Rishi Sunak insists he won't stand aside for Liz Truss in Tory leadership race

Rishi Sunak has insisted he will not drop out of the Tory leadership race, despite opinion polls showing that Liz Truss has double his support among party members.

Asked during a Sky News debate on Thursday night whether he would quit the race, the former chancellor said: “The quick answer is no”. He stressed that he would continue “fighting”.

Two opinion polls this week have put Mr Sunak 32 percentage points and 34 percentage points behind Ms Truss, the Foreign Secretary. The winner of the leadership race is announced on Sep 5.

The gap prompted speculation that Mr Sunak could drop out – but he explicitly ruled that out for the first time since the new polls suggested Ms Truss was extending her lead.

Ms Truss and Mr Sunak also clashed about the likelihood of recession and the best way to tackle the forecasted downturn and soaring inflation.

Ms Truss, the Foreign Secretary, said recession could be avoided: "What the Bank of England have said today is of course extremely worrying but it is not inevitable. We can change the outcome."

She argued her tax cuts, including scrapping the Corporation Tax rise and reversing the National Insurance increase, would help avert the downturn, saying: “You simply cannot tax your way to growth.”

But Mr Sunak, the former chancellor, insisted he would not promise tens of billions of pounds of “goodies” - a reference to his rival’s promises - because it would fuel inflation.

He added: “We in the Conservative Party need to get real and fast because the lights on the economy are flashing red and the root cause is inflation.”

Mr Sunak was challenged on his wealth - he is married to the daughter of an Indian billionaire - and whether it meant he was out of touch with the British public.

Questioned on his expensive suits and shoes, Mr Sunak said to applause: "I think the British people judge people by their character and by their actions and not by their bank account."

The 90-minute programme saw each candidate take questions from an audience of Tory members and Sky News presenter Kay Burley rather than directly debating each other.

Ms Truss declared: “I have no skeletons in my closet” and said she was “very confident” that Boris Johnson did not mislead Parliament over the partygate scandal.

She also said she would not visit Taiwan, unlike Nancy Pelosi, the US House of Representatives Speaker, whose visit this week prompted a fierce response from China.

10:03 PM

That's all for tonight...

Tonight's Sky News debate - or at least the reaction of the audience to prime ministerial hopefuls Rishi Sunak and Liz Truss - may have thrown a spanner in the works of what has felt like an increasingly predictable contest.

The former chancellor came out on top among the studio audience and seemed more composed in his responses to tough questioning from Kay Burley.

But Liz Truss gave a strong response when grilled about her previous changes of heart around key issues, and pointed out few people will have the same opinions across decades.

Ms Truss also sought to strike a more optimistic note as she insisted a recession was not "inevitable" despite bleak warnings from the Bank of England. Mr Sunak, for his part, used those same warnings to suggest Ms Truss's policies would only add fuel to the fire.

The Foreign Secretary remains on track to enter No 10. But tonight has shown the views of the Tory membership may be less clear cut than has been suggested - and the sheer scale of the challenges facing whoever ends up as Britain's next prime minister.

09:49 PM

You've watched the debate, now have your say:

09:38 PM

The Sunak campaign is enjoying that show of hands at the end...

09:36 PM

Snap analysis: A Pyrrhic victory?

The verdict of the studio audience at the end of tonight's Sky News debate seemed conclusive - they were more convinced by Rishi Sunak than Liz Truss.

Mr Sunak seemed more comfortable than Ms Truss in front of the cameras and during his grilling from Kay Burley, during which the Foreign Secretary seemed to struggle when pressed on her about-turn earlier in the week over public sector pay.

But the audience seemed to reach a different conclusion from the Tory grassroots, polling of whom puts Ms Truss in the lead by a considerable margin.

And once again there seemed to be no decisive moment that would swing this contest in favour of the former chancellor - meaning that while he may have been the winner in tonight's televised showdown, he still has it all to do if he is to enter 10 Downing Street on September 6.

09:30 PM

Who are the audience most likely to vote for?

A clear majority of the Sky News studio audience put their hands up for Rishi Sunak - rather than Liz Truss.

09:28 PM

Why are so many people supporting Truss not Sunak?

"It goes back to the question right at the beginning. Every stage of the parliamentary process, I had the broadest and biggest support."

