‘Truss tax relief plans risk energy bill catastrophe’

Liz Truss’s plans to cut taxes will ‘completely miss’ the mark, a think tank has warned.

British Foreign Secretary Liz Truss. Picture: Getty Images

Britain faces a “winter catastrophe” because of rising energy bills, for which prime ministerial contender Liz Truss’s plans to cut taxes will “completely miss” the mark, a think tank has warned.

The Resolution Foundation said the next prime minister needed to offer “radical” support to cope with an energy price cap expected to reach nearly £5000 ($8500) in January.

It called on the government to introduce a social energy tariff for low- and middle-income households, giving them a third off their bills. It said this could be funded by a “solidarity tax”, which would add 1 per cent to all income tax rates.

So far in the Tory leadership campaign against Rishi Sunak, Ms Truss has declined to set out her full plans for dealing with soaring energy bills. She has committed herself to reversing the rise in national insurance and scrapping green levies on energy bills. The Resolution Foundation said the tax cuts were “largely irrelevant” and would mostly benefit the richest.

Mr Sunak has pledged a £10bn package, including a £5bn commitment to cutting VAT on energy bills for a year, saving people £85 this winter.

The other £5bn would be spent on direct support for the poorest and pensioners. The foundation said that while welcome, this would create a “cliff edge” because people who earned just enough not to qualify would miss out on £1300 worth of support a year.

Johnny Marshall, a senior economist at the Resolution Foundation, said: “A catastrophe is coming this winter as soaring energy bills risk causing serious physical and financial damage. We are on course for thousands to see their energy cut off entirely, while millions will be unable to pay bills and (will) build up unmanageable arrears.

“The new prime minister will need to think the unthinkable in terms of the policies needed to get sufficient support to where it’s needed most.”

Ms Truss is the two-to-one favourite to succeed Boris Johnson in the ballot of Conservative party grassroots members, to be announced on September 5.

The Times