The foreign secretary is understood to have discussed the move with her advisers, but no final decisions will be made until after the Tory leadership contest on September 5, according to the Sunday Telegraph. The Treasury is expected to present plans to the new prime minister modeled on Gordon Brown’s response to the 2008 financial crisis, where VAT was cut from 20% to 17.5% for a year, as part of a series of proposals amid a surge in energy bills. Energy bills for a typical household will rise to £3,549 a year on October 1 when a new price cap is introduced, it was announced on Friday. If the VAT rate is reduced by as much as 5% from the current normal rate of 20%, it would be the largest reduction ever. Truss’s campaign has begun drawing up plans for her “emergency budget” but a source told the Telegraph it would “not be right for her to announce her plans before the Prime Minister is even elected or before she has seen all the facts”. A 5% cut would cost about £3.2bn a month, or £38bn, to remain in place for a year, according to an analysis by the Institute for Fiscal Studies. It will also reduce inflation temporarily by around 2%. Last month, Rishi Sunak announced plans to temporarily scrap VAT on household energy bills if elected prime minister. Archie Bland and Nimo Omer take you to the top stories and what they mean, free every weekday morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. A Treasury spokesman said the government was making the “necessary preparations to ensure a new government has options to provide additional support as quickly as possible”, adding: “No major budget decisions will be made until the new prime minister is in place of”.
