Rishi Sunak launches leadership campaign as rivals take aim over tax burden

As nominations open to replace Boris Johnson, the former chancellor will insist he has a plan to deal with the economic “headwinds” the country is facing, saying it is a matter of “when” and not “if” the tax burden starts to fall.

But the caretaker Prime Minister’s arch loyalists Nadine Dorries and Jacob Rees-Mogg came out in support of Foreign Secretary Liz Truss in a bid to block Mr Sunak.

The Culture Secretary and the Brexit opportunities minister gave their public backing to Ms Truss when speaking to reporters in Downing Street after attending Mr Johnson’s Cabinet meeting.

Following Education Secretary James Cleverly in backing Ms Truss, Mr Rees-Mogg said she has “always opposed Rishi’s higher taxes, that again is proper conservativism”.

Ms Dorries said Ms Truss, who voted Remain in the 2016 referendum, is probably a “stronger Brexiteer than both of us” and has “consistently argued for low tax policies”.

However, Deputy Prime Minister Dominic Raab backed Mr Sunak, and Transport Secretary Grant Shapps appeared to pull out of the race to support the former chancellor’s campaign.

Leadership rival Nadhim Zahawi lashed out at his predecessor Mr Sunak’s reluctance to do more now, saying it is not a “fairytale” to cut taxes to ease the cost-of-living crisis.

Mr Sunak will receive heavyweight support from another ex-chancellor, Lord Lamont, who said Mr Sunak has the courage to take the “tough decisions” needed to deal with the “extremely serious” economic situation.

Candidates require the support of 20 MPs in order to make the leadership contest, with nominations closing later on Tuesday.

By Tuesday morning, Mr Sunak, Penny Mordaunt and Tom Tugendhat look to already have the declared backers to make the threshold.

Several other candidates – including Liz Truss, Mr Zahawi, Jeremy Hunt and Kemi Badenoch – were close enough before nominations formally opened to suggest they will be in the race.

Insiders from Sajid Javid’s campaign were also confident of making the cut, as were allies of Suella Braverman.

Mr Shapps faces a battle to get the required nominations, while Rehman Chishti’s low-key campaign does not appear to have caught the imagination of his colleagues and he may well fall at the first hurdle.

Mr Sunak – who has the most declarations of support so far – is alone among the contenders to succeed Mr Johnson in not promising immediate tax cuts if he wins.

He has come under attack from allies of the Prime Minister, who believe his announcement last week that he is quitting helped trigger the slew of resignations which forced Mr Johnson to admit his time is up.

In the past, Mr Rees-Mogg has described him scathingly as the “much-lamented socialist chancellor” who put up taxes while failing to curb inflation.

In his address, Mr Sunak will defend his record while seeking to make a virtue of his willingness to confront difficult economic realities in the wake of the pandemic.

“We need a return to traditional Conservative economic values – and that means honesty and responsibility, not fairytales,” he will say.

“I have had to make some of the most difficult choices in my life when I was chancellor, in particular how to deal with our debt and borrowing after Covid.

“I have never hidden away from those, and I certainly won’t pretend now that the choices I made, and the things I voted for, were somehow not necessary. Whilst this may be politically inconvenient, it is the truth.

“My message to the party and the country is simple: I have a plan to steer our country through these headwinds. Once we have gripped inflation, I will get the tax burden down. It is a question of ‘when’, not ‘if’.”

But Mr Zahawi used his campaign launch video to say: “I believe cutting taxes isn’t a fairytale but rather a critical step to tackle the cost-of-living crisis.”

Meanwhile:

– Mr Hunt pledged to cancel “unthinkable” planned cuts to the size of the Army in the face of the threat posed by Vladimir Putin’s Russia and raise spending on defence to 3% of national income by 2028.

– Mr Shapps also vowed to increase spending to 3%, a figure in excess of the 2% Nato target and the existing government plan which would see it reach 2.5% by the end of the decade.

– Mr Tugendhat and Ms Badenoch will launch their campaigns.

– Chancellor Mr Zahawi brushed off a rebuke from Bank of England governor Andrew Bailey for setting out tax proposals during the leadership campaign, saying he was setting out his stall to be the next prime minister and his plans were “fully costed”.

Mr Tugendhat, the chairman of the Commons Foreign Affairs Committee, who has already said he would reverse the rise in national insurance and cut fuel, said further measures are needed to boost economic growth.

In a speech on Tuesday, he will set out his 10-year plan for growth to address the UK’s lagging productivity, with investment in skills and infrastructure as well tax breaks for research and development.

Ahead of his speech, Mr Tugendhat, a former soldier, said: “Tax cuts cannot be the only round in the magazine to fire growth in the economy.”

Candidates need the backing of 20 MPs by 6pm on Tuesday to make it through to the ballot.

Under the timetable set out by 1922 Committee chairman Sir Graham Brady, the first ballot of MPs will take place on Wednesday, with candidates failing to get 30 votes being eliminated, with a second expected on Thursday.

The process is then likely to continue into next week, with candidate with the lowest vote dropping out, until the list of candidates is whittled down to just two – who will go forward into a ballot of party members.

The new prime minister will be announced on September 5 when MPs return to Westminster from their summer break.