Liz Truss races into an early poll lead, leaving Rishi Sunak on the ropes in showdown for No10

RISHI Sunak was on the ropes last night as Liz Truss stormed to an early poll lead.

It came as the pair traded blows on taxes as the race for No10 heated up.

Rishi warned Liz’s £34bn cuts would “embed” sky high inflation and “push up their mortgage rates”.

But Liz hit back – saying Rishi’s plan to keep levies high will plunge Britain into recession.

Rishi has privately warned personal tax cuts will have to wait until late 2023.

In an early blow to the ex-Chancellor, a YouGov poll found that Liz had a stonking 24 point lead over Rishi among Tory members.

Some 62 per cent backed the Foreign Secretary while just 38 per cent back Rishi.

While 40 per cent said Rishi cannot be trusted. Just 18 per cent thought the same of Liz.

Last night, Liz declared herself “Labour’s worst nightmare” and said she was the only person who can win an election.

She vowed to rip up the economic orthodoxy – warning the cost Treasury “consensus” risks leading Britain straight into recession. Instead she promised £34billion of tax cuts.

She insisted her cuts would “decrease inflation” and pay for themselves by boosting growth.

While she promised there will be no return to austerity under her watch. “I’m not planning public spending reductions”, she told reporters in Peterborough.

“I’m planning public sector reforms to get more money to the front line, to cut the bureaucracy people face.

“I want people to keep hold of their own money but we’ll also have more money to spend on public services over the long term.”

Savaging Rishi’s grin and bear it approach to sky-high taxes, she called for an immediate change to avoid recession stop a Tory bloodbath at the next election.

She warned: “If we continue with our current economic policy, which is forecast to lead to a recession, it will be very hard for Conservatives to win an election.

‘We need bold action’

“This is a critical time. We need bold action. We are in economic difficulty, the whole world is an economic opportunity. It’s not time for business as usual.”

While she took a dig at Rishi’s wealthy background. Rishi’s billionaire heiress wife Akshata is richer than the Queen. And he was once caught on camera in his younger days saying he has “no working class friends”.

Twisting the knife into her rival, Liz – who went to a Leeds comprehensive – said: “I’ve got friends from all different kinds of backgrounds and I do think that gives me a perspective on what people want, what people need and how we need to move forward.”

While the born again Brexiteer admitted she got it “wrong” when she campaigned for Remain in 2016. She spoke out as the leadership contest reached its second, all important phase.

The two contenders have six weeks to battle it out for votes from Tory members. The contest is expected to be one of the bitterest ever.

Last night, Mr Sunak said Liz’s tax plans risk plunging Britain into such a bad inflation crisis that families would struggle to pay their mortgages.

He told Andrew Marr on LBC: “I’m worried about the inflation that we’ve got at the moment becoming embedded, and lasting far longer.

“That’s going to be so damaging for everyone listening because it’s going to erode all the savings that they’ve worked really hard to build up. It’s going to push up their mortgage rates and interest rates have to go up very high to deal with it.”

The ex-Treasury Chief is refusing to do big tax cuts until inflation comes down. Hitting back at critics who say he has been captured by the Whitehall blob, he also said he saved England from a devastating lockdown last December.

The nation was “hours away” from lockdown when he jetted back to warn it would spell economic misery, he said.

“I came back and fought very hard against the system because I believe that would be the wrong thing for this country, with all the damage it would have done to businesses, to children’s education, to people’s lives”, he said.

“We were hours away from a national lockdown, but I came back and challenged the system and said this is not right, and we don’t need to do this. And I’m glad I won the argument.”

Asked directly if he has ever opened or used an offshore banking trust in a tax haven, Mr Sunak said: “No.” But fresh questions about his wealth emerged last night after Channel 4 News discovered he had not won a scholarship to go to £46,000 a year Winchester College.

While Rishi has never directly said he got in for free, many of his MP backers had claimed he only attended the posh school because he was on a scholarship.

The programme also claimed the US hedge fund he co-founded managed funds in tax havens including the Cayman Islands, and paid partners with assets in those tax havens.

But his team flatly denied he ever benefited from a tax haven and said all taxes were paid in the US or UK.