Will Tory Tax Promises Solve The Cost Of Living Crisis?

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Just five candidates remain in the Conservative Party’s hunt for a new PM following the first leadership debates. But, when it comes to the economy, are these hopefuls barking up the wrong magic money tree?

If the Tory leadership contest so far has been about one thing, it’s been about tax. Considering the prominence of the cost of living crisis in voters’ minds right now, this shouldn’t come as a surprise. It’s still something of a shock, however, how few of the candidates seem to have grasped the scale of the looming economic crisis. Before Friday, most of the hopefuls were falling over themselves to get across their tax-cutting credentials at a time when public finances have been crushed by successive years of high government spending.

Where, then, will the money for tax cuts come from? Borrowing, as Sunak insisted at the first debate on Friday, would play havok with the deficit. Though Nadhim Zahawi has now exited the race, he was one of the few to offer an explanation, suggesting a 20% cut to all government departments. That honesty likely goes some way to explaining why he never built up much support, but it’s a truth the other candidates will have to wrestle with if they want to double down on their tax pledges.

With the already proposed pausing of the Civil Service fast-track scheme, NHS waiting lists at a record high, and hospital staff and teachers leaving already understaffed industries in droves, it’s difficult to see where sizeable cuts could be made without provoking the ire of not just the public sector workers, but the public at large. The upcoming rail strikes look increasingly likely to spill into a cross-industry ‘summer of discontent,’ and should doctors, nurses or teachers walk out after more than two years of brutal pandemic conditions then it seems likely that public opinion will overwhelmingly back giving them the raise they’ll inevitably ask for.

The ugly truth the Conservative party is wrestling with is that most of their plans for the economy don’t look all that different to those which have exacerbated the country’s current crisis in the first place. After almost a decade of austerity stretched the public sector to breaking point before Covid, even this government’s first budget looked to be an admission that Cameron’s trademark policy had been a mistake. Successive crises in Covid and Ukraine have shown the terrifying cost of this underinvestment, but still most of the leadership candidates seem intent on keeping public services at minimum capacity.

But what about Rishi Sunak? The former Chancellor has distinguished himself by being the only candidate to call for restraint before offering a tax cut—despite having already promised a 1p Income Tax reduction by the end of this parliament. And though Sunak has made great pains to model his economic outlook after Thatcher, it may be his own history in the Treasury he most has to contend with. As a Chancellor forced to give out huge volumes of money early in his role, he may find it difficult to persuade the public that the public spending tap can be so easily switched off—as demonstrated by his drop in popularity following a lacklustre response to the cost of living crisis.

All of this places the Tory party in a bit of an economic pickle. No matter which candidate they choose, the country’s finances are only going to get worse before they get better. And while Labour continue to lead in the polls, in all likelihood the new PM will have to face at least two more years of an increasingly stagnant economy before the next General Election. Labour are already the party the public trust most with the economy. And if the Conservative candidates keep on their current paths, that lead is surely going to widen.


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