Truss promises tax cuts not ‘handouts’ to tackle cost-of-living crisis

The Foreign Secretary said she would do things in a ‘Conservative way’.

Tory leadership hopeful Liz Truss (PA/Finbarr Webster) (PA Wire)

Liz Truss has said she would help people with the cost-of-living crisis by lowering taxes, not giving “handouts”.

The Tory leadership hopeful was asked whether she would offer more help with spiralling fuel bills this winter if she becomes the next prime minister.

The Foreign Secretary told the Financial Times she would of course “look at what more can be done” but said she would do things in a “Conservative way”.

Ms Truss rejected the idea of giving “handouts”, promising to implement tax cuts instead.

She told the publication: “Of course, I will look at what more can be done. But the way I would do things is in a Conservative way of lowering the tax burden, not giving out handouts.”

Her comments come against a backdrop that is growing starker by the day.

This week, energy consultancy Auxilione said the Government’s price cap, which sets bills for more than 20 million households in Britain, could reach nearly £4,000 a year from January.

New analysis from the Office for National Statistics (ONS) also shows that close to half (44%) of UK adults who pay energy bills found it very or somewhat difficult to afford them in the last two weeks of July.

We can create the British version of Silicon Valley. We can create real opportunities

Liz Truss

The Bank of England warned on Thursday the UK faces two years of falling household incomes, with inflation set to soar to more than 13% and the economy to relapse into the longest recession since the financial crisis.

At a Tory leadership hustings in Eastbourne, Sussex, on Friday evening, Ms Truss suggested her plans for immediate tax cuts could avert a recession.

So far, the Foreign Secretary has pledged to halt “green levies” on energy bills, reverse the national insurance hike and cancel the planned corporation tax rise.

She told Tory members: “I know there are difficult forecasts out there but forecasts are not destiny. And what we shouldn’t be doing is talking ourselves into a recession. We should be keeping taxes low.

“We can create the British version of Silicon Valley. We can create real opportunities.”

However, her rival Rishi Sunak argued that unless inflation is brought under control there is “no hope” the Tories will win the next election.

Taking a thinly veiled swipe at his opponent, Mr Sunak told the hustings he is “particularly worried about policies that risk making it (inflation) worse and last longer”.

The former chancellor said: “Well, the first thing we need to do in order to make sure we can win that election is have got through this inflation problem by then.

“And that’s why I’m particularly worried about policies that risk making it worse and last longer.

“Because this is a problem that isn’t just for this winter. It’s a problem for next winter as well, and beyond.

I don’t want to stick with the failed policies of the past. That’s what some people are suggesting. It hasn’t worked.

Rishi Sunak

“Because as the Bank of England said, they are worried about inflation becoming embedded – then there’s no hope that we’re going to win that next election. Absolutely none. It’s as simple as that.”

He also insisted corporation tax is not the “right tax” to focus on, instead speaking about the need to reform business taxes to “cut them on the things that make a difference”.

Mr Sunak said: “I don’t want to stick with the failed policies of the past. That’s what some people are suggesting. It hasn’t worked.”

He added: “Investment in this economy today, no better than it was a decade ago, in spite of us doing all those things on corporation tax.

“Because it’s not the right tax to focus on. And that’s where my experience in business, my time as chancellor, my conversations with business, have led me to the conclusion we need to be much more radical.

“We need to reform business taxes to cut them on the things that make a difference.”

On Friday night, the Foreign Secretary received the backing of two Conservative former ministers, Nus Ghani and Dame Andrea Leadsom.

Ms Ghani told Tory members in Eastbourne that because of her role as the vice-chairwoman of the 1922 Committee of backbench Conservative MPs, she had not been able to back a candidate until this stage of the race.

Dame Andrea, who served as Penny Mordaunt’s campaign manager and as business secretary, wrote in the Telegraph that Ms Truss would make sure “every baby is given the best start for life”.

As she attends the Commonwealth Games in Birmingham later, the Foreign Secretary is expected to set out a series of economic reforms which her campaign team claims will “promote regional growth by reviewing funding to supercharge the right kind of investment”.

Some of the reforms include reviewing the levelling-up formula to fix underinvestment in regional infrastructure and create low tax, low regulation “investment zones” or “full-fat freeports” on brownfield sites.

However, a campaign spokesman for Mr Sunak accused Ms Truss’s team of “copy and pasting” policies the former chancellor had already put in place.

The spokesman said: “Not only are Team Truss copy and pasting policies put in place by Rishi himself, but they are also re-announcing two-year-old government policies.

“Imitation is the best form of flattery, as the saying goes.”

Mr Sunak’s camp argued “investment zones” are simply a copy and paste of the freeports he pioneered as chancellor and that Ms Truss’s plan to review the levelling-up formula comes nearly two years after he reformed it.