Tory leadership - live: Sunak warns ‘we’ll lose election if inflation rampant’ as Truss heckled

Lord Robert Hayward, a Conservative peer and elections analyst, said Rishi Sunak’s performance in last night’s Sky News debate caused “a stop in terms of the momentum in one direction” of the campaign he said had recently been going in Liz Truss’ favour.

Speaking to Sky News, Lord Hayward said: “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.”

He added: “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.”

Business secretary Kwasi Kwarteng has said carrying on with the current economic policy "is not going to cut it" and that raising taxes is "adding insult to injury".

Speaking on Sky News, Mr Kwarteng, a supporter of Liz Truss' campaign, said on the Bank of England forecasts: "I think the problem we have is very simple. I think we've got inflation which is, as you say, squeezing people's incomes, but we've also got a rising tax burden.

"I've never understood why if we're going to help people, how are we going to help people by putting up their taxes? Especially when their daily shop, their costs, are going up.

"What's very clear to me from what the Bank of England said yesterday is that more of the same, just simply carrying on with our economic policy at the moment, is not going to cut it, it's not going to help us get out of this difficulty."

He said he was "not blaming the tax rises" but that "we can't tax ourselves to growth".

Former housing secretary Robert Jenrick has said the government's "overwhelming priority" should be inflation.

Speaking to BBC Radio 4's Today programme, the Tory MP, who is backing Rishi Sunak in the leadership race, said: "The dashboard is flashing red on the British economy and we shouldn't fool ourselves into believing that all is going to be fine.

"I think it's very clear this morning that our overwhelming priority must be inflation. That's what many people have been saying for a long time. It's what Rishi Sunak has been saying throughout this leadership contest and tax cuts, unfunded tax cuts, in the immediate - always attractive though that might be to those of us who want to reduce the burden of taxation - seem less relevant in these circumstances.

"As you've just heard from Paul Johnson, the two priorities for the country right now are firstly: is there anything further that we can do from a government perspective in addition to what the Bank of England is doing to tackle inflation? And, on that front, the one thing we certainly can do is to do no further harm and not to do any tax rises that might add to inflation.

"Secondly, to think very deeply about what we can do to help the poorest and most vulnerable households through the winter."

The governor of the Bank of England Andrew Bailey has said rocketing inflation "concerns me most" amid political criticism over the speed of actions taken by the bank to tackle the current economic turmoil.

"We are in the centre of things because of what is going on in the world at large and the impact that is having on inflation, and that's what concerns me most at the moment," he told BBC Radio 4's Today programme.

"Central bank independence is critically important in our view, but our job is to get inflation back down to target.

"I think it's important that there is a full debate during this process to choose the next prime minister of this country.

"It is clearly very important that public officials like I do not intervene in this debate and I am not doing that.

"We have strong views, of course, but I look forward to working with the new government and new prime minister, and sure we will have substantive exchanges on this."

The next prime minister will have to find “many more billions” of pounds to help households pay soaring energy bills, the head of a highly influential think tank has warned.

Our Whitehall editor Kate Devlin reports:

Former housing secretary Robert Jenrick has defended Rishi Sunak's proposal to charge people £10 for missing a second NHS appointment.

Speaking to BBC Radio 4's Today programme, the Tory MP said: "I don't think he should ditch that particular policy. I mean, it may be that it's difficult in practice to implement, but I think it's broadly supported by the public because we all want to see good quality public services but they need to be subject to reform.

"We're putting very large sums of money into the NHS, as we are to a number of other public services, but they're not working properly and so people want to see reforms being brought forward so this money is being spent properly."

Challenged on the policy's potential to target vulnerable people, he said: "I don't think there's a suggestion that you'd be going after people who have a good cause to miss appointments. What we're talking about is people who do so irresponsibly.

"It's not about money in the sense that it isn't about the money generated by the £10. It's about creating a culture whereby people treat public services like the NHS with the respect that it deserves and don't miss appointments if they can possibly avoid doing so.

"It has been looked at in the past. I was on the Health Select Committee many years ago, we looked at this and we concluded that we wouldn't do it as a money-raising exercise. It clearly doesn't raise very much money in the scheme of the NHS' budget, but it could inculcate a more responsible culture with the minority of people who go around missing appointments for GPs and dentists and so on, which ultimately just puts more strain on the public services."

A recession in the UK is “inevitable”, a Tory MP has warned as he criticised Tory leadership contender Liz Truss’s plan for the economy.

Liam Fox, a former cabinet minister and supporter of her rival Rishi Sunak, told Sky News: "I think it's inevitable given what's happening in the global economy.

"As I said, the United States is in its second quarter now of contraction. So, technically, by the UK definition, the US is in recession. That clearly is going to have an effect on everyone else.”

He added: “What Liz seems to be saying is, at a time when we are already spending £85 billion on debt interest, twice as much as we're spending on defence during a conflict in Europe, we should be borrowing even more money.

"That's been tried before. If there was an easy way to get out of the inflationary problem and growth, don't you think it would have been done here or the United States or in Europe?"

The immediate problem with the UK’s economy is “growth” and not inflation, Kwasi Kwarten has insisted.

The business secretary, who is supporting Liz Truss in the Tory leadership contest, said it “doesn’t make any sense” to take more of people’s money through tax when real incomes are being squeezed.

Ms Truss has vowed to reverse the rise in NI brought in by her rival, Mr Sunak and to cut income tax if she replaces Boris Johnson.

Mr Kwarteng told BBC Radio 4 Today: “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."

Challenged that problems on the supply side are predominantly causing inflation rather than consumer demand in the market, he said: "Inflation means that you're spending, you have less of your money, you have less of your real income is being squeezed.

"Now, nobody I've ever spoken to, until about a week ago or two weeks ago, has said the way to deal with that is to take even more of people's money through tax. That doesn't make any sense, and, if you take a step back and you look at what's going on around other G7 countries, they're not doing this, and the IMF was very clear 10 days ago when it predicted that we would have the lowest growth in the G7 next year and that's a consequence, not only of the inflation because everyone's dealing with global inflation, but it's also a consequence of having a very tight fiscal policy.

"But you don't put up interest rates as well as tightening fiscal policy. Nobody is doing that. That's why, across the world, people are actually saying we need to help people."

The governor of the Bank of England has urged workers to limit their demands for a pay rise this year warning of the impact of high inflation on those who don’t have ‘bargaining power’.

Andrew Bailey said the problem was one “we all have to be very conscious of” hours after he warned households will suffer the deepest fall in living standards on record as the UK plunges into a yearlong recession this autumn.

Our Whitehall editor Kate Devlin has more details below:

Boris Johnson and chancellor Nadhim Zahawi have gone AWOL, a Labour MP has said as he called on the government to do more people with the cost of living crisis.

Both the PM and Mr Zahawi are on holiday.

Jonathan Ashworth, the shadow work and pensions secretary, spoke to Sky News earlier, telling the station that a £ 4 billion “tax break” being given to oil and gas giants could be used to help millions pay their bills.

More comments from Mr Ashworth below: