Rishi Sunak has defined the Conservative Party’s choice: fairy tales or honesty?

Editorial: The former chancellor and leadership frontrunner has rightly challenged the folly of unfunded tax cuts

Rishi Sunak understands economic history (Getty)

The former chancellor has made a bold start to his campaign to be Conservative leader and prime minister. His opening pitch is a schmaltzy video telling his family’s story, but it contains a substantive political argument. “Do we confront this moment with honesty, seriousness and determination,” he asks, “or do we tell ourselves fairy tales that might make us feel better in the moment but will leave our children worse off tomorrow?”

This is an unmistakeable warning to the punk Thatcherites in the Conservative Party who think that the next step after borrowing £360bn to save people’s jobs during coronavirus shutdowns is to borrow even more or to slash public spending to pay for tax cuts.

Rishi Sunak, who understands economic history, knows that Margaret Thatcher put taxes up to stabilise the public finances, and that she cut them again when growth resumed. His allies point out that he is “a Thatcherite, not a Reaganite”. It was Ronald Reagan, the fiscally incontinent president, who joked: “I am not worried about the deficit. It is big enough to take care of itself.”

Mr Sunak’s comment was aimed at Liz Truss, the foreign secretary, if it was aimed at anyone. Ms Truss let it be known last September that she had objected to the rise in national insurance. She suggested in cabinet that the cost of tackling the National Health Service backlog should be met from borrowing. Her supporters claim that her position was vindicated when Mr Sunak rescinded half of the tax rise this month – but that was because tax revenues came in higher than expected, not because he thought borrowing was a good idea.

Jacob Rees-Mogg, the minister for Brexit opportunities, has put himself more explicitly at the head of the know-nothing tendency. He welcomed Mr Sunak’s resignation from the government, saying he had been a “socialist” chancellor.

It is true that Mr Sunak has twice deployed what he called “the overwhelming might of the British state” to protect people from hardship – once with furlough and business support during the pandemic, and this year with benefit payments to help with energy bills. These were the right decisions, and if Mr Rees-Mogg wants to argue that people should have lost their jobs during lockdowns, and that those on low incomes should be able to find £1,200 for their energy bills, he should explain what a “non-socialist” policy would be.

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As he is not a candidate for the Conservative leadership, perhaps his view is not so important. But if Ms Truss, or indeed any of Mr Sunak’s dwindling field of rivals, is proposing to cut taxes further or faster than the trajectory set by the former chancellor, they must set out what public spending they would cut, and how they would defend such “austerity” to the people; or how much extra they would borrow at rising interest rates.

The Independent has long argued that if people want good-quality public services – and they do – they must be prepared to pay for them. One of the most important public services is protection for the vulnerable from the rigours of economic shocks, and Mr Sunak is right to defend it. He deserves cautious praise for forcing the other candidates for the Conservative leadership to explain where they stand on this critical issue.