Hammond urges Tory leadership hopefuls to pledge to keep national debt falling

Chancellor Philip Hammond has written to the Tory leadership candidates asking them to pledge to keep national debt falling every year.

Mr Hammond said the Conservative Party had a “hard-won” reputation for fiscal and economic competence, and that it was “vital” it was not thrown away.

“If we do not commit to getting our debt down after a nine-year run of uninterrupted economic growth, how can we demonstrate a dividing line between the fiscal responsibility of our party and the reckless promises of John McDonnell and Jeremy Corbyn?” he wrote.

“I therefore ask you, as a candidate for the leadership of the Conservative Party, to pledge that if you are the next prime minister your government will, at a minimum, have a clear commitment to keeping our national debt falling every year, and to maintain the current limit of the deficit at 2% of GDP at least through 2021-22.”

Mr Hammond said the pledge did not mean “that there is no extra money to spend”.

“As I said at the Spring Statement, if we can avoid major economic shocks and if we leave the EU in a smooth and orderly way, an incoming prime minister will have genuine choices about how to use the available borrowing capacity implied by these fiscal commitments.

“Increased spending on public services, capital investment in Britain’s future prosperity, cutting taxes or more rapidly reducing the national debt.”

Dominic Raab has pledged to raise the national insurance threshold to £12,500, scrap stamp duty on homes under £500,000, and a 5p cut in the basic rate of income tax.

Environment Secretary Michael Gove has promised to scrap VAT and replace it with a lower and simpler sales tax.

Boris Johnson plans to raise the 40% tax threshold from £50,000 to £80,000, while Jeremy Hunt wants to cut corporation tax to 12.5%.

Sajid Javid has suggested he could scrap the top rate of tax.