Is Rishi Sunak U-turning over borrowing? Ex-Chancellor says he could act ‘to get us through this winter’ despite criticism of Truss’s plans to add to debt mountain to fund tax cuts – as experts warn her plan would save poorest families just 76p a month

  • Sunak prepared to allow ‘limited and temporary, one-off borrowing’ if PM
  • He said it may be required ‘as a last resort to get us through this winter’
  • He has attacked Truss for planning to increase borrowing to fund tax cuts

Rishi Sunak‘s leadership campaign defended his economic plans today as he said he could increase borrowing to help ease the cost of living crisis despite attacking Liz Truss for suggesting the same thing.

The former chancellor said today that he was prepared to allow ‘limited and temporary, one-off borrowing as a last resort to get us through this winter’ if he becomes prime minister.

It came amid warnings that families could be hit with £5,000 annual energy bills from January, coupled with a recession and double-digit inflation.

But Mr Sunak has been at pains throughout the leadership campaign to blast Ms Truss’s spending plans.

She has vowed to reverse April’s National Insurance Rise and a planned Corporation tax increase and maintain state spending via borrowing. He has described this as putting it on the national credit card for future generation to pay off.

Her plans faced a new challenge today as analysis from the Tony Blair Institute suggested the NI reversal would save the poorest families just 76p a month.

TBI chief economist Ian Mulheirn said: ‘Ideas floating around in the Conservative leadership contest – including a reversal of the NICs increase or a cut to VAT on fuel [as proposed by Mr Sunak] – will do almost nothing to help the people who are most exposed this winter.’ 

Sunak backer and former minister Mel Stride insisted today there is a ‘huge distinction’ between the two Tory leadership candidates’ plans to deal with the cost of living.

Asked if Mr Sunak’s proposals to borrow cash to aid the most vulnerable were a U-turn, Mr Stride told Times Radio: ‘There are things that can be done that aren’t borrowing, but he does also recognise that it is possible that a small amount of borrowing may be necessary.

The former chancellor said today that he was prepared to allow 'limited and temporary, one-off borrowing as a last resort to get us through this winter' if he becomes prime minister.

The former chancellor said today that he was prepared to allow ‘limited and temporary, one-off borrowing as a last resort to get us through this winter’ if he becomes prime minister.

But Mr Sunak has been at pains throughout the leadership campaign to blast Ms Truss's spending plans.

But Mr Sunak has been at pains throughout the leadership campaign to blast Ms Truss’s spending plans.

Sunak backer and former minister Mel Stride insisted today there is a 'huge distinction' between the two Tory leadership candidates' plans to deal with the cost of living.

Sunak backer and former minister Mel Stride insisted today there is a ‘huge distinction’ between the two Tory leadership candidates’ plans to deal with the cost of living.

UK economy SHRINKS 0.1% between April and June as spending falls

The UK economy shrank in the spring as Covid and household gloom over the cost-of-living hit growth, new figures revealed today.

Official statistics showed that GDP fell by 0.1 per cent in the three months April to June, despite rising 0.8 per cent in first quarter of the year.

The Office for National Statistics said output was affected by a fall in Covid spending on healthcare and signs that households were tightening their belts amid rising bills. 

The service sector was particularly badly hit, falling by 0.4 per cent over the quarter, ONS experts said. 

A large part of this was in health and social work, and came as less money was spent on the fight against Covid-19.


GDP fell 0.6 per cent in June – a fall blamed on the bank holidays for the Queen’ Platinum Jubilee where a fall in output was not offset by higher spending on food and drink. But the ONS said the Jubilee had a negligible impact on GDP for the quarter in today.

It also revised its May estimate from growth of 0.5 per cent to just 0.4 per cent.

ONS director of economic statistics Darren Morgan said: ‘Health was the biggest reason the economy contracted as both the test and trace and vaccine programmes were wound down, while many retailers also had a tough quarter.

‘These were partially offset by growth in hotels, bars, hairdressers and outdoor events across the quarter, partly as a result of people celebrating the Platinum Jubilee.’



‘But there is a huge distinction between doing that in a modest and targeted way to help people who badly need support and tens of billions of unfunded tax cuts which are going to be inflationary – which is Liz’s plan – inflation will take hold.

‘That will lead to increased interest rates, it will mean that mortgage rates will go up, the pressure on businesses will become that much greater.

‘It means loading tens of billions of pounds onto the country’s credit card to be repaid by our children and our grandchildren, and Rishi doesn’t think that is right.’

The former chancellor has said he is prepared to find up to £10 billion of extra support for those facing rising bills in the autumn – with a vision to cover the total cost for up to 16 million vulnerable people, according to The Times.

It said he valued his cut to VAT on energy at £5 billion, and would find the same amount again to go towards helping the most in need, as he warned: ‘You can’t heat your home with hope.’

Writing for the newspaper, Mr Sunak said he planned to find efficiency savings in Whitehall as a priority.

He added:  ‘Savings, not borrowing, will be my approach and I will be relentless in chasing these down.

