The final two Conservative leadership candidates have taken part in another televised debate, each making the case for why they should be Prime Minister.

Last night Rishi Sunak and Liz Truss were challenged by an audience of 2019 Conservative voters about honesty in politics.

Both candidates spoke about the importance of principles, integrity and keeping promises.

We agree that honest politicians do not make promises that cannot be kept. Full Fact will continue to scrutinise claims from both campaigns as Conservative party members choose our next Prime Minister.

During last night’s debate, hosted by the BBC, Mr Sunak and Ms Truss discussed their views on tax and the economy. Full Fact has examined what was said.

You can read key points from our analysis below, or visit our site for a full write-up, including sources.

Spending plans

The debate saw considerable focus on how much Ms Truss’s plans to cut taxes would cost.

Mr Sunak claimed that Ms Truss had promised £40 billion of “unfunded” tax cuts, and Ms Truss responded by saying this was “not true”. 

While Mr Sunak didn’t give a source for the £40 billion estimate, the figure appears to come from analysis carried out for the i by tax advisory firm Blick Rothenberg. 

Other estimates do exist, and are largely over £30 billion. The IFS has said that Ms Truss’s tax cuts alone would “cost more than £30bn – possibly considerably more”, depending on the precise details.

On the BBC Today programme on 21 July, Ms Truss was asked if her plans would cost £38 billion. She replied that figure was “slightly high but it’s around that”.

Will there be a recession?

Ms Truss claimed: “The OECD has described [Mr Sunak’s] policies as contractionary. That means it will lead to a recession.”

In an economic forecast summary for the UK published in June 2022, the Organisation for Economic Co-operation and Development (OECD) did indeed describe the current overall fiscal policy of the UK government as “contractionary”.

A contractionary fiscal policy refers to a policy which typically sees lower government spending and tax increases.

This kind of policy slows economic growth, but it does not necessarily mean that a country is heading towards a recession, which is defined as two consecutive quarters of negative economic growth.

The OECD’s update does not say that the UK’s current policy will lead to a recession. It states that “GDP is projected to increase by 3.6% in 2022, before stagnating in 2023”.

What about tax?

Mr Sunak claimed that his plans include the first cut to income tax in 16 years, and that his plans would “deliver tax cuts in this parliament for working people”.

It is true that the government’s existing plans, announced in March when Mr Sunak was still Chancellor, include a cut in the basic rate of income tax of 1p in the pound in 2024—by which point it will be 16 years since the basic rate was last reduced in April 2008. (The additional rate—for incomes over £150,000—was cut from 50% to 45% in 2013.)

However, there have been many other changes announced in the system of taxes and benefits that affect how much money working people keep, and receive, from the government. These include the rises in the National Insurance rate and threshold, and the freezing of these thresholds over the coming years.

Finally, Ms Truss also claimed with reference to Mr Sunak’s previous job that “this Chancellor has raised taxes to the highest rate for 70 years”. 

This is broadly true. Recently, the overall tax burden was forecast to soon become the highest for 70 years in the wake of the National Insurance rise (though others claimed taxes would rise to the highest-ever level, the highest in peacetime, since 1950, or since 1969). 

As we wrote at the time, these varying claims were all based on slightly differing estimates for the predicted and historic tax burden. But since then, the Office for Budget Responsibility has updated its forecast, and it estimates by 2023/24 taxes will account for 36% of GDP, the highest level since 1949.