Rishi Sunak readily admits he is behind in the race to become the next Prime Minister: “I think it’s pretty clear I’m the underdog [laughter].”
But he also reckons that while he hasn’t “taken the easy road”, he is standing up for “commonsense Thatcherism”, a position which is more “moral”, “conservative” and realistic than the unfunded tax cuts commended by his opponents.
Sunak has been accused, by Liz Truss supporters such as Kwasi Kwarteng, of conducting “a screeching U-turn” by coming out for a VAT cut on energy bills.
In this interview, Sunak rejects that accusation, and retorts that “a screeching U-turn on lots of policies that were in the 2019 manifesto” would “be tricky to implement”.
He says he has not engaged in the “Dutch auction of tax cuts” in which other candidates indulged, and has found that “actually wherever I’m going I’m getting a very positive reception and winning people round”.
In Sunak’s view, the Conservative Party should in future leadership contests negotiate on behalf of all the candidates with the broadcasters, in order to make sure that in televised debates “our party is not doing things that essentially write Labour’s next leaflets for them”.
This interview was conducted yesterday afternoon at Sawston Hall, in the village of Sawston, south of Cambridge, where Sunak was about to address a meeting of around a hundred Conservative Party members.
ConHome: “Tom Tugendhat revealed a private conversation to attack you in an earlier debate. Kemi Badenoch revealed a private Treasury discussion to do the same.
“Penny Mordaunt tweeted that either you or Liz Truss would ‘murder’ the Conservative Party. Truss’s spokesman has said you’re ‘not fit for office’, and you’ve attacked Truss for offering ‘socialism’.
“Hasn’t the only winner from this blue-on-blue contest so far been Keir Starmer, and given this level of vitriol why do any of you deserve to win?”
Sunak: “Well just to be clear, I’ve actually tried to be very positive throughout the campaign. From the get-go there was a lot coming my way, as you can probably remember, and I didn’t really respond to any of that. I’ve still not responded to any of it.
“The quote you’re referring to was not about her personally. I said something for nothing economics isn’t conservative, it’s socialism. That’s what I said. That was not about a person, that was about a policy.
“So I’ve been very clear about that, and I haven’t talked about any private conversations, and I haven’t talked about the many things that happened in government while I was there, very deliberately, because as I said in the debates we’re one Conservative team and one Conservative family.”
ConHome: “But you’re more Conservative than she is? – you have a proper profound belief in the morality of sound money and all that.”
Sunak: “I do, that is important to me, no it does matter to me, as everyone can see in this leadership election. I haven’t taken the easy road and I’ve wanted to make the argument that that should matter.
“And as a Conservative it’s something that I believe really deeply. And we’re now getting attacked by the Labour Party, Keir Starmer just the other day again was able to attack Conservatives for what in his words was peddling the fantasy economics of unfunded promises.
“Those were his words. He also used the expression ‘magic money tree’ to describe what he was hearing. I think we need to ask ourselves as Conservatives if the Labour Party is in a position where they’re able to attack us for that, think forward to an election, and what historically has been one of the strongest dividing lines between us – I don’t think that’s a very politically good place for us to be.
“I also don’t think it’s a sensible economic place for us to be and I don’t think it’s a particularly moral place for us to be because I genuinely think saddling our children with debts that we didn’t have the courage to deal with ourselves isn’t right.”
ConHome: “So how does this U-turn on the VAT cut fit in with that? Doesn’t that undermine your sound money message?”
Sunak: “No, because there’s a big difference between things that by their nature are deliberately temporary, and designed to deal with a particular problem at a moment in time, and things that are structural.
“So what you’re hearing is structural changes to the tax system that are permanent. What we’ve heard from others is I think at the last total £40 billion plus of permanent unfunded tax cuts, tax cuts funded by borrowing.
“That’s not what I’m suggesting at all. What I’m suggesting is a response to deal with an immediate crisis in here and now.
“And I’ve always been clear that as we knew exactly what energy bills would be, we would refine the support we put in place if that was required.”
ConHome: “On that, do you worry about unfunded tax cuts primarily from an inflation perspective or because you just don’t like borrowing to make tax cuts?”
