The race has begun between Liz Truss and Rishi Sunak to become prime minister after Penny Mordaunt was eliminated from the contest last night.
It will be a fiercely-fought war of ideas, not least because the outgoing prime minister, Boris Johnson, blames Sunak for his demise. Johnson has given his support to the Foreign Secretary who stayed loyal to him.
Truss gave her first broadcast interview of the campaign this morning to Radio 4. She set out some of the dividing lines that will define the upcoming summer of hustings; a new leader will be announced on 5 September.
A government led by her would make a radical departure from Sunak’s economic agenda, with immediate and far-reaching tax cuts funded by borrowing – a model Sunak has dismissed as “something for nothing economics” and “socialism”.
She also pledged “bold supply side reforms”, acknowledging that you “can’t tax your way to growth”.
[See also: Rishi Sunak will face two opponents in the Tory leadership contest: Liz Truss and Boris Johnson]
Questions about her credibility will continue to grow, however, after the only economist she referenced in relation to her policy on tax cuts was the Thatcherite Patrick Minford, an outlier and one of the few from his profession who publicly argued that Brexit would boost the UK’s economy.
Truss repeatedly underlined how she attended a comprehensive school in Leeds – while Sunak was a student at the elite private school Winchester College – and that, having remained as a cabinet minister since David Cameron appointed her as environment secretary in 2014, she was able to “take tough decisions”.
Truss again underlined she had tried to stop Sunak’s National Insurance rise while in cabinet – “I thought it was a mistake to raise taxes in these difficult economic times” – before quickly pivoting to showcase her allegiance to Johnson, saying she didn’t go public about not supporting the policy because “I’m a loyal person”.
Going further Truss added: “I wanted Boris Johnson to carry on as prime minister”. This will win her plaudits with Tory members – many of whom are angry that he was pushed to resign from office – but not necessarily the public.
Sunak and Truss will face one another in their first hustings of Tory councillors today, before parliament rises for summer recess and the pair tour the country.
Sunak, whose support has fallen among Tory members, will make the case for fiscal conservatism and argue that higher taxes are needed to fund struggling public services. His attack lines against Truss were given a run-out during the last TV debate, when he compared his opponent’s economic plan to Jeremy Corbyn’s “fantasy economics”.
[See also: PMQs: Boris Johnson warns that he’ll be back]
Both candidates will struggle to dictate the rules of engagement, however, and not least because the country is about to plunge into its so-called “summer of discontent”.
Inflation reached a record high of 9.4 per cent in June. After the government offered health workers a 4 per cent pay rise this week, the Royal College of Nursing emailed thousands of nurses announcing a ballot on strike action and accused Tory ministers of imposing “years of underpayment and staff shortages”.
The news followed postal workers who are members of the Communications Workers’ Union voting for industrial action, most likely in August, over Royal Mail’s pay offer of 2 per cent.
Meanwhile, the RMT union has already rejected Network Rail’s 5 per cent pay rise and rail workers have backed further strikes, again in August.
With inflation forecast to climb as high as 11 per cent, all of these pay “rises” amount to a real terms pay cut.
The cost-of-living crisis – exacerbated by significant energy bill rises this winter – will be front and centre of the debate.
Whether it remains sustainable for either candidate to insist they will offer no further financial support for people struggling is an open question.
Meanwhile, Labour will make hay of two would-be Tory prime ministers fighting with one another, and as conference season approaches, Keir Starmer will perhaps seize the opportunity to set out a policy agenda of his own.
[See also: Rishi Sunak and Liz Truss are struggling to convince Red Wall and Blue Wall voters]