The crucial race for second place was narrowly won by Foreign Secretary Liz Truss on 113 votes, against 105 for former defence secretary Penny Mordaunt.
Sunak and Truss now take their case to Conservative party members, who will decide the new leader and prime minister after a series of nationwide hustings in August.
The result will be announced on September 5. But Britain is already guaranteed to get either its first prime minister of colour, or its third woman leader.
Sunak’s resignation as finance minister this month helped to topple outgoing leader Boris Johnson after months of scandal including “Partygate”, and Downing Street is reportedly running an “anyone but Rishi” campaign.
At his last session of Prime Minister’s Questions in the House of Commons earlier Wednesday, Johnson bowed out by saying “Hasta la vista, baby!”.
In a hint of support for Truss’s low-tax platform, the premier urged his successor to “cut taxes and deregulate where you can to make this the greatest place to live and invest”.
Truss tweeted that she was “ready to hit the ground running from day one”.
But whoever wins the Tory race, “like some household detergent, would wipe the floor” with the main opposition Labour party, Johnson predicted.
– Mordaunt moribund –
Mordaunt — the one-time bookmakers’ favourite — lapsed to outsider status after Truss’s fellow right-winger Kemi Badenoch was eliminated on Tuesday.
In a bid to woo those MPs, Truss wrote in Wednesday’s Daily Telegraph that her plan to revive the economy would be “based around tax cuts, deregulation and tough reform”.
Former minister David Davis, a backer of Mordaunt, accused Sunak of lending votes to Truss so he could face her in the runoff.
“He wants to fight Liz, because she’s the person who will lose the debate with him,” he told LBC radio.
A YouGov poll published before the vote indicated that, despite his popularity with colleagues, Sunak was the least appealing candidate to the members.
The BBC plans to host a live televised debate with the final two candidates on Monday. Sunak won the two previous debates, according to snap polls, and the second one featured a no-holds-barred clash with Truss.
But Sunak’s popularity with the Tory grassroots has faded since questions were raised over his family’s tax arrangements, and as he presided over sky-rocketing inflation, which hit a new 40-year high of 9.4 per cent in June.
In a new policy announcement, Sunak vowed an “ambitious new plan to make the UK energy independent” by 2045 in order to prevent future energy-driven inflation spikes, after Russia’s war in Ukraine sent gas prices rocketing.
– ‘Fantasy economics’ –
Mordaunt had headed the same YouGov poll of Tory members previously.
But she slipped after a damaging few days in which her former boss, one-time UK Brexit pointman David Frost, slammed her work ethic and questions were raised over her stance on transgender rights.
Johnson announced on July 7 he was quitting as Conservative leader after a government rebellion in protest at his scandal-hit administration.
Under Britain’s parliamentary system, the leader of the biggest party is prime minister and can be changed mid-term without having to call a general election.
Labour leader Keir Starmer accused the Tory candidates of “fantasy economics” before turning his fire on the outgoing Johnson.
“He is a complete bullshitter and I think he’s been found out,” he told Labour prime minister Tony Blair’s former spin chief Alastair Campbell in a podcast.
Starmer attacked Johnson for the Downing Street “Partygate” scandal, which saw him fined for breaking the Covid lockdown rules he set for the public.
“It wasn’t just that he did things which broke the rules, it’s that he then took the piss out of the public with his ridiculous defences afterwards,” the Labour leader added.
It is “good for the country” that Johnson is going, Starmer added, saying it was reflected in public opinion at the last local elections at which the Tories lost hundreds of council seats.
AFP