Liz Truss challenges Rishi Sunak to cut even more taxes after U-turn on VAT

Ms Truss has said she welcomes the fact that Mr Sunak is ‘now saying that we should cut taxes’.

27 July 2022

Liz Truss has said she “welcomes” Rishi Sunak’s pledge to cut VAT on energy bills, but challenged him to “do more” and reverse the national insurance rise.

On Tuesday, the former chancellor unveiled plans to remove VAT from domestic energy bills for a year if the price cap, currently just under £2,000 a year for the average home, exceeds £3,000 as is forecast by experts.

Ms Truss’ campaign declared it a “screeching U-turn” as throughout the Tory leadership contest Mr Sunak has repeatedly branded her tax-cutting plans as “comforting fairytales”.

The former chancellor also rejected calls for a VAT cut to energy bills in February, telling the Commons “there would be no guarantee that suppliers would pass on the discounts to all customers”.

The Foreign Secretary was asked about her rival’s pledge during a visit to Romford, but refused to launch any personal attacks against Mr Sunak.

Instead, she challenged him to cut more taxes.

She told broadcasters: “I do welcome that.

“I think we all recognise that taxes need to come down.

“We have got the highest level of taxes for 70 years.

“I want a country where people who work hard and do the right thing, set up their own businesses, go into work are rewarded, and that’s why I want to lower tax.

Conservative leadership bid
Foreign Secretary and Conservative leadership candidate Liz Truss (PA/Aaron Chown)

“That’s why I’d reverse the national insurance rise, which we promised not to do in our manifesto.

“We need to get on with that, we need to get the economy growing.”

On whether she would say it is a U-turn on Mr Sunak’s part, Ms Truss said: “I welcome the fact that he is now saying that we should cut taxes because that’s what we need to do.

“I’d like to see more.

“I’d like to see him commit to going and reversing the national insurance rise because that national insurance rise has hit families in the pocket.

“I have been meeting families here in Romford.

“They want to see lower taxes for businesses, lower taxes for people so that we can get our economy going, grow our economy and create the opportunities for the future.”

Ms Truss would use general taxation to fill the gap in NHS funding left by her plan to reverse Mr Sunak’s national insurance increase, which was brought in to help pay for the NHS and social care.

She added: “Under my plans, we grow the economy, (and) we would still be able to start paying the debt down after three years.”

Meanwhile, in a video clip on Twitter, the former chancellor said he had “another great day”, campaigning in Hertfordshire, Cambridgeshire, and Suffolk.

He told his followers: “We have been talking about everything on people’s minds, tackling the cost of living, how we realise the benefits of Brexit.”

Speaking to Times Radio earlier this morning, Business Secretary Kwasi Kwarteng, a senior ally of Ms Truss, said Mr Sunak’s U-turn and handling of the TV debates were a sign he is under “a lot of pressure” in the race for No 10.

Ms Truss’ promises of vast tax cuts have helped her come out ahead in opinion polls and member surveys.

He said: “That’s why we see all these statements: he was the person who said the VAT cut would disproportionately benefit rich families, and now he’s saying that a VAT cut on energy bills is the right thing.

“He was saying that tax cuts were a fairytale, now he is proposing an unfunded tax cut.

“There comes a time in campaigns when people are under a lot of pressure, he clearly felt under a lot of pressure in the debate and he wanted to get out on the front foot and interrupt Liz.”

Rail and Tube strikes
Transport Secretary Grant Shapps (PA/Aaron Chown)

On the other hand, Transport Secretary Grant Shapps, a supporter of Mr Sunak, defended the £4.3 billion policy as sensible as it would not add to inflation.

“In the short term it would be deflationary because people’s costs would reduce, in the medium term it would not have an impact on the consumer prices index,” he told ITV’s Good Morning Britain.

Put to him that it is a “flip-flop”, Mr Shapps said: “If he hadn’t produced £37 billion of support, about £1,200 to the hardest-up households already, if he hadn’t done any of that and then suddenly did it, then you would have a point.

“But he has, he has been providing all this support, now he is saying: ‘Here’s something that won’t add to inflation that would save every person watching your programme £160 off their energy bills’, I think that’s worthwhile.”

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