Mr Sunak is asked about why close Cabinet and ministerial colleagues - such as Ben Wallace and Penny Mordaunt - have opted to back Ms Truss instead.

"Most MPs in Parliament and all MPs work together in lots of different guises. We're all one team, we're all one family, we're going to come together after this and we're going to take it to Keir Starmer and win the next election, because that's the real prize. Plenty of people sat around the Cabinet table also support me. I've been really humbled actually."

09:27 PM

Liz Truss's policies would benefit top 15 per cent, claims Sunak

Rishi Sunak denies he is too rich to become chancellor and says one of the last things he did as Chancellor "was helping the most vulnerable and people who really needed help".

"We're all going to have a difficult time and inflation makes everyone poorer and that's why I'm so concerned by policies that will make it worse and last longer and that's not right.

"When Liz is sitting here saying she's going to scrap the NHS levy, do you know who that benefits? That benefits the top 15 per cent of earners. It's not going to help the people David was talking about with the cost of living this winter."

09:24 PM

Rishi Sunak's quick-fire round

Why was Rishi Sunak absent from votes on abortion? "I completely agree with our current system of abortion, I don't think it should be changed."

Would he fist-bump the Saudi leader as Joe Biden did? "I'm not a fist-bumping person... Yes I would shake his hand, I think you do have to engage with people around the world, and they're a country we have a relationship with."

Does Mr Sunak now have working-class friends? "We all say silly things when we're younger. I don't go round asking them... I'd rather think we've moved beyond that as a country. I think people are less interested in where you've come from and more about where you're going."

Anything Mr Sunak wants to come clean about? "No, I've already had a high-profile role. I'm used to the scrutiny." He denies he has benefited personally from tax havens and says he had "nothing to do with" a part of an old business that operated from the Cayman Islands.

09:20 PM

Rishi Sunak clarifies position on onshore wind

Asked "onshore wind - [have] you changed your mind?" by Kay Burley, Mr Sunak says: "Last night I was asked a question, I didn't fully understand it and I misspoke. But my position on that is the same that it's been."

Rishi Sunak speaks in favour of fracking when it has the support of local communities and vows to get to net zero through "innovation" and enterprise.

09:18 PM

'Hang on, is this going to work?'

Asked about Ben Wallace's comments he had to be overruled on defence spending and Priti Patel reportedly saying he objected to the Rwanda plan, Rishi Sunak insists he does believe in the policy but asks "tough questions" to spend money properly.

"I wouldn't be doing my job properly if every time some Cabinet minister came to me and said 'ooh, please can I have x billion pounds to do this new thing', I didn't say: 'Hang on, is this going to work?'"

He promises to bring "grip and urgency and competence" to Rwanda, the NHS and other political issues.

09:15 PM

Rishi Sunak: I'm delivering measures causing Putin the most trouble

Rishi Sunak calls for home insulation to be improved in order to mitigate the current crisis.

"If we turbocharge that programme we can not only reduce our demand for energy, which improves our energy security, we can also save people £300 on their bills," he says. "We need to be lagging our loft anyway for climate change reasons."

On the conflict in Ukraine, Mr Sunak is asked if he is "tough enough". "How are we currently standing up to Vladimir Putin? We're doing two things - we're sending arms and money to Ukraine, which as we talked about earlier I found in Government spending.

"But what's the other way we're weakening Russia? We're targeting [Putin's] companies, their access to economic markets, his banking, his reserves. Who do you think put those together? I did with my finance ministers... As prime minister I will go further because there's more things we can do. So yes I'm tough enough and I'm already delivering the measures that are causing him the most trouble."

09:10 PM

'Why on earth should they trust you?'

Rishi Sunak is asked by Kay Burley about Britons who face months of hardship and as the Chancellor for the last two years, "why on earth should they trust you?"

Mr Sunak recalls the "enormous amount of anxiety" over what would happen to jobs and livelihoods during the pandemic, "but I stepped up at that moment to act boldly and radically, to design things that had never been done before like furlough that protected 10 million jobs and saved more than one million businesses". He says the economy faces "similar economic challenges" at the present time.

Is there anything he can do about recession? "Of course there is. The number one thing we have to do is not make the situation worse. What is causing the recession as you heard from the Bank of England today, it's not the tax burden that is causing the recession, that's simply wrong.

"What's causing the recession is inflation. That's the root of the problems we have, not just here but in America and elsewhere. So the way we're going to get this first and foremost is gripping inflation."

