Sunak ‘fuelled’ inflation with money printing, claims former Tory leader

A former leader of the Conservative Party has criticised Rishi Sunak’s approach to the economy, accusing the former chancellor of fuelling inflation.

Speaking to Sky News’ Sophy Ridge on Sunday programme, Liz Truss backer Sir Iain Duncan Smith said the Treasury, overseen by Mr Sunak, has demonstrated a “failure” of monetary policy.

Sir Iain continued: “There is a genuine debate to be had here in the party about this because I think the government and the Treasury, through a peculiar orthodoxy, is bound on the wrong course which could seriously damage us over the next two years.”

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He added: “We’ve got an inflationary spiral going on, now we’ve got the war in Ukraine, that’s made it even worse with regards to energy, but here in the UK we do have to bear some of the blame for the fact that we have inflation rising on top of all of that.

“And that’s down to the Bank of England and the Treasury’s failure over, I think, monetary policy.

“First of all, over a year ago the Bank actually kept on printing huge sums of money, which has inflated the economy as well as keeping interest rates low.

“It was the Treasury that signed off on that money printing, the chancellor no less, so before they say ‘oh it’s independent’, the Treasury has the right to say no to the money printing bit and they didn’t – that has fuelled inflation.”

Sir Iain said foreign secretary Ms Truss’ record in government is “strong” when asked about her tax proposals.

Ms Truss pledged to ditch the hike in corporation tax and suspend the green levy at the campaign’s first hustings on Friday.

But, seemingly in a dig at the foreign secretary, Deputy Prime Minister Dominic Raab said that those Tory leadership candidates calling for tax cuts need to explain how they would be paid for.

Mr Raab, who is backing Mr Sunak, told Sky News’ Sophy Ridge On Sunday programme: “You can’t borrow your way out of an inflation crisis.

“If people are suggesting we should make cuts to the NHS at a time not just of COVID, but all the other non-COVID NHS challenges, they have got to spell out where they are coming from.

“We want to all leave people with more money in their pocket. But if you cut taxes and inflation robs people of that money because it is worthless or sees interest rates go up so their mortgage is more expensive, then frankly it is a false economy.”

The comments came hours after the former chancellor and now Conservative leadership hopeful vowed to scrap hundreds of remaining EU laws and regulations if he triumphs in the contest.

In a fresh pitch to win over Brexiteers, the former chancellor promised to appoint a Brexit minister to comb through the remaining 2,400 EU laws still on the UK’s statute book.

He even promised a “Big Bang 2.0” for the City thanks to an overhaul of the remaining EU financial services regulations.

It comes as the final five leadership contenders prepare to face off again in the second televised debate on ITV on Sunday evening.

In a statement setting out his proposals, Mr Sunak stressed that he had always backed Brexit, even though he had been warned it could damage his political career, because it was the “right thing” for the country.

Mr Sunak topped the first two rounds of voting by MPs but still remains short of the 120 votes he needs to guarantee him a place in the final two.

A new poll of Tory party members by ConservativeHome has Kemi Badenoch ahead with 31% of those polled, with a commanding leader over second-placed Liz Truss on 20%.

Then comes Penny Mordaunt on 18%, who has dropped from first place, followed by Mr Sunak and Tom Tugendhat.

Away from the leadership contest, cabinet minister Alok Sharma has threatened to quit if the next prime minister does not commit to a strong net zero agenda.

Mr Sharma, who led last year’s landmark Cop26 UN climate summit, told The Observer that while it was “absolutely a leadership issue”, some of the remaining candidates in the Tory leadership race had been only “lukewarm”.