The past few days have seen a number of Conservative MPs set out their case to become the leader of their party—and by extension, the country.
As of 5.30pm on Monday 11 July, the following MPs have announced they will be running: Kemi Badenoch, Suella Braverman, Rehman Chishti, Jeremy Hunt, Sajid Javid, Penny Mordaunt, Grant Shapps, Rishi Sunak, Liz Truss, Tom Tugendhat and Nadhim Zahawi.
While it’s early days, here we’ve taken a look at a handful of the early claims to emerge as candidates launched their campaigns. We’ll be continuing to follow the contest closely in the coming days, including at the TV leadership debates—and if you’ve spotted something you’d like us to check, let us know.
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Mordaunt’s £10 fuel saving estimate appears slightly too high
“I will introduce an immediate 50% cut in VAT on fuel, reducing filling up the average family car by £10 per fill.”
The Minister for Trade Policy, Penny Mordaunt, announced on Twitter that she would cut the rate of VAT on fuel by 50%. She said this would save £10 on the cost of filling up the tank of an average family car.
We’ve contacted Ms Mordaunt’s office to ask her what this estimate was based on, and haven’t received a response at the time of publication. However, the RAC says the average price at the pump of a litre of unleaded petrol is about £1.91, as of 10 July 2022.
This includes VAT at 20%, which means that about 32p of that price is VAT. If the rate were halved, as Ms Mordaunt is suggesting, it would therefore save drivers about 16p per litre.We’ve not been able to find official statistics on the capacity of the average fuel tank, but the RAC has recently used the figure of 55 litres when talking about the average cost of filling up a family car. A car with a fuel tank that size would cost about £8.80 less to fill under Ms Mordaunt’s plan.
Filling up a car with a tank holding about 63 litres would be £10 cheaper, although the i reported in 2019 that nine of the ten best-selling cars in the UK had a tank of 55 litres or less.
Diesel is slightly more expensive than petrol, costing about £1.98 per litre in the RAC’s latest figures. Cars with diesel engines would therefore need to have tanks holding about 61 litres in order to save £10 per filling under Ms Mordaunt’s plan.
Hunt’s corporation tax comparison doesn’t tell the full story
"We're scheduled to increase corporation tax to be higher than Japan, America, France or Germany."
Mr Hunt claimed on the BBC’s politics programme Sunday Morning and Sky News’ Sophy Ridge on Sunday that the UK is scheduled to have higher corporation tax than four other countries in the G7—Japan, the United States, France and Germany.
In March 2021, the main rate of corporation tax was set at 19% for 2022, rising to 25% of profits over £250,000 in 2023.
But when this was announced, then-Chancellor Rishi Sunak said: “Even after this change, the United Kingdom will still have the lowest corporation tax rate in the G7.”
Full Fact has contacted Mr Hunt to ask what his claim was based on—we haven’t had a response at the time of publication. But according to data collected by the Organisation for Economic Co-operation and Development (OECD) for 2021 (the most recent year available) Mr Hunt’s claim doesn’t tell the full story.
The OECD splits corporation tax for each country into two categories—central government and sub-central government (for example, on a state or regional level).
The UK only levies corporation tax at a central government level, currently 19% and rising to 25% in 2023. If we only look at central government corporation tax, in 2021 Japan’s rate was 23.2%, the US 21%, France 28.4% and Germany 15.8%, which suggests on the surface Japan, the US and Germany at least all have lower corporation rate taxes.
However, unlike the UK, these countries also have corporation taxes at a sub-central government level (according to the OECD, Japan averages out at 7.4%, the US at 6% and Germany at 14.1%). According to the OECD, once deductions are also factored in that means corporations in those countries pay a higher average rate in total than in the UK in 2023—in Japan 29.7%, the US 25.8% and Germany 29.9%.
Of course, these figures are based on OECD data for 2021, and it is possible that other countries may change their corporation tax rates. It has been reported that corporation tax rates in some of these countries are set to be raised in the near future—for example in Japan and the US—though France has been reducing its rate of corporation tax, reaching 25% in 2022.
Sunak’s claim about NI threshold savings doesn’t factor in rate increase
"Changes tomorrow to the National Insurance Thresholds will save a typical employee £330 per year."
