The front-runner in the Tory leadership race has been accused of considering a “regressive” and “reduced” move that could cost the exchequer up to £38 billion a year as the government faces calls to offer more support with rising energy costs. As the Tory leadership contest enters its final week, a fresh row has erupted over Mr Trudeau’s “nuclear” option to cut VAT to help those who will see their gas and electricity bills soar . Following confirmation that the energy price cap will rise by 80% from October in England, Scotland and Wales. Alongside several promised tax cuts, Truss was reported by the Sunday Telegraph to be considering cutting the 20% capital levy on goods and services by 5% – the biggest cut ever. It is said to have been considered by the Treasury as part of modeling Gordon Brown’s response to the 2008 financial crash, when VAT was cut from 17.5% to 15% for a year. But a source in Sunak’s team said that since VAT was not paid on essential items such as staple foods, the move would do “nothing to help families pay their supermarket bills”. They called the plan “flawed on many levels” and “regressive,” arguing it would benefit wealthier households with “little to no benefit for lower-income households who will need the most help this winter.” The source added that it was “yet another addition to Liz’s spending black hole” – adding to the “existing £60bn of other unfunded permanent tax cuts… all paid for by borrowing money we don’t have, and further risking inflation”. Truss’ team did not dispute that the move was among the options being worked out with her potential new chancellor, Kwasi Kwarteng, if she becomes prime minister on September 6. While Truss has promised “decisive action” to provide “immediate support” if she wins the race, earlier in the contest she made clear her opposition to “leaflets” and was vague about what form such help might take – other than reducing green levies on energy bills and reversing the controversial rise in national insurance. John Redwood, Margaret Thatcher’s former policy chief who held a role at the Treasury under Mr Truss, also said more action was needed on energy supply and prices for businesses facing a huge rise in energy bills. With Boris Johnson’s outgoing government ruled out making major spending commitments before he leaves No 10 in just over a week, a senior Tory MP admitted on Sunday that the situation was frustrating for people. “Everyone wants to be able to say ‘this is exactly what’s going to be announced if our particular candidate wins,’” said Simon Hart, a former cabinet minister and Sunak supporter. “To be able to do this now, to speculate now on the extent of the challenge and then come up with a solution is, I think, a bit preposterous. “Will there be a specific number? Are we going to say “we’re going to give you this amount of money on September 7, 7”? No, I think it would be irresponsible to do that. 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. “What we can say is – like the prime minister – there’s a package coming his way.” Johnson has issued a rallying cry for Britain not to back down in its bid to cripple Russia economically with sanctions as punishment for its invasion of Ukraine, admitting that energy bills would be “muddy” this winter and that for many, heating of their house was “already”. hair raising”. “It is Putin’s war that is costing British consumers,” the prime minister wrote in the Mail on Sunday. “That’s why the energy bill doubles. I’m afraid Putin knows it. He likes it. And he wants us to hook up. “He believes soft European politicians won’t have the stomach for a fight – that this coming winter we’ll throw in the towel, lift sanctions and beg for Russian oil and gas.” Johnson said that this “would be absolute madness” and that “colossal amounts of taxpayers’ money have already been committed to helping people pay their bills”. Labor said it “shows how little it understands the shock wave” of the energy price cap. Pat McFadden, the shadow chief secretary to the Treasury, told Sky News “for some people it will just be impossible” to pay their bills.