Sunak: “Both. I think both are wrong. You’ve had all these people from Margaret Thatcher’s Cabinet, whether it’s Peter Lilley or Michael Howard or Norman Lamont or William Hague, because I believed what I was doing was commonsense Thatcherism.
“And I’m delighted and pleased that lots of people who were familiar with and lived through some of those arguments have supported that point of view, that you do need to get a grip of inflation first, before embarking on the things that I want to bring, which is a radical reform of our economy to drive growth primarily through innovation and investment.
“And she understood that, that’s what I think is important, and I think it would be very dangerous. And it’s not just me who said that, as I pointed out the other day when Liz Truss was asked if she could name a single economist who supported her plan. She named someone…”
ConHome: “Patrick Minford.”
Sunak: “Patrick Minford, who went on to say that to accommodate these things interest rates would have to rise, he used the number seven per cent, that’s not come from me, it’s come from the person she invoked in support of her position.
“And seven per cent interest rates would mean a typical mortgage would go up by about £6,000. That’s what that costs and I don’t think that is a good thing, I think that would be very damaging for millions of families up and down the country.
“That’s the inflationary argument, but there is also a moral thing.”
ConHome: “Seven per cent interest rates might not be good for millions of families with mortgages, but for those of us trying to get on the housing ladder, they might be slightly helpful in that respect.”
Sunak: “I don’t think it would. Seven per cent would be a big problem for you to get your first mortgage.”
ConHome: “It was more thinking of people having to default on them. But it’s not a particularly nice subject.”
Sunak: “I don’t think we want lots of defaults. Neither do I want people getting on the housing ladder having to deal with seven per cent interest rates.”
ConHome: “Did you say to Liz Truss after the ITV debate, ‘Why are we doing this?’ and if so, why didn’t you ask yourself the question before it rather than afterwards?”
Sunak: “The point I’ve made to the party is that when all this is said and done, someone, the party ideally, should take a step back and figure out what the right process is for having TV debates as part of a leadership contest.”
ConHome: “And what should they conclude about that?”
Sunak: “I think there might be an argument for the party negotiating on behalf of all candidates together with the broadcasters. That might be a sensible thing if the party sets the rules of the contest in general.
“Because there’s two competing things we’re trying to balance. One is a genuine need for scrutiny of candidates, and that is entirely reasonable and fair, because ultimately this person is going to become Prime Minister.
“But that need for scrutiny needs to be balanced with need as well to make sure that our party is not doing things that essentially write Labour’s next leaflets for them.”
ConHome: “You can get into a terrible auction.”
Sunak: “That’s why I can imagine the party on behalf of everybody figures out what the right mix of TV debates or interviews is, and when they should be, and can do that on behalf of all candidates.
“That’s something they should look at certainly. I think we’ve now had more TV debates probably in this election than in most general elections probably.”
ConHome: “If the two candidates are locked in a mutual spiral of who can cut the most taxes, or who can be the most fiscally conservative, or indeed who can be the more Thatcherite, then we’re actually missing the conversation the party should be having.”
Sunak: “I don’t mind a debate about policies and ideas, that’s entirely reasonable. My view is that embarking on a spree of excessive borrowing to fund tax cuts right now would not be the right thing for the economy or indeed the conservative thing to do.
“I’m going to deliver tax cuts, but I’m going to do it in a responsible way after we’ve gripped inflation, and I’m going to cut the taxes which actually I care most about, which are the taxes on people’s hard work, which is why I’ve already put in place an income tax cut in this Parliament, and I’d like to go further.
“But also cut the taxes on business that actually make a difference to growth and productivity, not just what sounds good. Now all my business experience, all my career, all the time as Chancellor, has led me to the conclusion that focussing solely on the headline rate of corporation tax is simply wrong.
“It has not led to an increase in business investment in this country, and if you want to see high growth, higher productivity, better jobs with higher wages, then we need businesses to invest more in capital, in innovation and R&D. I want to cut the taxes on those things, because our tax regime on those things is spectacularly ungenerous compared to lots of other countries.”
