Tory leadership rivals trade blows over tax and spending

Tory leadership frontrunners have clashed over how best to fund public services and control inflation in the contest's first TV debate.

Foreign Secretary Liz Truss attacked tax rises introduced under ex-chancellor Rishi Sunak as "wrong" and pledged to reverse them.

But Mr Sunak said they were needed to fund the NHS, and accused her of believing in economic "fairy tales".

Rivals also sparred over Boris Johnson, trans rights and trust in politics.

All five remaining candidates in the Tory leadership race took part in the Channel 4 TV debate, the first of two this weekend. They come ahead of the next round of MPs' voting on Monday.

Tory MPs will whittle the field down to two final contenders next week, before around 160,000 Tory members decide the party's next leader in a postal vote.

In a lively 90 minutes of exchanges, the economic backdrop loomed large as candidates were pushed on how they would fund public services and help people with the cost of living during a time of soaring inflation.

Mr Sunak, currently in pole position among MPs, was forced to defend tax rises introduced during his time as chancellor, including April's hike in National Insurance to pay for social care and the NHS.

Ms Truss, who came third in the latest MPs' voting round on Thursday, said the hike had been "wrong" and said she had "called it out" in cabinet.

She said if she won power she would reverse the rise, as well as removing green levies on energy bills - saying she would pay for it for by spreading the UK's "Covid debt" over a longer period.

But Mr Sunak rubbished her proposals, saying there was "no such thing as Covid debt" and warned against an "unfunded spree" of tax cuts, adding that "borrowing your way out of inflation isn't a plan, it's a fairy-tale".

Trade Minister Penny Mordaunt, currently second in the contest, said her economic blueprint, which involve raising income tax thresholds in line with inflation, was based on better "growth and competition".

When pressed by Mr Sunak that her plans would also require more borrowing, she denied she had promised to "reduce a load of taxes" but said "people need help now".

"Next April we are going to be one of the most uncompetitive nations in terms of our tax competitiveness. That cannot be allowed to happen," she added.

Earlier in the debate, Ms Mordaunt clashed with Ms Truss and fourth-placed contender Kemi Badenoch over her record on trans rights during her time as an equalities minister.

In a spiky section of the debate, both Ms Badenoch and Ms Truss accused Ms Mordaunt of supporting "self-ID", a process allowing a trans person to legally change their gender without, for example, a medical diagnosis.

Ms Mordaunt denied ever supporting the policy, but Ms Badenoch, who succeeded Ms Mordaunt in the equalities role, said she found that "hard to accept" and her understanding was Ms Mordaunt had pushed for it.

Ms Truss, who also had responsibility for equalities alongside her role as foreign secretary, said she had "changed the outcome" of a consultation to ensure self-ID was not brought in.

Mr Tugendhat, the fifth-placed contender in this week's vote, said that a clean start for the Conservatives would require a "break from those who sat around the table" in Mr Johnson's government and said he had not supported the National Insurance rise, calling it a "tax on jobs".

He also took aim at Mr Sunak's justification for the rise, saying he had told him previously it was "because the boss wanted it".

He also won applause from the crowd for being the only candidate to say directly that Mr Johnson had not been honest, with Ms Badenoch saying he had been honest "sometimes", and Mr Sunak saying "trust and honesty" were part of the reason he resigned.