TAX cuts would “make things worse by increasing inequality,” campaigners warned today after Tory leadership hopeful Liz Truss pledged to do so immediately if she makes it to No 10. 

The Foreign Secretary, who is vying with Rishi Sunak for the top job, said she would use an emergency budget next month to reverse this spring’s 1.25 per cent rise in National Insurance if she wins an ongoing ballot of party members. 

The tax increase on workers, introduced by her rival before his resignation as chancellor earlier this summer, could be repealed just “days” after the ballot result is due on September 5, rather than in April 2023 as stipulated by current Treasury rules, Ms Truss’s campaign claimed. 

Both candidates have clashed over their plans to help families with spiralling bills after the Bank of England warned last week that Britain is set to fall into its longest recession since the 2008 financial crisis, with inflation forecast to hit 13.3 per cent in October.

There are growing calls for whoever replaces Boris Johnson as prime minister to urgently increase the amount of support available to the poorest after more than a decade of stagnating wages.

Ms Truss wrote in the Sunday Telegraph: “I would hit the ground running by bringing in an emergency budget [to] tackle the cost-of-living crisis by cutting taxes, reversing the rise on national insurance and suspending the green levy on energy bills.”

Mr Sunak, who told the Times newspaper that her proposals would do little to help pensioners or those on low incomes, has attempted to make ground on the frontrunner by pledging a 4p cut in income tax by the end of the next parliament, despite his own warning that slashing taxes could push fuel prices up further. 

Unions and activists stressed that the pledges disproportionately benefit the wealthiest.

Economic justice campaigner Richard Murphy, who is a professor at Sheffield University, said: “Tax cuts for the rich increase inequality but do nothing for growth.

“The Tories claim tax cuts solve all problems, but they’re wrong –mostly they make things worse, or do nothing to improve them.”

The intervention came after a new Opinium poll, commissioned by the Observer newspaper, suggested that most people do not back tax cuts, while a quarter – 26 per cent – actually want taxes increased to support austerity-hit public services.