How do Liz and Rishi’s policies stack up? From the best way to fight inflation to when to cut taxes

Rishi Sunak and Liz Truss are preparing for more live television Tory bloodletting  tonight after their allies clashed angrily over immigration and standing up to China.

In an increasingly bitter battle to replace Boris Johnson and enter No10 the two rival camps spent the weekend tearing into each other to paint the other as a dangerous liability.

Allies of Ms Truss, the foreign secretary, labeled Mr Sunak a ‘totally boring failed economist’ after he vowed to double down on the £120m scheme to send migrants to Rwanda.

He also suggested that some could be housed in disused cruise liners to cut down on a multi-million-pound hotel bill for arrivals crossing the Channel in small boats.

The pair also clashed over China. When Mr Sunak last night declared Beijing to be ‘the biggest long-term threat to Britain, ‘allies of Liz Truss accused Mr Sunak of being ‘soft on China’ and pursuing closer trade links.

It is the latest round of infighting in an increasingly bitter leadership fight.

They have previously clashed over issues including tax policy, where they are wide apart.

The two are due to appear on a live debate on BBC tonight at 9pm. The last scheduled debate, on Sky News, was pulled at the last minute amid concerns that the party was damaging itself in public.

It comes as a new poll shows that while Liz Truss is on course to win the Tory leadership and take power in No10, she is less popular than Sunak with the wider voting public.

Here we look at their policies and their different offers to the Tory faithful.

TAX AND SPEND 

The main focus of the Tory members – some might say their only interest – is paying less tax. And it is tax policy that has contributed to most of Liz Truss’s lead over Rishi Sunak.

The Foreign Secretary has pledged to cut both personal and business taxes. She has vowed to scrapped a plan to increase corporation tax to 25 per cent, and reverse Boris Johnson’s 1.25 per cent increase to National Insurance designed to pay for the NHS and social care.

She believes her cuts will boost the economy. Experts have said fiscal plans would cost the Treasury £30billion, but she has insisted they will not impact public spending, because she will increase borrowing.

Mr Sunak on the other hand, has said that his main priority is reining in inflation, currently running at 9.4 per cent, the highest since the early 1980s. He will only look at cutting taxes once that handbrake has been removed.

The former chancellor has pitched himself as the fiscally conservative candidate and had criticised his rivals’ plans to raise borrowing to pay for tax cuts as ‘comforting fairytales’.

Inflation could soar to 15 per cent this winter, economists warned this morning.

The Institute for Fiscal Studies has said that Tory members would face a ‘genuine choice’ between Ms Truss’s plans and those of Mr Sunak, whose fiscal position is broadly that of the current Government.

In an analysis, the IFS’s Robert Joyce noted that cancelling a planned rise in corporation tax from 19 to 25 per cent would cost £17billion, though some might be clawed back in higher tax income generally if it stimulates economic growth. The National Insurance pledge will reduce tax takings by an additional £13billion and mainly help the better-off.

However he also points out that Mr Sunak’s plans leave the UK with ‘tax heading towards its highest sustained level in 70 years as a share of national income’.

Ms Truss’s plans have been backed by Prof Patrick Minford, one of Margaret Thatcher’s favourite economists.

But he caused consternation by saying that they could lead to interest rates hitting a ‘normal level’ of up to seven per cent. The current rate is 1.5 per cent and the increase would have a massive impact on homeowners’ mortgage repayments.

Additionally, public borrowing is already at a record level due to emergency bail-outs during the pandemic.  Last month figures interest payments on the £2.4trillion debt mountain set a new record of £19.4billion.

Today Education Secretary James Cleverly defended Ms Truss’s taxation plans and said he would not want to see interest rates at 7 per cent.

He said no prime minister can guarantee what interest rates will be in the future, but added: ‘Tax decreases will stimulate economic growth. That has got to be the foundation stone.’

But former health secretary Jeremy Hunt said Rishi Sunak is ‘prepared to be honest with the country’ about the state of the nation’s finances.

Mr Hunt, who failed in his own leadership bid, is backing the former chancellor in the Tory leadership contest.

He told ITV’s Good Morning Britain: ‘I’m supporting Rishi Sunak because I think he’s prepared to be honest with the country about the challenges that we face, the fact we can’t afford unfunded tax cuts.

‘I think we need that honesty when it comes to the future of the NHS as well.’

Truss will today announce what she calls a ‘full-fat’ version of the ex-chancellor’s freeports.

She claims existing low-tax areas are dogged by ‘excessive’ red tape.

The Tory leadership favourite wants to create model towns in the image of Victorian commercial areas such as Bournville.

Developers will be freed from planning rules so they can build quicker.

Miss Truss is also pledging to cut more red tape from the eight freeports created under Mr Sunak.

Her team hope the plans will unleash billions of pounds of investment.

IMMIGRATION

The two camps came to blows today over who was the toughest on immigration. Both have committed to the Rwanda scheme that is meant to see Channel migrants deported to Africa – though non have yet been sent.

Calling the current system ‘broken’, Mr Sunak offered a 10-point plan on Sunday that included a commitment to a narrower definition of who qualifies for asylum compared to that from the ECHR, with enhanced powers to detain, tag and monitor illegal migrants.

He also promised to give Parliament control over who comes to the UK by creating an annual cap on the number of refugees accepted each year, albeit one that can be changed in the case of sudden emergencies.