Unlike the other claims examined here, this wasn’t technically made as part of a Conservative leadership bid. But last week, shortly before resigning as Chancellor, Rishi Sunak repeated a claim that changes to the National Insurance threshold which came into force on 6 July will save a “typical employee” £330 per year.
It is correct that on 6 July the amount an employee can earn before they begin paying National Insurance increased from £9,880 per year to £12,570 per year, bringing it in line with the income tax personal allowance.
Full Fact asked the Treasury how Mr Sunak’s claim was calculated, and it told us that the maximum amount a typical employee—which it defines as someone earning more than £12,570 per year—could benefit under the recently increased National Insurance threshold is £332. Given the average employee does earn more than £12,570 a year, that explains the claim.
However, this figure does not show the impact of the 1.25 percentage point increase in National Insurance contributions—the Health and Social Care Levy—which was introduced in April 2022.
In the 2021/22 tax year, employees paid National Insurance at a rate of 12% on earnings above £9,568 and below £50,270. On 6 April 2022, the lower threshold increased in line with inflation to £9,880, but the Health and Social Care Levy, which we’ve previously written about, increased the basic rate of contributions to 13.25%.
As a result, most employees paid more National Insurance between April and July 2022 than they would have done in the same period last year.
Increasing the threshold to £12,570 somewhat balances out the increased payments brought about by the levy, but not for everyone.
Taking both the 1.25 percentage point increase and July’s threshold increase into account, employees earning roughly £35,000 will pay the same amount in National Insurance during the tax year 2022/23 as they did in the previous tax year, 2021/22, according to the Institute for Fiscal Studies.
Employees earning less than £35,000 will pay less in National Insurance than in the previous year, while those earning above £35,000 will actually pay more.
This means that an employee who in 2021 had the median salary of around £26,000 will pay less National Insurance in 2022/23 than they did in 2021/22, but will save far less than £330 per year as a result of both policies together.
Labour figures for ‘unfunded’ Conservative pledges cover all candidates
“Sir Keir said the Tory challengers had made £200bn of unfunded tax and spending commitments in recent days.”
Finally, not a claim from a leadership candidate, but from the Labour party, which said Conservative challengers had made £200 billion of unfunded tax and spending commitments, an estimate subsequently revised upwards to over £300 billion on Monday morning.
Some reports have not been clear on how that number was calculated.
Labour has reached its figure by adding together estimated costs of pledges on tax cuts and spending made by all 11 leadership candidates—including the same pledges made by multiple candidates.
Although Labour is clear that this is an overall estimate for the commitments made by all of the candidates, that naturally means the headline figure includes a lot of double-counting.
For example, Labour adds up Tom Tugendhat, Sajid Javid and Liz Truss all promising to reverse the National Insurance increase, which it says will cost £17 billion.
When it comes to corporation tax, the party also counts:
- Jeremy Hunt’s promise to immediately cut the 19p corporation tax rate to 15p
- Sajid Javid’s pledge to cut corporation tax by 1p per year to reach 15p
- Liz Truss’ plans to cut corporation tax (though it is unclear by how much)
- Grant Shapps saying that “our corporation tax rate must be the most attractive of all major democratic economies”
- And Nadhim Zahawi saying “one tax we can compare globally is corporation tax rates, and that influences decision making”
Labour estimates the first two will cost £24 billion, the rest will cost £14.5 billion, and adds all five together in its £330 billion total.
The sum also counts two candidates, Nadhim Zahawi and Suella Braverman, as endorsing the same policy paper on tax cuts.
Labour also claims that “one candidate has even attempted to provide an answer to where the money comes from – and it is through unspecified cuts to the NHS, schools and policing”, but has not taken this away from the total despite claiming that all of these pledges are “unfunded”. This may be a reference to Mr Zahawi, but that is not clear from the Labour press release.
This is just some of the double-counting involved in Labour’s assessment of the Conservative leaders’ pledges, not an exhaustive list. We’ve also not done an individual evaluation of Labour’s estimates for how much each of these pledges will cost.
Portrait of Penny Mordaunt used under Attribution 3.0 Unported (CC BY 3.0)