Tory rivals trade blows over economics and education

Gordon Brown warns of ‘financial timebomb’ as Labour plans intervention to help low-income housesholds

Rishi Sunak launched a fresh attack on his Conservative leadership rival Liz Truss’s plan for tax cuts in an emergency budget, describing it as a “big bung” for large businesses and the better-off, which would do little to help those most in need.

Truss had told the Financial Times that she rejected “handouts” as a way of helping people affected by the cost of living crisis, preferring to use tax cuts as the primary way of giving people financial support.

She was accused of making another U-turn within a week, last Sunday, after her campaign tried to play down suggestions there would be no support payments to help millions of struggling people through an already worsening cost of living crisis this winter. It follows her abandonment of plans to cut public sector pay for roles outside London and the southeast of England.

The candidates also set out their education policy proposals. Both would like to see more grammar schools, while Truss suggested that students with three A*s at A-level should automatically be offered an interview for a place at either Oxford or Cambridge as a way of improving access. Sunak vowed to phase out degrees that do not improve students’ “earning potential”, create a group of world-class technical colleges and introduce a baccalaureate that would prevent 16-year-olds from dropping maths and English.

The result of the leadership contest will be announced on 5 September.

Boris Johnson and the Tory leadership candidates should agree an immediate emergency budget tackling the spiralling cost of living, Gordon Brown has said, or risk “condemning millions of vulnerable and blameless children and pensioners to a winter of dire poverty”.

The former prime minister spoke out as figures show that more than 4m households are likely to spend a quarter of their net income on energy. “The reality is grim and undeniable: a financial timebomb will explode for families in October as a second round of fuel price rises in six months sends shock waves through every household and pushes millions over the edge,” Brown wrote in the Observer.

“The more the Conservative leadership election heats up, the more the remaining candidates have resorted to claiming the moral high ground. Raising debt is ‘immoral’, Rishi Sunak is saying. ‘High taxes are immoral,’ retorts Liz Truss. But there is nothing moral about indifferent leaders condemning millions of vulnerable and blameless children and pensioners to a winter of dire poverty.”

He added: “Boris Johnson, Sunak and Truss must this week agree an emergency budget. If they do not, parliament should be recalled to force them to do so.”

It follows the Bank of England’s grim forecast last week that inflation will soar to 13% in October. There have also been predictions that UK energy bills could reach more than £3,600 ($4,400) a year this winter.

Johnson, however, this week ruled out new cost of living measures until a new prime minister is in place. The prime minister’s official spokesperson said there were no plans for a Cobra meeting to address the crisis, and it would be for either Truss or Sunak to work out a plan when the new prime minister is in post in a month’s time. Downing Street said the “bigger challenges” for family budgets “are coming towards the end of the year”.

Senior Labour sources confirmed that the party was preparing to back a key intervention designed to curb the winter crisis, in addition to the removal of VAT on energy bills that it has already supported.

Labour leader Keir Starmer and Rachel Reeves, the shadow chancellor, have not yet finalised the package, but have concluded that big measures are needed. “We recognise that this is an emergency situation and that requires a response that matches the moment,” said a senior Labour source.

The Observer has seen research by the University of York’s social policy research unit that lays bare the scale of the crisis. By January, there will be 4.2m households – about 11.6 million people – spending more than a quarter of their net income on fuel. The study also found that more than 3m households will be spending at least 30% of their net income on fuel by January.

A separate report by Prof Donald Hirsch at Loughborough University found that government support for low-income households fails to cover the shortfalls they face.

Matt Copeland, the head of policy at the National Energy Action group, said the poorest could be protected with the right action. “The UK government has the power to save millions from the hardship of cold homes, crushing debt and unsafe coping tactics,” he said.

Brown said that local charities were stocking up on blankets, duvets, sleeping bags and hot water bottles as they prepare for “the worst winter in living memory”. He said it would have a devastating impact on child poverty.

There are no plans for the Tory leadership candidates to agree to any joint programme before the appointment of a new prime minister next month. Asked how she would help those hit by high energy costs, Truss said last week that she would help by cutting taxes rather than through “handouts”.

Sunak has backed scrapping VAT on energy bills, but wants to prioritise tackling inflation. “We must do everything we can to grip inflation and fast,” said a campaign spokesperson. “There is no doubt that the country faces a tough winter – we need to be honest with people about that. As prime minister, Rishi will look at every possible lever available to help those struggling with higher prices and bills.”

A government spokesperson said: “We know that rising prices caused by global challenges are affecting how far people’s incomes go and many will be concerned by the latest economic forecasts. We have continually taken action to help households by phasing in £37bn worth of support throughout the year, which includes specific support to help people through the difficult winter ahead.”

‘The reality is grim … and pushes millions over the edge’

Gordon Brown Former UK prime minister