'Regressive and flawed!' Rishi Sunak's allies slam Liz Truss over plan to slash VAT

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Supporters of the former Chancellor argue it will do little to help those struggling to pay food bills while benefitting wealthier households, a report has claimed. Ms Truss is reportedly considering a five percent cut to VAT, from 20 to 15 percent, in order to tackle the cost of living crisis and fight inflation.

It is estimated that the move would cost the Exchequer up to £38billion a year.

According to the Guardian, a source in the Foreign Secretary’s team did not dispute the plan was being considered.

Ms Truss’ proposed VAT cut would be the largest ever and is said to have been examined by the Treasury as part of a modelling exercise analysing Gordon Brown’s response to the 2008 financial crisis when he cut VAT from 17.5 to 15 percent.

Although Ms Truss has previously opposed “handouts”, a source in her campaign told The Guardian that she was open to the possibility of extra payment this winter.

However, the source stressed that the South West Norfolk MP would prefer to target extra spending on the poorest households.

They said: “Liz has been clear we need to lower the burden of taxation and focus on boosting energy supplies and this will be her priority as Prime Minister.

“She’s also been clear further support may be required to help.

“Her preference is to target this to those most in need, but isn’t ruling anything out.”

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Another proposed policy involves pursuing further tax cuts, including reversing the hike in national insurance contributions and suspending the green levy on energy bills on a temporary basis.

However, a source in Mr Sunak’s team hit out against Ms Truss’ VAT pledge as the levy is not paid on basic items such as staple foods.

The source claimed such a move would do “nothing to help families pay their supermarket bills”.

They went on to slam the plan as “flawed on many levels” as well as “regressive”, arguing that it would offer “very little to no benefit for lower-income households” and was “yet another addition to Liz’s spending blackhole”. 

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Ms Truss’ reported plan to introduce more targeted measures to support Brits comes just days after one senior Conservative MP voiced the need for wider help.

Chancellor Nadhim Zawawi said over the weekend that relatively well-off workers may need Government support.

Mr Zahawi added that even people earning £45,000 may need help with spiralling electricity and gas costs.

Sir John Redwood, who stood against Sir John Major in the 1995 Tory leadership election, also said action was needed to help businesses who look set to face a huge rise in energy bills.

A Truss supporting MP said that the Foreign Secretary was aware of the difficult situation that she will inherit if she wins.

They added: “This winter will determine the next general election.”

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