Liz Truss will cause inflation spiral with ‘dangerous’ tax cuts, Rishi Sunak warns

Liz Truss will plunge the economy into an “inflation spiral” if she pushes ahead with her “dangerous” economic policy, Rishi Sunak’s campaign team has warned.

Ms Truss’s leadership rival said the frontrunner had to choose between cutting taxes and offering help to struggling families over the winter, or risk wrecking the economy.

To push ahead on both fronts would mean “increasing borrowing to historic and dangerous levels, putting the public finances in serious jeopardy and plunging the economy into an inflation spiral”, the former chancellor’s camp said.

The striking intervention comes after Ms Truss softened her stance on providing help for families over the winter, saying she would provide support “across the board”.

The foreign secretary had previously insisted she was focused on tax cuts rather than what she termed “giving out handouts”.

Polls suggest Ms Truss is on course to beat Mr Sunak by a significant margin, with the latest YouGov survey this week giving her a 32-point lead. But Mr Sunak has continued to hammer away at Ms Truss’s plans and make policy announcements.

In a statement released on Sunday night, his campaign said: “Following weeks of rejecting direct support payments as ‘handouts’, Truss supporters have slowly woken up to the reality of what winter brings. They now say that they will provide people with help – but what help, for who, when, and how it will be paid for remains a mystery.

“The reality is that Truss cannot deliver a support package as well as come good on £50bn worth of unfunded, permanent tax cuts in one go. To do so would mean increasing borrowing to historic and dangerous levels, putting the public finances in serious jeopardy, and plunging the economy into an inflation spiral.”

The ex-chancellor’s team also siezed on reports that Ms Truss would not subject her planned September emergency Budget to scrutiny by the Office for Budget Responsibility (OBR).

“It’s no wonder they want to avoid independent scrutiny of the OBR in their emergency Budget – they know you can’t do both and it’s time they came clean about that now,” Mr Sunak’s campaign team said.

Former cabinet minister Michael Gove warned in an article for The Times on Saturday that Ms Truss was on a “holiday from reality” with her economic plans.

The battle between the Tory leadership hopefuls has seen the governing party’s poll ratings shrink, with Labour now consistently ahead. The main opposition party has proposed cancelling the coming energy price cap rise and having the government pay the difference – an interventionist policy that will test Ms Truss’s free market instincts.

Labour this weekend accused the government of having “lost the plot”, after The Sun reported Treasury plans for GPs to prescribe people cash to pay their energy and heating bills. Officials at the Treasury are reported to want family doctors to assess whether sick or elderly people need help with the cost of heating their homes.

Shadow health secretary Wes Streeting warned that the plan would simply put more pressure on the NHS over the winter.

“The Conservatives have lost the plot on the cost of living crisis and haven’t got a clue about the level of pressure on the NHS,” he said.

The British Medical Association (BMA) meanwhile said that it rejects “completely” the policy drawn up by the Treasury, and branded the government’s approach to policymaking “deeply unprofessional”.

Dr David Wrigley, deputy chair of BMA England’s GP committee, said: “At a time when GPs are already overwhelmed with the greatest workforce crisis and longest waiting lists in memory, this addition to their workload is totally unacceptable. It beggars belief that government ministers think it is appropriate to suggest GPs undertake this work.”

He added that GPs “do not have the time or the skills to do the work of the welfare system”.

The latest forecast for the energy bill price cap warns that bills could soar as high as £6,000 by April. Scottish first minister Nicola Sturgeon said on Sunday that the rise “can’t be allowed to go ahead” and suggested that the nationalisation of energy companies should be “on the table” as part of any solution.

“Cancel the price cap increase, do that first of all, and then yes, how is that then funded? What is the contribution from energy companies, the UK government?” she said, noting that France had taken EDF into public ownership.

Consultancy Auxilione says that the cap is expected to reach £3,576 in October, rising to £4,799 in January, and eventually hitting £6,089 in April.

Until April this year, the cap was set at £1,277, but prices have been pushed up by the war in Ukraine and a surge in demand caused by the reopening of economies after Covid lockdowns.