The chancellor Nadhim Zahawi has attempted to turbo-charge his leadership bid with a raft of tax cut pledges, despite warnings from a Tory grandee they risk fuelling inflation.

In a speech to Conservative activists, Mr Zahawi promised to cut the basic rate of tax to 19p and then 18p next year and the year after.

He also pledged to scrap VAT and green levies on energy bills for two years, reverse the planned corporation tax rise and ensure tax falls as a percentage of GDP every year if he became prime minister.

But former chancellor Lord Lamont criticised Tory leadership candidates "thinking that you can grow your way out of inflation" and argued that "unfunded, irresponsible tax cuts" would drive up interest rates and lead to a weaker pound.

The Conservative peer told Radio 4’s World At One programme: "You can’t grow your way out of inflation, you’re just likely to add to it if you attempt to do that.

"And there’s a real danger if you cut taxes, let’s say cut VAT in order to increase spending, to boost the economy, all you get is a very temporary boost and then you get more inflation".

He added: "I don’t suppose many people want to see interest rates above the level of inflation, but if we start giving unfunded, irresponsible tax cuts, the Bank of England will be faced with difficult choices indeed".