‘But I will also be honest. If it requires some limited and temporary, one-off borrowing as a last resort to get us through this winter, I’m prepared to do that.

‘Borrowing relatively small sums temporarily in the throes of a crisis to provide targeted support is good, Conservative government. Borrowing permanently for large, unfunded, inflationary spending commitments is a flight of fancy.’

Speaking today to Times Radio, Mr Sunak suggested a proportion of the funding for new cost of living help could be found through Government ‘efficiences’ and an increased take from the windfall tax on oil and gas firms.

‘That levy is almost certainly likely to raise more money, because the situation is worse with energy prices and they’re higher,’ he said.

‘So that levy will automatically raise more money which we can use.’

The ex-chancellor attacked his rival Ms Truss for voicing her opposition to windfall taxes.

It comes after Mr Sunak claimed Ms Truss’s cost-of-living plans could put vulnerable people at risk of ‘real destitution’, with economic policy once again driving a wedge between the candidates.

As the pair took to the stage for the latest party hustings in Cheltenham, the former chancellor said that without further direct payments, pensioners and those on very low incomes could face serious hardship.

But Liz Truss stood by her tax-cutting plans, warning against ‘Gordon Brown economics’, as she said ‘you take money off people in taxes and give it back in benefits’.

Asked at the hustings whether she was for or against ‘handouts’, Ms Truss stressed that her ‘first preference’ has always been to ‘reduce taxes’.

She has previously hinted she would consider further support for struggling households if made prime minister, but insisted she will not ‘write the Budget in advance’.

Sunak admits extra help will also benefit richest – but he says, like him, they can give £200 to charity

Rishi Sunak today admitted his promise of further help for families was ‘not perfect’ and that the wealthiest would also benefit.

The ex-chancellor has pledged, if he becomes prime minister, he will slash VAT on energy bills to boost every household by around £200.

But Mr Sunak was forced to acknowledge that, by offering extra universal support to everyone, he would also be handing more cash to the richest.

He suggested they could give their extra money to charity – as the millionaire Tory leadership candidate has vowed to do himself if he benefits from more action on the cost-of-living crisis.

‘I want to make sure that I can do something that provides immediate help to millions and millions of families and that is one of the very few, if not only, levers available,’ he told Times Radio.

‘I’m not going to pretend it’s perfect, of course it’s not. But that is the best thing to do.’


With a dire new warning that energy bills could top £5,000 by the spring, the cost-of-living issue continues to dominate the exchanges in the battle to succeed Boris Johnson.

The Times said Mr Sunak would offer specific support to pensioners and those on benefits because they ‘simply cannot increase their incomes to meet their energy costs and are the most vulnerable in society’.

Universal credit, winter fuel payments and similar schemes could be used to ease the burden.

While Ms Truss stressed she was keen to cut taxes, Mr Sunak warned at Thursday’s hustings the country ‘will never ever forgive us’ if the Conservatives do not provide ‘direct support’ to millions of pensioners.

‘No tax cut, and Liz’s tax plan, is not going to help those groups of people,’ he said.

‘So scrapping the health and social care levy, as she wants to do, is worth £1,700 to her on her salary.

‘For someone working really hard on the national living wage, it’s worth just over a quid a week. And for someone who’s a pensioner, without any earnings, it’s worth zero.

‘Now I want to provide direct support to those groups of people.’

He said it would be a ‘moral failure’ not to do this, suggesting Ms Truss’s vision could put people at risk of serious hardship.

‘If you support a plan that Liz is suggesting, which says she doesn’t believe in doing that, doesn’t believe in providing direct financial support to those groups of people… we are going to, as a Conservative Government, leave millions of incredibly vulnerable people at the risk of real destitution,’ he said.

Quizzed on the billions of profit made by energy giants, Ms Truss said she would ensure companies in an oligopoly were held to account.

But she insisted that profit is not a ‘dirty word’, and argued that it being treated as such is ‘a massive problem’.

She also said she would ‘absolutely’ not support a windfall tax, claiming it is a ‘Labour idea’.

‘It’s all about bashing business, and it sends the wrong message to international investors and to the public,’ she said.

Separately, Ms Truss resisted suggestions she might be modelling herself on former prime minister Margaret Thatcher, insisting: ‘I am my own person.’

‘Don’t get me wrong, I’m a massive fan of Mrs Thatcher, but we live in different times,’ she said.

Earlier on Thursday, Mr Johnson appealed to electricity bosses to help ease the pressure as on hard-pressed families.

Representatives of major electricity companies arrived in Downing Street for crisis talks as analyst, Auxilione, said regulator Ofgem could be forced to raise the price cap for the average household to £5,038 from next April.

However the meeting failed to produce any immediate concrete help for struggling consumers, with Mr Johnson acknowledging any ‘significant fiscal decisions’ would be be a matter for his successor.

Instead the Prime Minister was reduced to urging the companies to act ‘in the national interest’ in the wake of Russia’s invasion of Ukraine which has caused the price of oil and gas to soar.

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