Senior Tories who served in Margaret Thatcher’s final cabinet have warned the former prime minister would never have approved Liz Truss’ plan to cut £30bn in tax cuts financed by loans, as Rishi Sunak denounced his plans opponent as “immoral”.
With a bitter tax row emerging as the defining issue in the race to succeed Boris Johnson, three members of Thatcher’s cabinet told the Observer that she would have taken a dim view of the tax cut at a time of high inflation Truss has tried to model herself on Thatcher in her bid to win the leadership, which she has denied.
Chris Patten, Norman Lamont and Malcolm Rifkind said the former Tory leader would not have supported the tax cut plans. Patten said: “Margaret Thatcher was a fiscal conservative who didn’t cut taxes until we had brought inflation down. She was honest and didn’t believe in bullshit.”
Norman Lamont, a senior Treasury minister under Thatcher, said: “Mrs Thatcher strongly believed that reducing the deficit came before reducing taxes. She also believed that deficits were simply deferred taxes.” Malcolm Rifkind said he was “as sure as I can be that he wouldn’t be impressed by tax cut financing through increased borrowing, even if it wasn’t at a time of high inflation, but certainly when it is.”
“She believed that tax cuts had to be financed by economic growth that was already producing more revenue, or by cuts in government spending,” he said. “This is what Thatcherism means. I think all conservatives, as well as many other people, believe in the desirability of tax cuts. But no conservative would ever see that as an ideological imperative.”
Sunak, the former chancellor who was fighting to defeat Truss in the race to become prime minister, on Saturday called Truss’s plans “immoral” and warned they would increase inflation, raise mortgage rates and damage the economy He has also promised to cut taxes, but only after inflation has been brought down.
“Not only do I think it’s the wrong thing for the economy, I also think it’s immoral because there’s nothing noble or good about running up bills on the country’s credit card that we pass on to our children and grandchildren,” he said.
A Truss spokesman said: “Liz’s plans for tax cuts will reward people for their hard work and effort, allowing them to keep more of their hard-earned money. You can’t tax your way into to growth”.
However, there are already concerns that the dominance of tax cuts and plans to reduce the size of the state will mean that the Tories will not hold together the coalition of traditional Tories and the new “red wall” voters who are ensure the party a majority of 80 people. in the last elections.
Rachel Wolf, co-author of the 2019 Tory manifesto, said leadership candidates needed to start talking about the agenda promised to voters in newly won seats to ensure gains made at the last election are not wasted. “This 2019 bid has won by goals,” he said. “Every focus group we’ve done in a myriad of areas has confirmed that this offer is what people are looking for. I think when they make a judgment call in the next election, it’s going to be partly about the ability to deliver beyond the tax cuts in 2022, 2023 or 2024. I think they need to start talking about that.”
Wolf pointed to a new report from his consultancy Public First and the Health Foundation think tank, which showed that voters were aware of the health inequalities that Johnson promised to address as part of his leveling agenda . The research found that 37% of Tory voters in 2019 would be less likely to support the Tories at the next election if health inequalities worsened, including lower life expectancy in poorer areas.
Wolf said failing to deliver on those commitments risks fueling populism on the right. “My fear is that if we don’t start to demonstrate an ability to understand and respond to the kinds of issues that this report is talking about, then voters who were very frustrated because they wanted change and who feel poor right now will feel right . desperately disappointed. It makes them much more open to populist arguments. I think there is a very high risk of another right-wing resurgence [Nigel] Farage or potentially worse.”