There's a testy exchange between Sunak and Truss over monetary policy and whether cutting taxes would stoke already record-high inflation.

Truss says the problem is the Bank of England has been too slow to raise interest rates to get on top of rising prices.

But Sunak describes the plans outlined by Truss as a "fairytale" and they would make inflation worse.

Nick Eardley
Political correspondent

The Conservative Party is very quickly trying to move on from Boris Johnson.

We've seen it in economic pledges; many of the candidates wants to dump his national insurance increase.

But we've also seen in the debate how unhappy some of the candidates were with questions of honesty at Downing Street.

Asked about whether cutting taxes will hit public services, Sunak says he had to make a difficult decision following the pandemic when chancellor.

Sunak says it didn't seem fair to not properly fund the NHS, even if it was "politically inconvenient" to him.

He says the answer to too much borrowing cannot be more borrowing.

Truss confronted Sunak on this, saying that other countries are taking the right approach by spreading the costs over a longer period.

Sunak says it is not responsible to launch an "unfunded spree of borrowing and more debt", because that would make inflation rise even further.

Liz Truss says it's wrong to put up National Insurance and it's wrong to be charging the green energy levy on top of bills at the moment.

If she was PM, she says she would immediately reverse the NI increases, which she says she called out in cabinet. She would also remove the green energy levy so that people have more affordable energy bills.

Truss says she would pay for that by spreading the debt that was accumulated during the pandemic over a longer period.

Covid is a one in 100 year event, she says.

Tugendhat says tax is rising to the highest level in 70 years, which is contributing to the growing cost of living.

He says the state needs to provide support to people, rethink how we do public services, push power away from the centre and into the regions to help people more.

Guru-Murthy asks what he would cut, to witch Tugendhat says he'd restore the four-hour maximum waiting times for A&E.

He says the question is about the leadership of the NHS and making sure it delivers for the public.

A member of the studio audience, who says she is a full-time carer looking after her mum, asks if any tax cuts will come at the expense of public sector cuts.

Earlier in the debate, Krishnan Guru-Murthy asked the candidates to give a yes or no answer on whether they believe Boris Johnson is honest.

Kemi Badenoch says "sometimes".

Penny Mordaunt says: "There have been some really severe issues and I think he has paid a price for that."

Rishi Sunak says: "I tried to give him the benefit of the doubt for as long as possible and ultimately I reached the conclusion that I couldn't, and that's why I resigned... There were a number of reasons that I resigned but trust and honesty was part of that."

Liz Truss says Johnson "has been very clear himself that he made mistakes in government" but she had taken his explanation for inaccurate statements over Partygate "at face value".

Asked the same question about whether Johnson was an honest man, Tom Tugendhat simply says: "No."

Image source, Britain's Next PM: The C4 Debate/ITN Productions

Krishnan Guru-Murthy asks the audience to put up their hands if they trust politicians.

On screen, it appears that no audience member put their hand up.

Host Krishnan Guru-Murthy next asks Penny Mordaunt about her stance on trans issues.

Nick Eardley
Political correspondent

This leadership election has seen a lot of criticism of candidates from allies of others.

Is Penny Mordaunt ready? Is Rishi Sunak Conservative enough? Can Liz Truss be trusted?

The five on stage tonight say they don't want to engage in negative briefing.

But Kemi Badenoch came pretty close there, listing why she trusts the rest of the candidates but very noticeably leaving out Penny Mordaunt.

"I'll give her the benefit of the doubt" she said.

Mordaunt has the momentum just now - and many see the next few days as a race to beat her to second.

Her response? She calls it a "big fat compliment that no-one wants to run against me".

Asked whether it's acceptable to have a prime minister who breaks rules, Tugendhat says "of course there's a problem" with having a leader who is a rule-breaker.

He says trust is what holds our lives together, from the health system to families.

Tugendhat refers to his experience serving in the military, adding that the public needs a leader they can trust.

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Truss says we need to see the government delivering, including on cutting tax and bringing energy bills down.

She says people need practical help for the cost of living crisis.

Truss adds she believes in meritocracy and promoting people based on ability.

Restoring trust is about walking the walk not talking the talk, she concludes.

Next up is Tom Tugendhat, who says he would make a clean break from Boris Johnson's leadership.

"And that's why I'm there", he adds.

Tugendhat says it's about serving others, serving the people and not themselves as politicians.

Kemi Badenoch says she would change the way government is run and would choose people who were talented, not loyal. She would be truthful about the difficulties that we face as a country.

Loyalty is important in politics but sometimes it was prized more under Boris Johnson, and criticism wasn't listened to, she says.

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Mordaunt says the key is to deliver on the 2019 manifesto, deal with the issues from the pandemic and get public services running well.

But she adds the Tory party needs to set out a new modern agenda, adding that she’s not a legacy candidate and is focused on the future.

Asked about why she didn't resign from Boris Johnson's government, Foreign Secretary Liz Truss says she raised issues with the prime minister in private.

Credit: Britain’s Next PM: The C4 Debate/ITN Productions

Liz Truss is quizzed on whether her team has been attacking Penny Mordaunt in the papers.

Truss says she's running a clean campaign.

Rishi Sunak says he trusts all his fellow contenders, adding that they're "all part of the same Conservative family".

Kemi Badenoch says she trusts three of the candidates who she knows, and knows Mordaunt less well but will give her "the benefit of the doubt".

Image source, Britain's Next PM: The C4 Debate/ITN Productions

Penny Mordaunt says the challenges the country is facing are "very grave", and unless we can get people to do things for their communities we're not going to get ourselves out of this situation.

Trust is important because there's a bond between all of us - politicians, businesses, our communities, she says.

She says people can trust her because she has had an opportunity to serve in high office, and she's always spoken out when she felt things had to change.

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Image source, Britain's Next PM: The C4 Debate/ITN Productions

Guru-Murthy asks Kemi Badenoch if she should call a general election, given nobody knows who she is.

She replies that is not the way she would go.

On trust, Badenoch says the government has too often been telling people what they want to hear rather than what they need to hear.

She adds it’s important for politicians to have difficult conversations over the issues facing the country.

Image source, Britain's Next PM: The C4 Debate/ITN Productions

Former Chancellor Rishi Sunak is quizzed next.

Krishnan Guru-Murthy presses him on why the public should trust him if he stayed in Boris Johnson's cabinet as a senior minister until very recently, despite numerous controversies.

Sunak says members of the public should trust him because he wanted to be honest with everyone in the country about the challenges we face, with inflation and the cost of living rising.

He says that his resignation from Johnson's cabinet was the uncomfortable thing to do, and he did it anyway.

Sunak adds that there'll be "honesty and responsibility" in his approach as prime minister.

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