Sunak accused of “reversing” taxes after promising to cut VAT on electricity bills

Rishi Sunak has come under fire for a “coup” on taxation after promising to lower VAT on electricity bills and interrupting rival Liz Truss in a Tory leadership debate.

It comes after the Conservative leadership unveiled plans to remove VAT from domestic energy bills for a year if the price cap – currently just under £2,000 a year for the average home – exceeds £3,000, experts predict.

But critics have pointed to Mr Sunak’s repeated condemnation of Ms Truss’s proposal for an unfunded tax cut, which he called “comfort tales”.

Business secretary Kwasi Kwarteng said his plan was to turn around, which, along with the way Mr Sunak handled the TV clashes, was a sign that he was under pressure to race for 10th place.

Mr Kwarteng, a senior ally of Ms Truss, told Times Radio: “I think he’s under a lot of pressure.

He said that the tax cut was a fairy tale, now he proposes an unreasonable tax cut.Kwasi Kwarteng

“That’s why we’re seeing all these statements: he was the man who said the VAT cut would benefit wealthy families disproportionately, and now he’s saying the VAT cut on electricity bills is the right thing to do.

“He said that the tax cut was a fairy tale, and now he is offering an unreasonable tax cut.

“There comes a time in campaigns when people are under a lot of pressure, he clearly felt a lot of pressure in the debate and he wanted to come forward and interrupt Liz.

“I think it was the wrong look for him, I think it was the wrong move, but I can understand why he did it.”

Asked if Mr. Sunak could win the general election, Mr. Kwarteng told LBC radio, “He’s changed this tax issue dramatically, which worries me a bit, but he’s a capable politician and a very likeable guy.”

Mr Sunak dismissed February calls for VAT cuts on electricity bills, telling the House of Commons that “there is no guarantee that suppliers will pass on discounts to all customers.”

Criticism also came from the opposition, with Shadow Treasury Secretary Pat McFadden accusing him of “acting as his personal rebuttal unit” and Liberal Democrat Treasury Department spokeswoman Sarah Olney said “it sounds like another Sunak scam” .

But the former chancellor’s campaign team said his new “winter plan” to tackle inflation and the cost-of-living crisis contrasted with the £55bn inflationary budget commitments Ms Truss had made.

Transport Minister Grant Shapps, a supporter of Mr Sunak, defended Mr Sunak’s £4.3bn policy as prudent as it does not increase inflation.

“In the short term it will lead to deflation because people’s spending will go down, in the medium term it won’t affect the consumer price index,” he said on ITV’s Good Morning Britain.

Telling him it was a ‘shifter’, Mr Shapps said: ‘If he hadn’t provided £37bn of support, around £1,200 had already been given to the families most in need – if he hadn’t done any of that. and then suddenly did it, it would make sense.

“But he has, he’s giving all that support, now he’s saying ‘Here’s something that won’t increase inflation, that will save every person watching your program £160 off their energy bills’ – I think that it’s worth it”.


Liz Truss and Rushi Sunak with TalkTV Lead Political Editor Kate McCann (Dominic Lipinski/PA)

Mr. Sunak said of his proposals: “This additional VAT reduction will help deal with the current emergency.

“I will also begin to implement major supply-side reforms to address the growing financial pressure families face.

“It means getting more people out of social benefits urgently and getting them employed, as well as solving the supply chain problem.”

The VAT wasn’t the only issue that has seen Mr Sunak accused of a drastic turnaround: Labor and Pensions Minister Teresa Coffey said it blocked her plans to help people on welfare get better jobs by increasing the number of hours they must work.

As part of his proposals, Mr. Sunak would expand the workforce by tightening the rules on unemployment benefits, doubling the number of hours a person on welfare must work per week to avoid having to seek a full-time job. temporary job.

Ms Coffey, patron of Ms Truss, said: “The DWP (Department of Work and Pensions) will soon change the rules so that people continue to look for additional work until they have at least 12 hours a week, with the goal of increase this number in the future.

“The DWP had hoped to start this earlier this year, but was unfortunately blocked by the former Chancellor.”

Ms. Truss’s promises of significant tax cuts have helped her come out ahead in opinion polls and member polls.

During a TalkTV/Sun debate Tuesday night that was halted after host Kate McCann passed out on air, Ms Truss said it was “immorally wrong” to raise taxes during a cost-of-living crisis, but the former chancellor hit back hit by saying so. it was “morally wrong” to pile new debts on future generations.

The two also fell out over a rise in national insurance that was introduced to pay for the NHS and social security, with the former chancellor calling himself ‘bold’ for introducing a £12bn tax hike.