Tax cuts that could give high earners nearly £2,000 are ‘fair’, Truss says

Former Tory chancellor warns they will add to inflation

Liz Truss has described as “fair” tax cuts which could hand nearly £2,000 to high earners, as a former Conservative chancellor warned they would stoke already soaring inflation.

Lord Hammond said that cuts were “simply not the answer” and “not the right thing to do".

Many Tory MPs privately also admit they fear Ms Truss’s plans will exacerbate inflation at a time when experts already predict it could reach as high as 22 per cent.

Just a day before she is expected to be confirmed as prime minister, Ms Truss pledged to act immediately on soaring energy bills if she wins the keys to No 10.

She also confirmed her government would present an emergency budget within a month that would set out how it plans to cut taxes.

Shown figures which suggested that her plans to scrap the rise in National Insurance would benefit some by just £7 a year but top earners by around £1,800 ,she told the BBC’s Sunday with Laura Kuenssberg programme the plans were “fair”.

“To look at everything through the lens of redistribution, I believe, is wrong, “ she said. “Because what I’m about is about growing the economy and growing the economy benefits everybody."

Ms Truss argues that cutting taxes will raise revenue in the long term, in part by encouraging more businesses to invest in the UK.

Lord Hammond said that while the Conservative party supported low taxes “in the short term, we have to be pragmatic and cutting taxes at a time when we have a huge deficit, £160 billion probably this year of Government borrowing, when inflation is the major problem we have to tackle, is simply not the answer."

He told Sophy Ridge on Sunday: "Yes, tax cuts now, everything else being equal, would deliver an inflationary stimulus. That is not the right thing to do."

Ms Truss also appeared to row back on suggestions she could review the Bank of England’s interest-rate setting powers, after criticism it did not act swiftly enough at the start of the crisis, saying she was a “great believer” in its independence.