But those proposals were picked apart by Truss allies, who raised questions about Mr Sunak’s proposals, arguing that it was unclear how the refugee quota would work and suggesting that some of his plans amounted to a ‘rebrand’.

Allies of Ms Truss also queried a suggestion from Mr Sunak that illegal migrants could be housed on cruise ships, something the Truss camp suggested would amount to arbitrary detention and a breach of both domestic and international law.

It prompted claims he was offering unworkable ‘red meat’ to Tory rightwingers because he is losing, but his own camp told the Times: ‘Good to see Remainer Truss on the side of human rights lawyers.’

Mr Sunak sought to defend his proposals on Sunday afternoon, telling the BBC that tackling illegal migration was a ‘priority’ for him and that ‘no options should be off the table’.

But he was unable to give a clear assurance that his policy proposals would be legal.

‘What we do need to do is be very honest about the challenges that the ECHR, these European laws, have on our ability to grapple with this problem.

The Truss campaign had said that as prime minister she would increase the UK’s frontline Border Force by 20 per cent and double the Border Force Maritime staffing levels, with Ms Truss claiming that her plan to tackle illegal migration would be given a strong legal foundation by the new UK Bill of Rights.

She vowed to take on the ECHR as immigration was thrust into the spotlight of the Tory leadership run-off.

Miss Truss also pledged to revisit the controversial idea of asking Border Force to intercept Channel migrants and tow them back to France.

The idea was abandoned by Boris Johnson this year after warnings it posed too great a risk to life. But campaign sources said Miss Truss would explore ‘all possible tactics’ for turning around boats to discourage others from the perilous crossing.

The Foreign Secretary uses an interview with The Mail on Sunday vow to strike Rwanda-style deals with more countries.

She said: ‘The Rwanda policy is the right policy. I’m determined to see it through to full implementation, as well as exploring other countries that we can work on similar partnerships with. It’s the right thing to do.

The plans from both candidates generated anger in some quarters, with Oxfam labelling as ‘cruel’ any plan to link UK aid payments to countries’ co-operation with immigration removals and Amnesty International saying that making policy only to please Tory members has caused ‘chaos and backlogs’.

Education Secretary James Cleverly, who is backing Ms Truss, today said a suggestion from Rishi Sunak’s campaign that asylum seekers could be housed on cruise ships could be ‘reputationally quite a negative thing’ for holiday destinations if the ships are moored nearby.

He told Times Radio: ‘It’s understandable that (Mr Sunak) needs to put across a strong position on migration issues. I get that.’

He added: ‘I haven’t seen the practicalities of that. I do think that it would be interesting to see where those ships would be moored because typically the places where you can moor a cruise ship are holiday destinations.

‘And I’m not completely sure that that would suit the tourist industry in our coastal towns which need I think a boost rather than what might be reputationally quite a negative thing, but I will look at that.’

CHINA AND FOREIGN POLICY 

The pair also clashed over China. When Mr Sunak last night declared to be ‘the biggest long-term threat to Britain, ‘allies of accused Mr Sunak of being ‘soft on China’ and pursuing closer trade links.

Last night former party leader Sir Iain Duncan Smith, one of five British MPs sanctioned by China for speaking out on human rights abuses, said it was ‘surprising’ that Mr Sunak was claiming to be tough on Beijing.

Ahead of the leadership contenders’ first head-to-head TV debate tonight, Sir Iain – who is backing Miss Truss – said: ‘Over the last two years, the Treasury has pushed hard for an economic deal with China.

‘This is despite China sanctioning myself and four UK parliamentarians, despite China brutally cracking down on peaceful democracy campaigners in Hong Kong, threatening Taiwan, illegally occupying the South China Sea, committing genocide on the Uyghurs and increasing its influence in our universities.

‘After such a litany, I have one simple question to Mr Sunak: where have you been over the last two years?’

Earlier this month, China’s state-controlled Global Times suggested Mr Sunak was Beijing’s preferred leadership candidate. While ‘most of the candidates hold a tough stance on China, only one of them [Sunak] has a clear and pragmatic view on developing UK-China ties’, the communist mouthpiece said.

A source in Team Truss said Mr Sunak was ‘playing catch-up’ on the China issue. Another said it was ‘remarkable’ that the former banker believed he had grounds to go on the attack over it. ‘Liz has almost single-handedly dragged the Government into a tougher position on China,’ the source said.

Mr Sunak accused his rival of allowing Beijing to extend its propaganda machine into Britain’s universities through its Confucius Institutes, which he pledged to shut down.

Critics say the Chinese government-funded cultural centres are strangling free speech on campuses and spying on overseas students. Nine such institutes opened during Miss Truss’s two-year stint as an education minister, sources in the Sunak camp said.

Neither camp last night wanted to comment on mounting evidence that Covid might have leaked from a laboratory in the Chinese city of Wuhan. But a source close to the Foreign Secretary said: ‘She doesn’t think the Chinese have been entirely forthcoming about how the outbreak started.’

DEFENCE

Liz Truss has pledged to raise Britain’s spending on defence to 2.5 per cent of GDP by 2026, and 3 per cent by 2030.

This would cost more than £22 billion on top of the current £48.2bn defence budget. She will also ‘review’ plans to cut the Army by nearly 10,000 personnel.