Tory leadership race: candidates need a detailed plan to avert recession

With the tory leadership contest in full swing to replace Boris Johnson, Business Leader will be canvassing opinions from professionals and leaders as the race intensifies.

Commenting on the Conservative leadership race and the battle to become prime minister, Steven Mason, insolvency practitioner and senior manager at insolvency and corporate recovery practice Inquesta, said:

“With 11 candidates vying for the post of Conservative party leader, and with it the position of Prime Minister, there has been no shortage of headline-grabbing statements relating to tax and the economy. So far, the rival camps fit neatly into two segments. One, almost exclusively occupied by favourite Rishi Sunak, is steeped in pragmatism and argues against reckless giveaways and ‘fairytale’ tax cuts.

Another candidate, Tom Tugendhat, has shown similar caution, warning against unrealistic pledges, although he too has committed to reversing the national insurance rise and reduce ‘crippling’ fuel taxes.

Other candidates appear keener to display their tax-cutting credentials to party members, with a unanimous pledge to ease a tax burden which is at the highest level since Labour’s Clement Attlee was prime minister in the late 1940s and early 1950s. It appears that, of the leading candidates, only Mr Sunak is arguing for restraint. Contrast that with the latest entrant into the race, foreign secretary Liz Truss, who has promised that she would ‘start cutting taxes from day one’.

Likewise, newly-installed chancellor Nadhim Zahawi revealed his plan to cut income tax by 2p within two years, should he become PM.

To kick-start an economy on the brink of recession, Sajid Javid and Jeremy Hunt have vowed not only to scrap a planned corporation tax rise from 19 to 25 per cent from next April – a move that was supposed to bring in about £17bn a year – but also go further, with a cut to 15 per cent that would cost billions more.

How is the business world reacting? The Confederation of British Industry, the country’s leading business lobbying group, has called for ‘a smarter tax policy rather than eye-catching measures to please the Tory faithful’.

It seems that Mr Sunak is on firm ground with his reluctance to promise wholesale tax cuts. The Institute for Fiscal Studies has already warned that the UK needs to spend much more on the NHS, social care and pension obligations in the future, which inevitably mean tax rises or changes to how we view the welfare state.

So far, beyond the headlines, there are very few details about plans to stimulate the economy and avoid an autumn recession. No major economy other than Russia is forecast to perform worse next year, so time is of the essence for a credible plan to help UK businesses struggling with rising costs.”