ConHome: “Do you feel this argument is getting through, or do you think you’re the underdog at the moment?”
Sunak: “I think it’s pretty clear I’m the underdog [laughter]. I don’t think there’s any doubt about that. But I’m happy to make the argument. I passionately believe in it.
“And I’m not engaging in a Dutch auction of tax cuts. I’ve decided not to. You saw earlier on when there were lots of people in this contest, there was a weekend where there was an escalating auction of tax cuts. I didn’t participate in that.
“It doesn’t make my life any easier, but I’m going to keep going round the country, and I’m going to keep talking to people, and actually wherever I’m going I’m getting a very positive reception and winning people round.”
ConHome: “Various Permanent Secretaries, at the Department for Education, the Ministry of Defence etcetera, have tweeted and emailed about the importance of Black Lives Matter.
“To many party members these emails and tweets are evidence that after 12 years of Conservative government Whitehall, along with the broader British Establishment, leans Left, and ministers seem powerless to do anything about it.
“Do you agree? Is there a culture war, and should the Conservative Party be fighting it?”
Sunak: “I’m incredibly proud of this country’s history, its traditions and its values. As a Conservative, I think it’s our responsibility, indeed our duty, to robustly defend those values, and that’s what I would do as Prime Minister.
“I’m not interested in people rewriting our history. I’m not interested in people to now say what I believe to be relatively commonsense, mainstream opinions and values should be marginalised, or in some cases labelled as racist or homophobic. That’s just not right and we should be prepared to call that out.
“I put out a video a day or two ago about my plan to tackle illegal migration, and I went out of my way to say it is not racist to say we should have controlled borders.
“I’m living proof that this is an incredibly tolerant, diverse country , and we shouldn’t be shy about defending that, and celebrating it, quite frankly.”
ConHome: “On the refugee cap, how would you get that through Parliament, when the Lords would resist it and it wasn’t in the manifesto so you can’t use the Parliament Act to drive it through.”
Sunak: “Well I think there’s a lot the new Prime Minister can try and do, but my strong point of view is we should have no option off the table in tackling this problem.
“We left the EU so we have parliamentary sovereignty, it’s not unreasonable if Parliament is having a sense of this is an acceptable and affordable level of people we can welcome to this country who are fleeing difficult situations.
“Of course we’re a compassionate country but there’s a limit to what we can do.”
ConHome: “How constrained do you feel by the 2019 manifesto?”
Sunak: “I think we have to recognise we’re actually relatively close to a general election, and that’s one thing that should be on all our members’ minds.
“All the conservative values that we cherish, all the policies that we cherish, will come to naught if we lose that next election.
“So who’s best placed to win that election? I believe I offer our party the best chance of winning what will be a historic fifth general election victory which hasn’t been done before.
“Given we’re all this way through Parliament I think a screeching U-turn on lots of policies that were in the 2019 manifesto is going to be tricky to implement.
“What the Government should focus on is now the things that we know are most pressing in people’s minds and grip them.
“So for me that’s the NHS waiting lists, which are a hugely challenging issue for millions of families. Tackling illegal migration. And making sure we realise the benefits of Brexit.
“The thing that will dominate all of those is the economy.”
ConHome: “Do you understand why some party members think that someone who held an American Green Card isn’t really settled here and can’t be Prime Minister?”
Sunak: “I lived and worked in America for a while and that’s why I had a Green Card, so I had the status there. And I happened to have it after I got back and gave it up when I was busy dealing with the pandemic, and as soon as it became relevant I gave it up immediately.
“So I love this country to my core. It’s why I’m sitting here, right, because this country welcomed my family as immigrants. They chose Great Britain because it was a very special place.
“I feel an enormous debt of gratitude to this country for everything it’s done for me and my family and I want to be Prime Minister to try to provide those same opportunities for everyone else, that’s what I’m about.”
ConHome: “How are you going to build us some houses?”
Sunak: “I set out a few ideas at your hustings. We need to do far more brownfield remediation…”
ConHome: “Will you repeal the 1947 Town and Country Planning Act?”
Sunak: “I don’t think I can commit to that here and now [laughter]. Brownfield remediation…”