Liz Truss to introduce emergency cost of living budget ‘within weeks’ of becoming prime minister

But Tory leadership frontrunner’s current plans blasted as insufficient and unsustainable

Liz Truss (Danny Lawson/PA) (PA Wire)

Liz Truss will introduce an emergency budget "within a matter of weeks" of becoming prime minister, one of her allies has said.

The timing announcement comes after Labour laid out plans to freeze energy bills by paying energy companies for expected increases in wholesale prices.

The Tory frontrunner Ms Truss is likely to become prime minister early next month if the polls are correct.

She has said she will take action on the cost of living but has suggested she will focus on tax cuts rather than more government assistance – which she has badged "hand-outs".

Speaking on LBC radio on Monday morning Truss ally Brandon Lewis said: "I know she'll be looking to do that within a matter of weeks of becoming prime minister if she's in that fortunate position."

Mr Lewis said the underlying principles of Ms Truss's plan would be to cut taxes, and to "deal with the green levies in the short term".

Green levies on energy bills account for just 7.8 per cent of energy bills, however. Energy bills have increased by many times this due to surging wholesale prices.

Some economists have said cutting the levies will make bills higher in the long term because the policy will slash investment in cheaper renewable energy, increasing dependence on fossil fuels.

Defending Ms Truss's promise to cut the green levies, Mr Lewis added: "This is something that is affordable within the headwind we've got - to go beyond that, obviously does need an emergency budget and that's the work that's going on at the moment.

Mr Lewis also denied the Conservatives were "taking a kicking" from Labour over the energy crisis and described Sir Keir Starmer's plan as "unfunded".

Keir Starmer's £29 billion plan would keep the energy price cap at its current level of £1,971 for six months from October, with the aim of saving the average household £1,000.

It comes as 70 charities and community organisations on Sunday signed an open letter to Ms Truss and her leadership rival Rishi Sunak warning that families reliant on social security payments face a £1,600 shortfall over the coming months.

"Many of our organisations work directly with these families and are becoming overwhelmed, too often unable to provide the support so desperately needed," the letter, organised by the Joseph Rowntree Foundation said.

"This situation cannot be allowed to continue. As the prospective leaders of this country, we urge you to act now to demonstrate the compassion and leadership needed to tackle this issue head on."