Liz Truss and Rishi Sunak secured their places in the final two on Wednesday, while Penny Mordaunt, once the bookies’ favourite, was knocked out in the fifth round of voting by Conservative MPs.
Ms Mordaunt picked up 105 backers, which was not enough to defeat Ms Truss on 113 or Mr Sunak on 137.
Kemi Badenoch was knocked out of the fourth round on Tuesday, after Tom Tugendhat was voted out on Monday.
Suella Braverman was eliminated in the second round on July 14, while Jeremy Hunt and Nadhim Zahawi both crashed out the day before.
The identity of Britain’s next prime minister remains in the balance but one thing seems certain: the Tories are entering the “nastiest” leadership campaign in their history.
Here, we assess the chances of the final two candidates still in the running. The latest odds are from SkyBet.
We will keep this article updated.
Latest odds: 13/8
The man who helped bring down Boris Johnson by resigning as chancellor could yet succeed him despite the controversy earlier this year over his multi-millionaire wife’s non-dom tax status and his own curious decision to retain a US green card during much of his time at the Treasury.
His biggest hurdle might be convincing fellow MPs that his reluctance to cut taxes makes him fit to run the country, but the 42-year-old is one of the few candidates with the requisite experience and skills to step straight into the top job.
The former chancellor has pledged to create a new criminal offence for belonging to or facilitating grooming gangs, which would lead to tougher sentences, in a first glimpse into his approach on crime.
He also called for criminals to spend longer in prison if they do not attend sentencing hearings and backed ministers getting a veto over parole board decisions.
Mr Sunak has insisted that he is not too rich to be Tory leader and prime minister, as he asked people to judge him on his actions and not his bank account.
He said he hoped his background, which has seen him amass a fortune in the City, would serve as an inspiration.
Speaking to The Telegraph in his first campaign interview on July 12, he pledged to model himself on Margaret Thatcher with responsible tax cuts.
Countering claims that his refusal to promise immediate tax cuts shows he is not a true conservative, Mr Sunak said that, by prioritising inflation, he was following the Iron Lady’s economic approach more than his rivals.
“We will cut taxes and we will do it responsibly,” he said. “That’s my economic approach. I would describe it as common sense Thatcherism. I believe that’s what she would have done.” Read the full interview here.
In an opinion piece for The Telegraph on July 21, Mr Sunak said: "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."
Read his op-ed here.
Latest odds: 4/9
Liz Truss is the front-runner to be the next prime minister, after Tory MPs voted her into the final two of the leadership contest alongside Rishi Sunak on July 20.
Bookmakers have Ms Truss as the favourite after a string of recent polls found Conservative Party members – who will decide the contest – favoured her over Mr Sunak.
Ms Truss attacked Mr Sunak's record, saying that the Government had been "going in the wrong direction on tax".
Ms Truss launched her Tory leadership bid by promising to cut tax from “day one” in office, declaring that it is time to get back to Conservative values.
In an article for The Telegraph announcing her candidacy, the Foreign Secretary signalled that she would cut corporation tax, reverse the National Insurance rise and overhaul business rates.
Ms Truss argued she could be trusted with Brexit despite voting Remain in the 2016 EU referendum as she held a launch event for her Tory leadership bid. She said: “We need to deliver Brexit and all the opportunities it offers. We need to win the fight for freedom at home and across the world.”
A tax-cutting Tory who likes to play up comparisons to Mrs Thatcher, she said in a TV debate: “I’m running an entirely positive campaign which is about the great challenges we face and what we need to do to deliver for the people of Britain because we are facing a cost-of-living crisis, families are struggling.”
A government minister since 2012, Ms Truss is the longest continuously serving member of the Cabinet, having held four previous Cabinet posts.
You can read her Telegraph Op-Ed here.