He says he would commit more money to the problem but he does not know how much. "What I'm not going to do is embark on a borrowing spree worth tens of billions of pounds, put that on the country's credit card... that's certainly not conservative."

09:06 PM

We need trust, integrity and honesty back, urges Rishi Sunak

What does trust mean to Rishi Sunak in politics? "Telling the truth, even when that's not easy, and as you can see in this leadership election, I'm doing that." He adds Liz Truss's economic policies "risk making the problem far worse".

On the idea he betrayed Boris Johnson - one audience member says "you knifed Boris for your own interest" - he says: "I worked with the prime minister for a couple of years and he deserves enormous credit for the work during that time."

But Mr Sunak flags his economic differences with Mr Johnson "and the Government was on the wrong side of an ethical issue, and enough was enough for me, but also 60 people".

"Everyone remembers what was going on with Chris Pincher. Maybe you're okay to defend it, I couldn't defend it, 60 members of the Government weren't okay to defend it."

09:03 PM

Sunak: We must move away from asylum definition

Rishi Sunak praises the compassion of Britain in welcoming migrants, something the country is "amazing at".

"But it is also absolutely right that we have control over our borders. What is not right for people to break the rules and come here illegally.

"The scenes we see on our TV screens are not right... We need to move away from this European definition [of asylum], that is exploited by leftie lawyers. We have to make the Rwanda policy work, I will do whatever it takes, legal changes if necessary, to make it work."

On immigration, Mr Sunak pledges to "be pragmatic" and have a system "that actually welcomes the best and brightest from around the world... Actually we want to have a visa regime that makes us the best place in the world for people to come."

09:02 PM

Rishi Sunak: NHS should not be free 'at the point of misuse'

One audience member asks what Rishi Sunak can do to restore NHS dentistry and quips "I'm running out of teeth".

Mr Sunak says he has seven fillings "so I feel your pain" and Britain "has to be bolder about how we reform the NHS".

He points to the health and social care levy and his plan to introduce charges for missed appointments.

"If people can cancel them in advance, properly, we free up all that extra space. I do think it's right to say we believe in an NHS that's free at the point of use, but it's not free at the point of misuse. If we want to cut taxes in this country, we have to do things differently."

08:59 PM

Will Rishi Sunak increase the size and budget of the Army?

"Yes, the simple answer is absolutely. I think we are already a force to be reckoned with, but there's always more that we can do."

This represents a change in tact from Mr Sunak, who had not previously pledged to increase defence spending. But he still declines to set an "arbitrary target" after Liz Truss said she would raise it to three per cent of GDP by the end of the decades.

He says he oversaw the biggest uplift in the defence budget and found £2billion from across Government to support Ukraine.

In response to a separate question, Rishi Sunak says he does not believe a study which attributed his 'eat out to help out' scheme to a rise in Covid cases in summer 2020 was right.

08:57 PM

How many people in the current Cabinet would Rishi Sunak have in his own Cabinet?

Mr Sunak declines to say and describes the question as "premature", but promises to "reflect the talents and traditions of my entire party".

08:55 PM

What would Rishi Sunak do to unite the Tory Party?

Rishi Sunak says he has the most support from Tory MPs and is best-placed to bring the party together as a result.

"That's the breadth of my support because that's the person I am, I can build a broad team around me and that's what I'm going to do in Governmemnt.

"I want to make sure we have a Government that represents all the talents and traditions of our amazing party and you saw some of that on display in this leadership election early on.

"And I want all of you to be able to look at the Government and see a piece of your view of conservatism represented. The real enemy is Keir Starmer and the Labour Party and I want to take the fight to them and all of us."

08:49 PM

Rishi Sunak is here

Enter the former chancellor, who will field questions from the audience and then Kay Burley.

We get started with a question from Matthew, who asks if there is a point he would stand aside in the campaign considering opinion polls point to a dominant Liz Truss win and endorsements from "Tory big guns" in her favour.

"The quick answer is no," Mr Sunak says to some applause. "That's because I'm fighting for something I really believe in and I'm taking my ideas across the country.

"I want to have that debate with people because I passionately believe what I'm saying is right. I want to convince as many people as possible of that."

08:47 PM

Liz Truss: Of course my views are not the same as at 19

Liz Truss insists Boris Johnson "did a good job as our prime minister, he delivered Brexit, he delivered the vaccines, he also did a great job of leading the free world in standing up to Vladimir Putin in Ukraine".

