Truss promises tax cuts, not “handouts” to tackle the cost of living crisis

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

The Tory leadership hopeful was asked if she would offer more help with rising 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 else can be done”, but said she would do things in a “conservative way”.

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

She told the publication: “Obviously I would look at what else could be done. But the way I would do things is in a conservative way to lower the tax burden, and not issue handouts.”

Her comments come against a backdrop that grows stronger with each passing day.

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

New analysis from the Office for National Statistics (ONS) also shows that almost 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.

The Bank of England warned on Thursday that Britain faces two years of falling household incomes, with inflation set to rise to more than 13% and the economy set to slide back into its longest recession since the financial crisis.

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

So far, the foreign minister has promised to stop “green taxes” on energy bills, reverse the increase in national insurance and cancel the planned increase in corporation tax.

She told Tory MPs: “I know there are difficult predictions out there, but forecasts are not destiny. And what we shouldn’t do is talk ourselves into a recession. We should keep taxes low.

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

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

Right-wing leadership bid

Liz Truss during the hustings in Eastbourne (Gareth Fuller/PA)

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

The former chancellor said: “Well, the first thing we have to do to make sure we can win the election is get through this inflation problem until then.

“And that is why I am particularly concerned about policies that risk making things worse and lasting longer.

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

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

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

Mr Sunak said: “I do not want to cling to the failed policies of the past. That’s what some people suggest. It hasn’t worked.”

He added: “Investment in this economy today, no better than a decade ago, despite us doing all these things on corporation tax.

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

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

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

Ghani told Tory MPs in Eastbourne that because of her role as deputy chair of the 1922 committee of backbench Conservative MPs, she had been unable to support a candidate until this stage of the race.

Dame Andrea, who acted as Penny Mordaunt’s campaign manager and as business secretary, wrote in the Telegraph that Mrs Truss wanted to make sure “every baby gets the best start in life”.

Right-wing leadership bid

Rishi Sunak during the hustings event (Gareth Fuller/PA)

As she later attends the Commonwealth Games in Birmingham, the foreign secretary is expected to set out a series of economic reforms that her campaign team claim will “promote regional growth by considering funding to increase the right kind of investment”.

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

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

The spokesman said: “Not only is Team Truss’ copy and paste policy put in place by Rishi himself, but they are also re-enacting two-year-old government policy.

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

Mr Sunak’s camp argued that “investment zones” are simply a copy and paste of the free ports he pioneered as chancellor, and that Mrs Truss’ plan to overhaul the equalization formula comes almost two years after he reformed it.

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