Foreign Secretary Liz Truss has signaled she will tighten ministerial control of the Bank of England if she wins the race to be the next UK prime minister after accusing it of failing to tackle spiraling inflation.
Truss, the foreign secretary, told the Sunday Telegraph newspaper that he would “look again” at the central bank’s mandate to “make sure it is sufficiently tough on inflation”.
The BoE has been operationally independent since 1997. The government charged it with aiming for an inflation target of 2 percent. Inflation is currently 9 percent, well above that target.
Truss has hinted that she may interfere with the bank’s independence, saying she would like – as prime minister – to set a “clear direction” for it on monetary policy.
Many Tory MPs accused the BoE of losing control of prices after it insisted higher inflation would only be temporary and peak at 5 per cent – despite the global fuel crisis.
Trots, who is contesting the first televised leadership debate on Friday, is battling to get down to the final two candidates on the shortlist, which will be put before Tory MPs by the end of next week.
In a bid to appeal to the right-wing, the foreign secretary pledged £30 billion in largely unfunded tax cuts and promised to cut red tape.
The Truss campaign suggested there was a “gap” of around £30bn in public forecasts, with taxes likely to be higher than expected. The same goes for Tom Tugendhat, considered an outsider in the final list of five candidates.
But Paul Johnson, head of the Institute for Fiscal Studies, said “anyone who is serious about meeting these (Britain’s fiscal targets)” would not believe there was £30bn of spare cash to spend.
Truss also said he wants to lift the UK’s ban on oil and gas fracking, leaving local areas to decide whether they want the controversial practice to continue.
Rishi Sunak, meanwhile, sought to underline his Brexiter credentials as he promised to spend his first 100 days as prime minister working out which of the EU’s 2,400 legacy rules should be scrapped. The government is already planning to “set fire to” old European laws, but Sunak said he would speed up the process.
The former chancellor’s team is horrified by the way euroskeptic Tory MPs are flocking to Truss – even though she voted Remain six years ago – and Penny Mordaunt, the trade secretary.
Sunak indicated that he campaigned to leave, unlike others, despite being warned that it would be extremely important to his political career. “As prime minister, I would go further and faster in using the freedoms that Brexit has given us to reduce the mass of EU regulations and red tape that is holding back our growth,” he said.
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A survey by JL Partners found that Sunak was the overwhelming choice of voters in most key target constituencies for the Conservative Party. In the 365 seats won by the Tories in 2019, Sunak was 76 per cent favourite, with Mordaunt on 5 per cent and Truss on zero. Tugendhat came in with 19 percent and Kemi Badenoch, the fifth candidate, with zero.
Mordaunt told the BBC on Sunday morning that he wanted to cut value-added tax on petrol from 20 per cent to 10 per cent, while also raising middle-income tax thresholds. The minister argued that the VAT reduction would be fiscally neutral because there would be additional revenue in the treasury from higher fuel sales.
Mordaunt acknowledged the policies would mean adjustments to state tax receipts, but said there was an urgent need for interventions to help people hit by the rising cost of living.
Dominic Raab, the deputy prime minister, sounded skeptical about the claim that the halving of VAT on fuel would be self-financing: “I would like to see a serious analysis of self-financing tax breaks,” he told Sky News.
One Labor official said the claim was “nonsensical” as it suggested people would buy twice as much petrol as before. Instead, it is likely to cost more than £8 billion, he suggested.
Tugendhat, the most centrist candidate, said he would not drop out before Monday’s third vote, saying: “I have never turned down a challenge because the odds were against me.”
Alok Sharma, the cabinet minister who chaired last year’s COP26 international climate talks in Glasgow, said he would not rule out resigning if the new prime minister scraps the goal of reducing carbon dioxide emissions to net zero by 2050. Sharma blamed some candidates for being “lukewarm” on the climate agenda, telling the Observer newspaper: “Anyone who aspires to lead our country needs to demonstrate that they take this issue incredibly seriously.”
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