Ms Truss recalls the "serious times" Mr Johnson went through and says "many mistakes were made during lockdown by many people... to say this was the crowning problem is not right. He said sorry for the mistakes he made and it's completely wrong to [mischaracterise] him."

A final question before the Foreign Secretary leaves: In the wake of a series of changing policy positions, "will the real Liz please stand up?"

Ms Truss argues she has always believed Britain should be a more successful country and has always believed in freedom and low taxes. "Show me somebody who has the same views of 19 and 49 and I will show you somebody who is not capable of original thought. I have considered things differently, and I also listen to people and I think that's important."

08:42 PM

Liz Truss's quickfire round

Will Liz Truss apologise for wanting to abolish the monarchy? Liz Truss jokes she would not be raising the issue with the Queen "and she's been far too polite to raise it with me". She concedes she "was wrong" to urge the abolition of the monarchy as a Liberal Democrat.

Would she apologise to Nicola Sturgeon, who she said she would ignore? "No, I won't."

She declines to say the naughtiest thing she has ever done "on TV... my daughters are watching, I don't want them to get any ideas, Kay."

Is there anything she would want to come clean about before becoming PM? "I can tell you there are no skeletons in my closet. I think everything I've ever said and done is known about very publicly."

What one change to the system would she make to restore integrity to Westminster? "I think the answer to restoring integrity isn't introducing more rules. The issue is about clarity and leadership and doing what you say you will do."

08:41 PM

Liz Truss: We must work collectively on Taiwan

Should Taiwan be armed now, Liz Truss is asked by Kay Burley. She states democracies such as Taiwan "should be defended" and condemns the "escalatory rhetoric" of China.

Will Britain go any further? "That is as far as we will go at this stage, but we are working very closely with our allies on this because there are countries like the United States and Japan that are also very concerned about the future of Taiwan. And what we need to do is work collectively."

Pulled up on her comments about volunteers going to fight abroad in Ukraine, Ms Truss says: "What I was saying is I supported the cause in Ukraine." She said she "supports the cause in Ukraine" and does not say whether she knew about official advice at the time.

08:37 PM

Windfall tax 'a problem for Britain'

Liz Truss pledges to work to increase North Sea supplies to mitigate the energy crisis because the problems can only be dealt with through energy security and also fracking where it is wanted.

Asked about the windfall tax with reference to Shell's profits of £9.8billion between April and June, Ms Truss - who would scrap the policy - replies: "The problem with a windfall tax is it might secure money in the short term, but it puts off companies investing Britain in the long-term.

"They think that at any point they could be taxed. And I think that is a problem. What we need to show is Britain's open for business, we are a country that keeps to our word about what taxes are and windfall taxes are essentially surprise taxes that companies don't know are happening."

Ms Truss instead insists she would incentivise the likes of Shell to release more resources from the North Sea. "It's the signal that it sends to every business across the country that a Government is willing to give you a surprise tax and that is a problem for Britain. There's no such thing as free money and I think we need to be very careful if the UK gets a reputation for arbitarily taking money that we've not earned through the tax system."

08:33 PM

'It wasn't the right policy' on pay boards, adds Truss

Liz Truss says the way her pay boards policy was interpreted "was not right, and that's why I took an immediate decision not to go ahead with it".

She adds it "wasn't the right policy to deal with this situation, and therefore I withdrew the policy".

Ms Truss describes herself as "honest and upfront" over the concerns around the policy.

08:30 PM

Liz Truss grilled on pay boards about-turn

Liz Truss is now sat down with Kay Burley. Ms Burley quotes from her campaign press release on Monday: "Introduce regional pay boards tailoring pay to the cost of living where civil servants actually work, saving up to £8.8billion per year."

Ms Truss says she was not going ahead with the policy because of "concerns" around it and said "I don't have the details" around what was promised. Ms Burley quotes the suggestion by the Taxpayers' Alliance that the £8.8bn figure could be arrived at by "freezing or reducing pay for existing roles and new positions" in the public sector.

The Foreign Secretary adds "that was not my intention, but given the concern that was caused I decided not to proceed with this policy".

