The Daily Telegraph

Sunak’s ‘screeching U-turn’ on tax cuts

Ex-chancellor pledges to scrap VAT on energy bills as he trails Truss in polls

- By Daniel Martin and Nick Gutteridge

RISHI SUNAK was last night accused of a “screeching U-turn” on tax cuts, as he pledged to scrap VAT on energy bills for a year if he became prime minister.

In an apparent climbdown, the former chancellor promised to introduce the “temporary and targeted” measure to save £160 on the average household bill as energy prices soar this winter.

The announceme­nt came after polls of Tory members showed he was trailing Liz Truss, who has run on an unashamedl­y tax-cutting agenda. Mr Sunak has spent the early part of the campaign claiming that his rival’s plans to cut National Insurance and scrap planned corporatio­n tax increases would stoke inflation.

A source close to the Truss campaign said: “It’s good that Rishi has finally woken up and decided to offer something to people struggling with the rising cost of living. But this feels like a screeching U-turn from someone who has spent the last few weeks of the leadership campaign branding everyone else’s tax cuts immoral and fairy tales.”

The Foreign Secretary’s allies also pointed out that as recently as February, when he was still chancellor, Mr Sunak rejected calls to cut VAT on energy, saying it would “disproport­ionately benefit wealthier households”.

Ms Truss has not committed to cutting VAT on energy bills, instead focusing on suspending the green levy.

The Sunak campaign denied there had been an about-turn, saying the tax cut was “a tool that was always in our arsenal”. “We didn’t use it back in spring because the size of the jump of the bills was way bigger,” a source said. “And it wouldn’t have touched the sides. This is a response to latest estimates that suggest the rise might be £100-£200 more than anticipate­d.”

Under a new plan to tackle the cost of living crisis, Mr Sunak said he would scrap VAT for domestic energy users for a year from October, at a cost to the Treasury of £4.3 billion. He also unveiled plans to reduce the country’s reliance on French ports to tackle supply chain problems that push up prices, and tighten benefits rules to get more

‘It’s good that Rishi has finally woken up and decided to offer something to people struggling with the rising cost of living’

people off welfare and into work. His tax-cutting policy came after two polls indicated he had lost Monday night’s head-to-head debate on the BBC, with one showing 50 per cent of Tory members thought Ms Truss won, compared with 39 per cent who backed him.

At another debate last night, held by The Sun and Talk TV, the pair traded blows on whether it was “morally wrong” to put up taxes or to increase borrowing.

The debate was cut short when the presenter, Talk TV’S political editor Kate Mccann, fainted on stage, with Ms Truss mouthing: “Oh my God” and rushing forward to help. A Talktv spokesman later said the presenter was “fine” but had been advised not to continue by doctors.

Allies of both candidates said there had been a conscious effort to make the debate less fractious than the angry opening showdown, which was marred by the pair shouting over each other. Mr Sunak had been accused by the rival camp of interrupti­ng his opponent and “mansplaini­ng” to her.

Announcing his new policy last night, Mr Sunak said: “Tackling inflation and getting people the support they need to help with the cost of living is critical. That’s why, with the price cap expected to rise above £3,000 in October, I will move immediatel­y to scrap VAT on everyone’s domestic energy bills for the next year, saving the average household £160. This temporary and targeted tax cut will get people the support they need whilst also – critically – bearing down on price pressures.”

He added: “As chancellor I knocked £400 off everyone’s energy bill and provided support of £1,200 for the most vulnerable households. This additional VAT cut will help deal with the current emergency. I will also begin undertakin­g major supply side reforms targeted at the rising cost pressures families are facing. That means urgently getting more people off welfare and into work and tackling the supply chain crunch.”

His team said the tax cut would only apply if the energy price cap rises above £3,000 in October and insisted that the plans would reduce prices overall, in contrast with £55billion of fiscal commitment­s Ms Truss has made. Mr Sunak believes her plans would increase inflation, as well as interest rates and government borrowing. But, in February, he told the Commons: “I know that some in this House have argued for a cut in VAT on energy. However, that policy would disproport­ionately benefit wealthier households.”

Last night the former chancellor said he would aim to bring down costs by expanding the labour force and reducing the number of people on benefits. He said he would double the hours someone on welfare has to work a week – from nine to 18 – to be exempt from having to look for a full-time job, and explore other measures to get people off welfare and into work. Mr Sunak pledged to look at new incentives to support inactive older workers to return to work. He said he would work with Britain’s biggest importers to build up trade with Dutch and Danish ports, ending the disruption that was causing shortages.

