Liz Truss has 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 will cut corporation tax, reverse the National Insurance rise and overhaul business rates.
The move piles further pressure on Rishi Sunak to promise tax cuts, with most of his rivals to replace Boris Johnson vowing to unpick policies he adopted as chancellor.
“I will fight the election as a Conservative and govern as a Conservative,” Ms Truss said, in a thinly veiled rebuke of Mr Johnson and Mr Sunak’s economic policy.
She added: “Under my leadership, I would start cutting taxes from day one to take immediate action to help people deal with the cost of living.”
Two other leadership candidates have also given their first interviews to The Telegraph and have issued promises to cut tax.
Penny Mordaunt, the trade minister, has promised to halve VAT on fuel and raise the income tax thresholds for basic and middle-earners in line with inflation.
Nadhim Zahawi, the Chancellor, said of tax cuts that “nothing is off the table” and signalled corporation tax and income tax could be reduced if he wins.
On Monday, a new 1922 Committee executive will agree the rules for how to whittle down candidates to a final two, with nominations needed by Tuesday.
Priti Patel, the Home Secretary, is expected to become the 11th candidate to announce a bid on Monday, framing herself as the most ardent defender of Brexit.
Mr Sunak has double the number of MP supporters as any other rival, but most MPs are yet to declare.
Michael Gove, the former communities secretary, has endorsed Kemi Badenoch, praising her "no b—----" approach.
Any MP who fails to get the support of 36 MPs is expected to be forced out of the race on Wednesday evening, under the new proposed rules designed to speed up the process.
Ms Truss’ article contains her first public comments on a leadership bid since rushing back from a G20 summit in Indonesia, after Mr Johnson resigned last Thursday.
She wrote: “It isn’t right to be putting up taxes now. I would reverse the National Insurance increase that came in during April, make sure we keep corporation tax competitive so we can attract business and investment into Britain, and put the Covid debt on a longer-term footing.
“I will get the private sector growing faster than the public sector, with a long-term plan to bring down the size of the state and the tax burden.”
The reference to bringing down the size of the state indicated that Ms Truss intends to lower current public spending, which is forecast to reach a 50-year high.
It is understood Ms Truss will launch a spending review if she wins office, reopening a three-year agreement that Mr Sunak signed off as chancellor last year.
She also wants to bring forward the Budget, which is currently pencilled in for November, according to an ally, with tax-cutting plans to be pursued as soon as she would enter Number 10.
Scrapping the rise in corporation tax from 19 per cent to 25 per cent due in April and reversing the 1.25 per cent increase in National Insurance, which kicked in this spring, would cost the Treasury tens of billions of pounds.
Ms Truss indicated that she would fund the move by bringing down public debt over a longer timeframe than Mr Sunak, who wants it falling by 2024.
The tax position is at direct odds with Mr Sunak’s stance. He has argued now is not the time for big tax cuts, given the need to bring down inflation, which is forecast to reach 11 per cent this year.
The UK is experiencing stagflation - both soaring prices and stuttering growth. Consensus among economists is that tax cuts fuel inflation, but they could also boost growth.
The battle over economic approach and timing looks set to be the central struggle as candidates vie to become the next prime minister.
In her leadership pitch, Ms Truss also tried to position herself as the candidate best placed to win over both Blue Wall Tory heartlands and Red Wall former Labour seats.
She wrote: “People want to be free to get on, live and thrive. They do not want the Government trying to run their lives or spend more of their money than is necessary. I have been standing up for core Conservative principles throughout my career.”