08:24 PM

Truss: I was honest over pay boards - but stop misrepresenting that policy

Liz Truss is asked why she announced a policy "in which you openly said you valued the work of teachers, nurses and police officers in Newcastle, where I work, than in Guildford, for example. We're having this election because of issues around poor judgment and trust. Why should we trust your judgment?"

Ms Truss replies the reason she immediately decided not to pursue the regional pay boards policy "was being misinterpreted in exactly the way you said, because it wasn't about teachers or nurses or doctors".

"Immediately as there were concerns expressed about that policy, I said I was not going ahead with it. And I was very honest about the situation, it wasn't a core part of policy plank."

08:22 PM

Britain is less competitive, says Liz Truss

Liz Truss insists the Bank of England makes independent decisions about interest rates and we are nowhere near 15 per cent.

"But to say we are going to put up taxes to the highest level and beyond the highest level in 70 years, I think that's wrong. And I speak to lots of businesses who are concerned about the proposals to raise corporation tax. The fact is Britain has got less competitive relative to other countries."

Asked by Jill about Germany, Ms Truss says it has a "very different economic system from the UK".

08:21 PM

How important is it to balance the books?

"It is important over the long term to make sure that the private sector is growing faster than the public sector and we are able to generate the revenues for our economy and also to be able to pay for our public services.

"But it isn't right to try and balance the books straight away when we've had a major global crisis like Covid and every single country in the world has built up debt from that crisis. We have lower levels of debt than most of the G7 countries, so I think trying to balance the books prematurely is actually counterproductive because if you put up taxes and you stop businesses forming, you stop new investment and you stop economic growth, you're less likely to pay down the debt over the longer term."

But Ms Truss is told by Jill, an audience member: "I do not want to see my children and my grandchildren encumbered with huge debt at a time of rising interest rates - Bank of England today - and at a time of rising inflation. The one thing Margaret Thatcher believed in was sound money. This is not sound economics. And the whole business about economic growth... tax cuts do not necessarily produce economic growth."

08:16 PM

Hey Jude, don't make it bad...

Liz Truss is asked by Jude, a recent graduate, how she will solve the housing crisis and make it easier for young people to own their own home.

"It is a problem that this generation of young people end up buying houses much later in their lives than previous generations. But the way to do it is not the system at the moment which is Soviet-style top down housing targets which simply cause huge concern and don't deliver the housing we want."

Ms Truss calls for a "much more localised" planning system and reveals she has "changed my view" on the green belt, and said top-down targets "have resulted in having the opposite effect on getting the homes built".

"We now need to have incentives to get local councils to set up investment zones and do things differently, because the current system isn't working."

08:14 PM

Liz Truss: We cannot enabled failed peace or giveaway of Ukraine

Asked about how she would "broker peace negotiations in Ukraine", Liz Truss says the conflict will only end with the Russians leave Ukraine.

"We need to make sure that we enable the Ukrainians to defeat Vladimir Putin. If there's any failed peace settlement, if there's any giveaway of Ukrainian territory what we know from history is Russia will just come back for more," she says, noting the Minsk accord didn't work and Mr Putin's ambition to create a "greater Russia".

"That is why it's so important that we were the first European country to supply weapons to Ukraine. And we need to continue to do that but we also need to work with our allies like the Americans who are also putting weapons into Ukraine. We also need to toughen up the sanctions on Russia because at the moment the way Putin is able to fund his appalling war machine is because of the oil and gas revenues he is getting."

She says both Britain and other countries must find alternative energy sources so Russia can no longer hold the continent "to ransom", and insists it would be "wrong" for Britain to give away any territory on behalf of the Ukrainians but the settlement must be up to Zelensky.

08:11 PM

Make NHS decisions more locally, urges Truss

Liz Truss denies she would simply sack middle managers but ensure things were "decided more locally" and NHS staff were reallocated.

08:09 PM

Truss insists we must reallocate funding to social care

Liz Truss is asked by a medical consultant what she will do about understaffing in the NHS.

"First of all, I'd make sure we're putting the recent funding reallocated, the £13billion, into social care because there are many people who are in hospital who ought to be in social care but there aren't the beds available.

"I'd also support our doctors and nurses more by removing some of the central diktats and also having fewer layers of management. I've met people who face seven or eight layers of management above them and I think that can be quite difficult and quite demotivating.