Ms Truss said: “I do think it is morally wrong at this moment when families are struggling to pay for food that we have put up taxes on ordinary people, when we said we wouldn’t in our manifesto, and when we didn’t need to do so.” Mr Sunak shot back, saying it was “morally wrong” to heap more debt on future generation­s. An insider in his camp said this time he was more relaxed about letting the Foreign Secretary “speak at length” about her plans for tax cuts, which he said were unfunded.

RISHI SUNAK last night said he had “relied” on the NHS to treat his daughter and grandfathe­r as he insisted the health service would be his number one priority if he became Tory leader and prime minister.

In his second televised debate in as many days with Liz Truss, Mr Sunak defended his decision to raise National Insurance so the health service can “do things differentl­y”.

Asked about the last time he called 111 by Talktv political editor Kate Mccann, Mr Sunak said his grandfathe­r had just come out of hospital and his daughter had needed A&E treatment.

“I rely on the NHS, as do all of us, and I know it’s people’s priority,” he said. “I think Liz says she supports the extra funding, but doesn’t support the means for paying for that.”

The former chancellor oversaw the introducti­on of the health and social care levy – which Ms Truss has pledged to scrap – while at the Treasury in April.

It is estimated that the levy will raise £17billion and has added 1.25 percentage points to National Insurance paid by employees and employers.

Mr Sunak said: “I did something really difficult – which I’m actually getting a lot of flak for at the moment – and I made sure the NHS got the funding it needed to work through the backlogs, get everyone the care needed

‘I think Liz says she supports the extra funding, but doesn’t support the means for paying for that’

and work through that as quickly as possible.

“I don’t think we can have an NHS which is underfunde­d and not able to deliver the care that it needs. I think you can be reassured [that] the NHS is safe in my hands.”

He pointed to new blood cancer screening techniques, surgical hubs, and community diagnostic centres as recent innovation­s which the NHS needed to do more of.

Ms Truss said she called 111 “fairly recently – just before Covid – and I did actually get a good service on 111”.

“Likewise, my daughter has had to go to A&E for some specific issues with her hand and we got a good service at the time. I recognise I’ve had friends of mine who’ve had to wait longer than that very recently.”

The Foreign Secretary reaffirmed Boris Johnson’s 2019 manifesto commitment to building 40 hospitals across Britain. However, she also pledged to put more trust in front-line workers at the expense of middle management.

“I think too often we are directing and micromanag­ing people on the front line, the doctors and nurses who do the work,” she added.

“And what I want to see is fewer layers of management in the NHS.”

Elsewhere in the debate, which was hosted jointly by Talktv and The Sun newspaper, the two candidates were asked about rising meat prices.

Mr Sunak flagged the £37billion of cost of living support he oversaw while chancellor, and argued he had to lower inflation as soon as possible.

He said that supermarke­ts needed to be “held to account” to price their products fairly in order to protect British farmers during the cost of living squeeze.

Mr Sunak added: “We want to make sure that the supermarke­ts and all the other people in the supply chain are being fair in how they price things.”

Ms Truss described herself as a “proud representa­tive” of her rural South West Norfolk constituen­cy, pledging to reduce the red tape facing farmers.

“We need to help our farmers produce more food and be able to produce food in an affordable way and a lot of that is about the cost of things going into farming,” she said.

“One thing that is really important is that we help our rural communitie­s across the UK. They are struggling as well in this cost of living crisis.”

And when asked by Mccann whether they would support the return of fracking, both candidates answered: “Yes, if local communitie­s support it.”

Moments before the programme came to an early end, Ms Truss and Mr Sunak once again traded barbs over their differing tax policies as Ms Truss accused him of “making us less competitiv­e” as a country.

Mr Sunak retorted that the audience – made up of Sun readers – “have enough common sense to know you don’t get something for nothing, and everyone accepts that”.

Ms Truss insisted she would be “committed to the extra money that was announced for the NHS … It is needed to deal with the backlog and I would fund that money out of general taxation”.

“It is affordable and the fact is, whatever Rishi says now, we did not need to raise National Insurance in order to pay. We did have that money available in the Budget, it was a choice to break our manifesto commitment and raise National Insurance. I still remain opposed to it and I would reverse that rise.”

 ?? ?? Last night’s debate on Talktv was interrupte­d when Kate Mccann, the host, fainted, prompting a shocked Liz Truss to rush to her aid
Last night’s debate on Talktv was interrupte­d when Kate Mccann, the host, fainted, prompting a shocked Liz Truss to rush to her aid
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 ?? ?? Both leadership candidates were asked by Talktv political editor Kate Mccann, centre, who fainted during the debate, about the last time they called 111
Both leadership candidates were asked by Talktv political editor Kate Mccann, centre, who fainted during the debate, about the last time they called 111

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