Energy bills: Liz Truss ‘plans to tackle rising charges with tax cuts’on August 28, 2022 at 6:49 pm

- Advertisement -
- Advertisement -
- Advertisement -
- Advertisement -

The Tory leadership contender prefers tax cuts to direct support to tackle energy charges, her team says.

Young brunette curly female reading her bill papers, looking stressedImage source, Getty Images

Liz Truss has “ruled out” further direct support for everyone to help cover the cost of surging energy bills, sources close to her have told the BBC.

Rishi Sunak, who is vying with her to become the next prime minister, has said the government “must provide some direct support to everyone”.

But Ms Truss’s team said she was not considering further universal support, like the £400 payment that all households will receive this winter.

Reports suggest a VAT cut is an option.

On Friday, energy regulator Ofgem hiked the price cap on household bills by 80%, meaning the typical household gas and electricity bill will rise to £3,549 a year from October.

Save the Children warned the rise could put young people’s health at risk, with families unable to afford to heat their homes, and money expert Martin Lewis predicted grave consequences without more state help.

“I am begging and praying and pleading that there is more government help this winter so that people do not die,” he said.

Ofgem said the next prime minister would need to act urgently and decisively to address surging energy prices.

Ms Truss and Mr Sunak, one of whom will be announced as Boris Johnson’s replacement as Conservative party leader on 5 September, have faced repeated questions about what action they would take.

Ms Truss has so far only confirmed she will cut National Insurance and green levies on bills.

But her team have emphasised she is considering “all possible options” to help people – including further tax cuts and more targeted support for lower income households through the welfare system.

Sources close to her say she would want to move as quickly as possible with an “emergency fiscal event” if she is elected.

It comes as newspaper reports suggest she is “mulling” cuts to VAT and increasing the amount of money people have to earn before they start paying income tax.

A report in the Sunday Telegraph suggests she is looking at a “nuclear” option to cut VAT by 5%, saying it could save the average household £1,300 a year.

This video can not be played

To play this video you need to enable JavaScript in your browser.

Mr Sunak’s team has dismissed a cut to all VAT as being “incredibly regressive”, saying it would cost more than £30bn.

A source on his campaign team added: “Tory members will not like the sound of Liz Truss boosting welfare – once it goes up, it’s hard to take back down.

“It also means the worst off this winter are hardworking families and pensioners on middle incomes, which are Conservative and swing voters. Truss’s plan is a gift to Labour.”

The former chancellor has said he will cut VAT on energy bills and – writing in the Times on Saturday – said direct government support must be provided to everyone, with a focus on low-income households and pensioners.

He has also indicated he would try to make up the difference between the current energy price cap of £1,971 a year and the new cap of £3,549, for the most vulnerable households by changing things like welfare benefits and pensioners’ winter fuel credits.

Writing in the Mail on Sunday, Boris Johnson said his successor would deliver a “huge package” of support, without saying what that would be.

In his last week as prime minister, Mr Johnson is expected to give a speech about the future of energy, the BBC has been told.

A No 10 source said this would emphasise the need for long-term solutions, not just “short-term blow-cushioning on the cost of living”.

It is likely this will serve as a challenge to his successor not to neglect plans to ramp up other energy sources, like offshore wind and nuclear power.

Mr Sunak has already indicated his support for boosting insulation and offshore wind.

Ms Truss has voiced support for exploring more North Sea oil and gas and fracking, where communities support it. But she has criticised other forms of energy such as solar farms on agricultural land.

In his article, Mr Johnson wrote the months ahead were going to be “tough, perhaps very tough” and energy bills would be “eye-watering”.

He said “colossal” amounts of taxpayers’ money had already been committed to helping people.

All households will get the £400 rebate on energy bills, with low income and vulnerable households receiving an additional £650.

Pensioners will also receive £300 along with their winter fuel payment in November, and people on an eligible disability benefit will receive an additional £150.

This video can not be played

To play this video you need to enable JavaScript in your browser.

Labour and the Liberal Democrats have criticised the government’s response to the growing cost of living crisis.

Pat McFadden, Labour’s shadow chief secretary to the Treasury, told Sky News Mr Johnson’s article showed how little he understood the shockwaves sent through households by Ofgem’s announcement.

Labour has said its plan to freeze energy prices this winter – paid in part by a windfall tax on energy companies – would save someone on the minimum wage more than £40 a week.

Lib Dem leader Ed Davey said the energy price cap rise was “nothing short of a catastrophe for millions” and SNP Westminster leader Ian Blackford warned businesses could “go to the wall” over winter.

A Treasury spokesperson said the department was making “necessary preparations” to ensure the next government had options to deliver extra help “as quickly as possible”.

2px presentational grey line

How much are energy prices rising by?

  • The price cap, set by Ofgem, is rising by 80% in October
  • The price of electricity will rise on average from 28p per kilowatt hour (kWh) to 52p and gas will go up from 7p to 15p per kWh
  • A typical annual energy bill paid by direct debit is currently £1,971. In October, that will rise to £3,549
  • Prepayment meter customers will pay an extra £59 a year from October, taking the new typical bill on a prepayment meter to £3,608
2px presentational grey line

In his article, Mr Johnson blamed Russia’s war in Ukraine for rising costs, but said with every month “Putin’s position grows weaker”.

His decisions as prime minister would make for a “bounceback”, he added, predicting a “golden” future for the UK.

Writing in the Sunday Express, Ms Truss warned “the era of complacency is over” as she outlined her plans to bolster Britain’s defences if she is made prime minister.

She said she planned a “full renewal” of the UK’s nuclear deterrent and repeated her pledge to increase defence spending to 3% of GDP by 2030.

Her rival, Mr Sunak, has said he views the Nato defence spending target of 2% of GDP as a “floor and not a ceiling” and noted that spending is set to rise to 2.5% “over time”, but has refused to set “arbitrary” goals.

Around the BBC - Sounds
Around the BBC footer - Sounds
- Advertisement -

Discover

Sponsor

Latest

Hurricane Ian: Florida braces for ‘major’ storm damageon September 28, 2022 at 1:22 pm

People in the riskiest areas have been told it is too late to evacuate, says Florida's governor.This video can not be playedTo play this...

Ukraine war: Russian air strikes claim three lives in Kyiv and Mykolaivon February 7, 2024 at 8:37 am

President Volodymyr Zelensky says two people died in Kyiv and another man is killed in Mykolaiv.Image source, Getty ImagesBy Patrick JacksonBBC NewsAir defence in...

Warning over scam energy bill support messageson September 20, 2022 at 12:51 pm

Emails and texts link to a fake Ofgem website where people's personal details are demanded.Emails and texts link to a fake Ofgem website where...

OPEC and allies reportedly set for video meeting as analysts pour skepticism on Trump’s intervention

KEY POINTS It comes less than 24 hours after President Donald Trump told CNBC that he expected OPEC kingpin Saudi Arabia and non-OPEC leader...

Arsenal 2-1 Wolverhampton Wanderers: Late own goal from visiting goalkeeper Jose Sa gives hosts dramatic winon February 24, 2022 at 10:30 pm

An own goal from Wolves goalkeeper Jose Sa helps Arsenal complete a dramatic late turnaround in their pursuit of a top-four Premier League place.