"And what we need is more of the empowerment, more of the decisions to be made, by people on the frontline. There are also issues we need to look at around doctors' pensions, and also there are many doctors who very kindly came out of retirement to help during Covid. What I'd like to do is see what we can do to encourage those people to come back into the profession and really help because we do face serious issues."

08:07 PM

Liz Truss: When we promise something, we must deliver

Liz Truss insists on the need to deliver on the 2019 manifesto "and when we promise something, we need to follow through on it".

"But I also want the Conservative Party to be a party that reaches out to everybody across the country, gets people on board, encourages people to join our country.

"Because we have some fantastically talented MPs but we need a new generation of members."

Promising to appoint a "fantastic party chairman", she declines to say who but insists her Cabinet appointments would be "on the basis of merit and people who get things done".

08:05 PM

Sunak's taxes will lead to a recession, says Liz Truss

Asked whether she is confident she can avert a recession by the end of the year, Liz Truss insists on the need for reform.

"I want us to be on the side of people who work hard, people who do the right thing, people who support their families, people who set up businesses and that is why it is so important we don't burden them with excess regulation but we also keep taxes low."

Ms Truss notes Rishi Sunak's planned corporation tax rise would mean a higher rate than Ireland, adding: "You simply can't tax your way to growth. I'm afraid that the taxes we have at the moment, a 70-year high, are likely to lead to a recession."

08:04 PM

'We are headed for very difficult times'

Audience member Diana notes the Bank of England has said a recession is inevitable, and is asked how she will mitigate this.

Liz Truss responds: "What the Bank of England have said today is of course extremely worrying but it is not inevitable. We can change the outcome and we can make it more likely that the economy grows.

"And what's important is that first of all we need to help people with the cost of living, I would immediately reverse the National Insurance increase, I would also have a temporary moratorium on the green levy... but I would also keep corporation tax low to attract more investment into our economy and doing all we can to avoid a recession."

Ms Truss says she knows what it is like when a country enters recession and that is why taxes must be kept low and the procurement rules changed, adding: "Now is the time to be bold because if we don't act now, we are headed for very difficult times."

08:02 PM

A country predicted to plunge into recession

Kay Burley notes the backdrop of a country predicted to plunge into recession.

More than 60 Conservative members - and others - are in the audience, largely reflecting the demographic of the party.

In a different format to other events, the two candidates will face questions from the audience followed by those of Kay Burley.

07:59 PM

Liz Truss has won the coin toss...

... and has chosen to go first tonight, meaning she will be interviewed by Kay Burley and take questions from the studio audience before Mr Sunak gets his turn.

07:57 PM

What's at stake tonight?

Tonight marks Liz Truss's first big sit-down interview of the campaign - and it could prove a major test for the Foreign Secretary.

While she has had brief chats with presenters at various hustings, her conversation with Kay Burley later on will be more akin to Rishi Sunak's Q&A with Andrew Neil last Friday. Ms Truss declined to take part in a Channel 4 interview.

For Mr Sunak, who appears to be on a losing streak with the Tory grassroots, his chances of entering Downing Street on September 6 now seem relatively slim.

But with ballots going out this week, he has another chance tonight to impress those Conservative members who remain undecided.

07:45 PM

15 minutes to go...

... and you can follow all of the action at the top of this live blog.

Rishi Sunak and Liz Truss will face questioning from Sky News's political presenter Kay Burley - but not before they are subject to scrutiny from a largely undecided audience of Conservative Party members.

07:41 PM

Boris Johnson and Nadhim Zahawi holidaying as UK economy falters

Boris Johnson and Nadhim Zahawi were both abroad on holiday as the Bank of England announced the biggest interest rate rise in 27 years and recession was forecast for later this year.

The Prime Minister was on his delayed honeymoon and the Chancellor was taking a break overseas as a year-long downturn was forecast by the Bank today.

The foreign trips follow weeks of Mr Johnson’s administration being labelled a “zombie government” by various detractors, with still a month to go until the Tory leadership race is concluded.

The Prime Minister has already promised not to make any major changes to taxation and spending policies as he sees out the summer before a successor is chosen.

Ben Riley-Smith, our Political Editor, has the story

07:24 PM

Liz Truss has also arrived

07:17 PM

The leadership hopefuls have arrived at Sky Studios

Here is Rishi Sunak meeting the head and chief executive of Sky:

07:00 PM

Three charts that show the economic disaster facing Britain

The Bank of England today painted a grim picture for the UK economy as it unveiled the biggest rise in interest rates in 27 years, Louis Ashworth reports.