The final two candidates’ positions on key policies
By Nick Gutteridge
Taxes: The former chancellor has been the only candidate to resist the calls for immediate tax cuts saying the nation needs “honesty and responsibility, not fairytales”. He has pledged to focus on getting inflation under control and only cut taxes once that happens, presenting his position as “common-sense Thatcherism”.
Borrowing: Mr Sunak has repeatedly said that the nation must balance its books and that borrowing to fund tax cuts “might make us feel better in the moment but will leave our children worse off tomorrow”. He has warned that “borrowing your way out of inflation isn’t a plan”.
Net Zero: He has committed to keeping the target of making Britain carbon neutral by 2050. To achieve that he would oversee a massive expansion in offshore wind farms, but he would maintain the ban on putting up any new turbines on land. He wants to make the UK energy self-sufficient by 2045.
Trans: The former chancellor launched his campaign by pledging a new “manifesto of women’s rights”. He has railed against “trends to erase women via the use of clumsy, gender neutral language” and voiced concerns about trans athletes being allowed to compete in women’s sport, insisting “biology is fundamental”.
Brexit: Mr Sunak voted Leave and has said taking back control of lawmaking will give Britain a competitive economic edge. He has pledged to scrap or reform all remaining EU rules on the UK’s statute books by the next election and wants to overhaul Brussels’ red tape clogging up the City.
Defence: He has vowed to stick to the Nato target of spending two per cent of GDP on defence and has suggested he would exceed that, saying it is a floor, not a ceiling. But he has refused to commit to the “arbitrary” 2.5 per cent rise promised by Boris Johnson.
Housing: Mr Sunak has pledged to speed up building in cities and on brownfield sites as well as cracking down on “land banking” by big developers. He has suggested he wants to see Government funding for affordable housing scaled back, with more incentives put in place for developers to build homes poorer people can afford to buy.
Immigration: The former chancellor would keep the Rwanda policy, saying it is “absolutely critical that we have control of our borders”. He has said a tough approach is needed to foil “an illegal set of criminal gangs who were causing people to die in pursuit of coming here”.
Taxes: The Foreign Secretary has announced £30 billion worth of tax cuts and would start to implement them “from day one”. She would cancel the planned 6 per cent rise in corporation tax and reverse the National Insurance hike which came into force in April. She would also lift green levies on energy bills for two years.
Borrowing: She plans to pay for tax cuts by putting the Covid debt on a “longer-term footing” akin to the nation's war debt from the 1940s. That would potentially involve refinancing the £311 billion borrowed during the pandemic so that it was paid back over a much more drawn-out period.
Net Zero: Ms Truss backs the target overall but has said “we need to reach net zero in a way that doesn’t harm businesses or consumers”. She is “very supportive of using gas as a transition fuel” and has suggested she would end the ban on fracking so it could go ahead in areas where there’s local consent.
Trans: The Foreign Secretary has hit out at “ludicrous debates about pronouns” and as equalities minister scrapped plans to reform the law so people could change gender without a medical diagnosis. She has backed feminist campaigners, including Labour MP Rosie Duffield over her statement that “only women have a cervix”.
Brexit: She vociferously supported Remain during the 2016 referendum but has since transformed herself into one of the most steadfast Brexiteers in the Government. She has driven forward plans to override the Northern Ireland Protocol and has said she now regrets voting to stay in the EU.
Defence: Ms Truss would increase spending on the military to three per cent of GDP by the end of this decade and “review” the plan to cut the size of the Army to 72,500. She has said Russia’s invasion of Ukraine shows the West has not dedicated enough funding to defence.
Housing: The Foreign Secretary has pledged to rip up “Stalinist” housing targets and would make it quicker and easier for developers to build on brownfield land in “opportunity areas”. She has said the UK needs to “build up more” in cities and “it’s very important that we have policies that have local consent”.
Immigration: She “completely agrees” with the Rwanda policy and says “we need to have further reforms in the UK to make sure we can really stop illegal immigration”. She has said she wants to see reform to the way ECHR rulings are applied in Britain but “would be prepared” to withdraw from it if necessary.