Tory leadership frontrunner Liz Truss on Sunday faced renewed pressure to outline her plans to tackle the cost of living crisis, as MPs called for increased support for households and small businesses grappling with rising energy bills.
The foreign secretary, who has advocated for £30bn in tax reductions, is exploring VAT cuts of up to 5 percentage points and increasing the personal allowance, the level at which people start paying income tax on their earnings.
Truss has previously ruled out giving “handouts” to ease income pressures, describing it as “taking money from people in taxes and then giving it back to them in benefits”. Her allies on Sunday indicated that a support package would be unlikely to include additional one-off payments.
However, officials close to the foreign secretary have stressed that all options will be considered and that a final decision on financial support will be made after a new party leader is announced on September 5.
Rishi Sunak’s allies have dubbed the latest proposed VAT cut, first reported in The Sunday Telegraph and The Sunday Times, as “flawed” and “regressive”. One official from the former chancellor’s team said: “VAT is not paid on basic items such as food therefore does nothing to help families pay their supermarket bills.”
“Cutting VAT will benefit higher-income households more, leaving very little to no benefit for lower-income households who will need the most help this winter,” they added.
Meanwhile, Conservative MPs have voiced growing concern over the impact of energy price rises on households and business, following the regulator Ofgem’s announcement on Friday that the energy price cap would increase by 80 per cent in October, taking bills up to £3,549 for the average user.
“I’m hearing from constituents who are reaching out for the first time worried about how they will get through this winter,” one senior Tory MP told the Financial Times. “Some of the existing help packages don’t even touch the sides.”
Another Conservative backbench MP thought that Truss was right not to give details of her plans until elected but said they were concerned about the ability of households to manage energy prices over the winter. “The worry is ‘how long will this go on for?’” they said.
Other Tory MPs raised the alarm over the future of small companies. “I’m hearing that companies are seeing 300 per cent increases in bills. Businesses will close as some of these numbers are not viable,” one senior Tory backbencher argued.
“We need to be giving small and medium-size businesses more financial support for energy bills,” another added. “If they have to pass on costs to customers that will only drive inflation further.”
Over the weekend, outgoing prime minister Boris Johnson blamed the cost of living crisis on Moscow, saying that Russia’s president Vladimir Putin wanted the UK to “buckle” in the face of “eye-watering” energy price rises, referring to the gas crisis sparked by the war in Ukraine.
Johnson added that the nation had “enough resilience to get through” the coming months, adding that his successor would introduce a “huge package” of financial support.
This week Johnson will reiterate the importance of committing to longer-term net zero pledges alongside implementing short-term methods to ease pressures on the cost of living, the Daily Telegraph reported.
The cost of living crisis is just one of several pressing issues facing the next prime minister, with concerns over continued NHS waiting list backlogs and ambulance delays.
Matthew Taylor, NHS Confederation chief executive, on Sunday argued that an “honest conversation” was needed about the capacity of the health service heading into the winter.
Are you facing difficulties managing your finances as the cost of living rises? Our consumer editor Claer Barrett and finance educator Tiffany ‘The Budgetnista’ Aliche discussed tips on the best ways to save and budget as prices across the globe increase in our latest IG Live. Watch it here.
Source: Economy - ft.com