Officials predict inflation will hit a 43-year high and Britain will face a long-last recession, as the country undergoes an energy crisis.

These three key predictions from Threadneedle Street’s latest monetary policy report show the economic disaster facing Britain.

06:55 PM

If you can't stand the heat...

Working from home increased in every Whitehall department during last month’s heatwave, official statistics have revealed.

The Cabinet Office published data today showing the daily average for staff working in Whitehall offices during July.

The numbers suggest the spike in temperatures in the middle of the month had a significant impact on the workforce as civil servants ditched Whitehall in favour of staying at home.

The Cabinet Office insisted workplace attendance "will be lower in summer as staff take annual leave and with the impact of recent rail strikes" but this had not impacted delivery.

Jack Maidment has the story

06:42 PM

Policy watch: Where Liz Truss and Rishi Sunak stand on the key issues

Rishi Sunak promised the biggest income tax cut in 30 years, vowing to slash the basic rate from 20 per cent to 16 per cent within seven years as he battles to close the gap with his rival, writes Nick Gutteridge, our Political Correspondent. The move would mean millions of households paying a fifth less in income tax.

Meanwhile, Ms Truss is marketing herself as a Thatcherite who also promises tax cuts, foreign policy experience, and a track record of delivery.

The Foreign Secretary has also ruled out a second Scottish independence referendum, and said that thousands more foreign workers could be allowed into the UK to temporarily take up agricultural jobs.

Here is where the final two candidates stand on the key questions

06:30 PM

New Sunak site attacks Truss over inflation

Policymakers raised interest rates by 0.5 percentage points today, to 1.75 per cent, as they try to keep a lid on inflation - which is now forecast to climb above 13 per cent this autumn.

The Bank's sixth rate rise in a row is the biggest in 27 years, and comes as it warned that price rises were likely to remain in double-digits for the best part of 12 months.

Rishi Sunak's campaign has used the news to attack Liz Truss after Patrick Minford, her economic adviser, said interest rates of up to seven per cent would constitute a "more healthy economy".

The 'Not In Your Interest' website, set up by team Sunak, professes to calculate how much interest rates of five per cent could cost Britons and their families.

06:20 PM

Our elite has a serious case of Truss Derangement Syndrome

My enemy’s enemy is my friend, so it is no wonder that Liz Truss is ahead in the race to be our next prime minister, writes Allister Heath.

Allister Heath: Why I'm cautiously optimistic about Liz Truss

06:10 PM

Truss beats Sunak - and Starmer - in latest polling

Ordinary British voters think Liz Truss would make a better prime minister than both her leadership rival Rishi Sunak and Labour leader Sir Keir Starmer, new polling shows.

This evening's data from Redfield and Wilton Strategies shows the Foreign Secretary leads Sir Keir by 37 per cent to 35 per cent in a head-to-head scenario.

Ms Truss, who also leads Mr Sunak by a considerable margin in surveys among the Tory grassroots, has a six-point lead with the wider public (36 per cent to 30 per cent).

And there is further bad news for the former chancellor, who trails Sir Keir by seven points. Thirty-two per cent of the public prefer Mr Sunak and 39 per cent the Opposition leader.

06:05 PM

Could Sunak supporters switch sides?

That's the claim from figures in Liz Truss’s Tory leadership campaign as they privately attempt to convince MPs who have endorsed her rival, reports Ben Riley-Smith.

The Foreign Secretary’s team is said to be in talks with a number of Mr Sunak’s backers and claiming some notable politicians could publicly change sides this month.

"We are staying in contact with MPs of all stripes, including some Rishi supporters, to try to convince them to come over," a Truss campaign source told The Telegraph.

Full story: Why Rishi Sunak's backers could still be swayed

06:00 PM

Good evening

Dominic Penna here, the Telegraph's Political Reporter, guiding you through tonight's televised quesiton-and-answer sessions and interviews with both of the remaining Conservative leadership candidates.

Rishi Sunak and Liz Truss will first face questions from Tory members before then sitting down with Sky News presenter Kay Burley for in-depth interviews.

After a series of bruising blue-on-blue encounters earlier in the campaign, Mr Sunak and Ms Truss have opted not to debate each other directly.

We'll be bringing you all the latest as the night unfolds.