Lord Robert Hayward, a Conservative peer and elections analyst, said Rishi Sunak’s performance in last night’s debate caused “a stop in terms of the momentum in one direction” of the leadership campaign.
Last night marked the first time Sunak had “clearly led” in a debate, Hayward told Sky News this morning, adding that Truss had struggled when asked about her policy U-turn on public sector pay.
There’s no question in my mind and the vote of the audience, it was the first time that he had clearly led in a debate.
Liz has had the best of the last few days, no question about it, with the series of endorsements from different major personalities. I think what happened last night was there was a stop in terms of the momentum in one direction.
It won’t necessarily have reversed it, but there will be this morning a different sense of messaging that is around.
The business secretary, Kwasi Kwarteng, has criticised the the Bank of England’s control of inflation, saying “something had clearly gone wrong” at the institution as prices are predicted to rise by 13% and the UK is forecast to suffer an economic downturn lasting more than a year.
As a key supporter of the foreign secretary, Liz Truss, the frontrunner to be the next Tory leader and prime minister, Kwarteng’s comments suggest the Bank’s independent mandate to keep inflation at 2% may be re-examined if she takes over at No 10.
Kwarteng told Sky News:
The job of the Bank was to deal with inflation. They’ve got a 2% inflation target, that’s actually their mandate. And now inflation is getting double digits. So clearly, something’s gone wrong.
I think there is an issue about how the Bank is operating because clearly if I say to you 2% is your target, and you say to me, ‘Well, actually it’s going to hit 13%,’ I would quite rightly say something’s gone wrong. We’ve got to look at how you’re performing.
Kwarteng also said the Bank should have acted quicker to increase interest rates in an effort to control inflation. He said:
I think there is an argument to suggest the rate should have probably gone up slightly sooner.
Liz Truss and Rishi Sunak “need to stop” talking about tax in the Tory leadership contest and focus on tackling inflation, the head of the Institute for Fiscal Studies has warned.
During a set of televised leadership interviews with both contenders last night, Truss claimed her tax cut plans could avert the looming recession, claiming that it was “we can change the outcome, and we can make it more likely that the economy grows.”
Sunak claimed £30bn plan would lead to “misery for millions” and that he was “worried” her proposals would lead to “misery for millions”.
Paul Johnson, director of the Institute for Fiscal Studies, said the reason why Truss and Sunak are so focused on tax “remains a mystery”.
He told BBC Radio 4’s Today programme this morning:
I think candidates need to stop talking about the fiscal headroom that was announced, that was sort of supposed to be there back in March.
What they’re talking about is that the Office for Budget Responsibility at the time said that we’d be borrowing about 30 billion less than we absolutely could to meet the fiscal target of a balanced current budget in a few years’ time.
Those numbers are now “massively out of date” now that the economy has changed and inflation is much higher than expected, Johnson said.
What they need to be talking about is how they think they’re going to be tackling inflation, how they think they’re going to be responding to the increased needs of households and how they’re going to be responding to what this means for public services, and it remains a mystery to me why they’re so focused on tax.
The business secretary, Kwasi Kwarteng, who is backing Liz Truss in the Conservative leadership contest, has admitted that “I don’t know where Boris is” but insisted the prime minister is in “constant contact” with him.
Johnson and his chancellor, Nadhim Zahawi, have been criticised for being on holiday on the day the Bank of England announced the biggest interest rate rise in 27 years and forecast an economic downturn lasting more than a year.
The PM has been on holiday since Wednesday and Zahawi is away with his family and was not available for interviews in the wake of the BoE’s grim predictions.
When asked if the PM is on holiday, Kwarteng told Times Radio:
I don’t know where Boris is, but I’m in constant contact with him. He’s just had a wedding, I think he’s on a honeymoon and … I don’t think many people will begrudge him that.
Speaking to LBC radio, Kwarteng said he believed the chancellor was “completely on top of the situation”. He added:
He’s completely aware of what’s going on and his officials and he are working very hard to see how best we can generally be we can deal with this.
I think I think he’s on top of the situation. I think his arrangements are up to him.
He said it is “completely false” to say the government is doing nothing over the summer, adding on Times Radio:
I said we’re going to have to wait four weeks for an emergency budget because that’s how we help people – it’ll be through the new chancellor, new prime minister, whoever they are, to come up with the measures. But the idea we’re doing nothing in the meantime is false.
Meanwhile, Liz Truss and Rishi Sunak each took part in a televised leadership interview where the foreign secretary was challenged about the Bank’s projections as it increased interest rates by 0.5 percentage points.
Truss claimed her tax cut plans could avert the looming recession, while Sunak stepped up his criticisms of her £30bn plan for unfunded tax cuts, claiming it would lead to “misery for millions”.
Kwarteng, who is backing Truss to be leader, argued that carrying on with the current economic policy “is not going to cut it” and that raising taxes is “adding insult to injury”.
He defended the foreign secretary’s tax cuts plan, arguing that taking more of people’s money through tax when their real income is being squeezed by inflation “doesn’t make any sense”.
He told BBC Radio 4’s Today programme:
There is pressure on public finances but the immediate problem, as Liz always said, is one of growth.
She talked about recession very early on, a few weeks ago, at the beginning of the leadership contest, and the risk of recession means that you can’t have rising interest rates, which we saw yesterday, and also have tighter fiscal policy. No economist in the world is going to say that the way to deal with a looming recession is to tighten monetary policy and to tighten fiscal policy at the same time.
Here’s the agenda of the day.
9.30am: The Office for National Statistics publishes the results of its latest survey of the social impacts of the cost of living, goods shortages and Covid-19.
7pm: Truss and Sunak will meet in Eastbourne tonight for hustings with party members in the southeast.
I’ll be covering for Andrew Sparrow today. Do drop me a line if you have any questions or think I’ve missed anything. My email is email@example.com or you can reach me on Twitter.