of circumstances of any new prime minister in recent years. Experts predict that millions will struggle to pay sky-high energy bills, rising in part because of the ongoing war in Ukraine.
There are warnings that vital public services like schools and hospitals could buckle under the soaring charges they face. And police forces are braced for a rise in crime and disorder this winter as they draw up plans to deal with the cost of living crisis.
As well as an announcement on energy bills, Ms Truss pledged she would bring forward an emergency Budget within a month which would set out plans to cut taxes.
Shown figures which suggested her plans to scrap the recent rise in national insurance contributions would benefit top earners by around £1,800, while others could receive just £7, she told the BBC’s Sunday with Laura Kuenssberg programme the plans were “fair”.
“To look at everything through the lens of redistribution, I believe, is wrong,” she said. “Because what I’m about is about growing the economy and growing the economy benefits everybody.”
Ms Truss argues cutting taxes will raise revenue in the long term, in part by encouraging more businesses to invest in the UK.
Lord Hammond said that while the Conservative Party supported low taxes, “we have to be pragmatic and cutting taxes at a time when we have a huge deficit ... when inflation is the major problem we have to tackle, is simply not the answer”.
"Tax cuts now, everything else being equal, would deliver an inflationary stimulus," he told Sophy Ridge on Sunday.
Amid the criticism, Ms Truss did appear to row back on suggestions she could review the Bank of England’s interest rate-setting powers, saying she was a “great believer” in its independence.
The new prime minister will be announced just after 12.15pm tomorrow at the Queen Elizabeth II conference centre in Westminster. The winner will be informed of their victory only 10 minutes beforehand.
However, Boris Johnson will still remain prime minister for almost 24 hours. He and the new Conservative leader will both travel on Tuesday to Balmoral to see the Queen. The new Tory leader will be asked to form a government, triggering the starting gun on what is expected to be a swift reshuffle.
Ms Truss’s ally Kwasi Kwarteng is thought likely to become the new chancellor, with Ben Wallace remaining in charge of defence.
Another staunch loyalist, Thérèse Coffey, is tipped to become health secretary, seen as a key position this winter, with Jacob Rees-Mogg, expected to go to business.
But Ms Truss may still face the type of party unrest that eventually brought down her predecessors. Reports this weekend suggest as many as 12 MPs are already planning to submit no-confidence letters in her and want another leadership vote by the end of the year.
Ahead of the result, shadow international trade secretary Nick Thomas-Symonds said Labour was on an “election footing” and wanted Ms Truss’s government “swept away as soon as possible”.
Scotland’s first minister Nicola Sturgeon predicted that if the foreign secretary governed as she has campaigned in the leadership contest she would be a “disaster”.
Ms Truss’s rival, Rishi Sunak, who is widely expected to lose the leadership contest, also confirmed he would remain an MP no matter what the outcome.
