Tory leadership race: Rivals battle over tax cutting pledges

Conservative leadership hopefuls have been setting out competing plans to cut taxes, as the race to replace Boris Johnson heats up.

A flurry of weekend announcements has seen most candidates promise cuts for individuals, businesses, or both.

But divisions have opened up over the timing and scale of the proposed reductions.

They also mark a contrast with ex-chancellor Rishi Sunak, who has played down the prospect of immediate cuts.

Meanwhile the contest has widened further, with Trade Minister Penny Mordaunt becoming the ninth Tory MP to throw her hat into the ring.

The Brexit-supporting former defence secretary launched her campaign on Sunday, styling herself as a pragmatist and a team player.

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She joins a field of contenders that has increased significantly in recent days, with an official timetable for the contest set to be confirmed next week.

As well as Mr Sunak, his successor Nadhim Zahawi, Transport Secretary Grant Shapps, and former health secretaries Sajid Javid and Jeremy Hunt have all launched campaigns for the top job.

They join Attorney General Suella Braverman, former equalities minister Kemi Badenoch and backbencher Tom Tugendhat - with Foreign Secretary Liz Truss expected to launch her campaign within the next 24 hours.

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Tax cutting plans

Mr Javid has promised wide-ranging tax cuts, including cancelling next year's scheduled hike in corporation tax from 19% to 25%, and instead gradually reduce it by 1p a year to 15%.

He also wants to bring forward next year's planned 1p cut to income tax and reverse April's National Insurance hike, introduced when he was health secretary to fund the NHS and social care.

Speaking on the BBC's Sunday Morning programme, he said those proposed cuts would cost £39bn a year. In addition, he also wants to cut fuel duty.

Arguing the cuts were required to boost growth in the UK economy, he said not introducing them was a "much greater risk".

Pressed on how he would fund them, he said he would be setting out details in the coming days, but pointed to official projections of a £30bn "fiscal headroom" against spending targets by 2024.

Penny Mordaunt, the latest candidate to enter the race, has been MP for Portsmouth North since 2010.

Paul Johnson, director of the Institute for Fiscal Studies think tank, said the £30bn figure was calculated at a time when inflation predictions were lower.

Writing on Twitter, he added that using the headroom to fund tax cuts would "almost certainly" require public-sector pay cuts or more borrowing.

"Everyone would like lower taxes. But [we] need to be clear about consequences," he added.

Mr Hunt, a former foreign and health secretary, has set out a rival plan to reduce corporation tax to 15% in one go at the Budget this autumn.

He says that, if elected, he would also freeze business rates - a tax on commercial property - for the poorest areas for five years.

And in another dividing line with Mr Javid, he has said any cuts to income tax should depend on achieving economic growth first.

He also revealed that if he becomes leader he would make Tatton MP Esther McVey - who founded the "blue collar" group aiming to target working-class voters - his deputy prime minister.

Mr Zahawi, who announced his leadership bid on Saturday, has pledged to cut taxes for "individuals, families and businesses," and Mr Shapps has promised to cut personal tax for the poorest.

Responding to newspaper reports that the authorities are looking into his tax affairs, Mr Zahawi issued a statement saying he was not aware of any investigation and described the claims as "smears".

He added he would "answer any questions" HM Revenue and Customs had for him and pledged to publish his tax returns every year, if he becomes prime minister "to reassure colleagues and the wider public".

Mr Shapps told Sophy Ridge on Sky News he would stop next year's corporation tax rise, and the 1p cut to income tax "should happen now".

Speaking to the same programme, foreign affairs committee chair Tom Tugendhat said he would reverse the National Insurance rise and reduce "crippling" fuel taxes.

The slew of tax-cutting plans to have been announced so far mark a contrast with Mr Sunak, who has played down the prospect of tax cuts before public finances improve.

The former chancellor has not yet set out his economic pitch for the leadership, promising more details in the coming days and weeks.

But in a video launching his campaign, he warned against "comforting fairy tales" that would "leave our children worse off tomorrow".

Shadow home secretary Yvette Cooper criticised candidates promising to scrap the National Insurance rise, adding they had not joined Labour in opposing it at the time.

"I don't think any of them have put forward any costed proposals," she told the Sunday Morning programme.

"While they've been talking about being a low-tax party, they've all been voting for 15 tax rises," she added.

Launching her leadership bid earlier, former naval reservist Ms Mordaunt emphasised her teambuilding abilities, adding that leadership should be "less about the leader and more about the ship". She is yet to announce a policy platform.

However in an early mishap shortly after launching, she posted a new version of her campaign video after paralympian Jonnie Peacock asked for footage of him included in the clip to be removed.

A new version of the video was posted around two hours later, with footage of cricketer Jonny Bairstow and the Welsh national football team also removed.

The timetable and rules for the leadership contest are expected to be announced next week, with the 1922 Committee of backbench Tory MPs that organises contests meeting late on Monday.

It will be a two-stage process, with Conservative MPs whittling down the field to two candidates through successive rounds of voting, before Tory party members choose the winner.

While the campaign is yet to formally get under way, Brexit opportunities minister Jacob Rees-Mogg has said people will "think an election is necessary" once the race is over.

Speaking on Channel 4's Andrew Neil show, he said many candidates would promise they will not call an early general election - but added it was "highly probable" one could be held if the polls favour Mr Johnson's successor in the coming months.