Conservative leadership candidate Liz Truss has railed against “Treasury orthodoxy” as she defended herself against accusations her economic proposals were dangerous.
Her opponent Rishi Sunak warned that millions of households in the UK could face “destitution” without further aid this winter, after claiming Ms Truss’ tax-cutting agenda could “pour fuel on the fire” of inflation.
The cost-of-living crisis dominated the debate over who will succeed Boris Johnson as prime minister, as both candidates clashed at the latest leadership hustings at Birmingham’s National Exhibition Centre.
Ms Truss told the audience of Tory members: “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.”
Ms Truss sought to pitch her proposals as a new economic model ahead of the hustings, claiming that “business as usual” could not go on.
Chancellor Nadhim Zahawi claimed that Ms Truss “understands the economics of growth” as he introduced the Foreign Secretary.
The Sunak campaign has attacked Ms Truss’ economic credibility in the final weeks of the race, after reports suggested 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, Ms Truss criticised the media for “constantly” making comparisons between her and former prime minister Margaret Thatcher, saying that the UK was in a “very different situation” from when the Iron Lady came to power in 1979.
But her rival welcomed the support of Baroness Thatcher’s cabinet ministers.
Mr Sunak said: “I think unfunded tax cuts are wrong and do you know what?
“Her (Thatcher’s) chancellor Nigel Lawson agrees with me, the head of her policy unit agrees with me, Norman Lamont agrees with me.
“All of these people who understood Margaret Thatcher’s economics are supporting my economic plan because it is the right one for our country and it is a Conservative approach to managing the economy.”
Mr Sunak 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.
The former chancellor was earlier forced to fend off the suggestion that he should quit the contest to allow the next prime minister to 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.
Outside the exhibition centre, approximately 40 protesters gathered head of the hustings, chanting “Tory scum – out of Brum”, while party members queued to get in.
