Sunak plans to cancel out energy price rises while Truss set to abolish windfall tax

UK Conservatives leadership candidate Rishi Sunak has set out plans to cover the total cost of rising energy bills for up to 16 million vulnerable people by finding up to £10 billion ($12bn) to battle the effect of this October’s price rise.

Every household would benefit from a £200 reduction in their bills by abolishing VAT on energy, Mr Sunak wrote in The Times.

The former chancellor has announced the plan in a challenge to fellow candidate Liz Truss, who has said only that she would consider the measures.

"You can't heat your home with hope," Mr Sunak said as he attacked his rival for her refusal to set out detailed plans beyond cutting green levies on bills that would save all households about £150 a year.

"People need reassurance now about what we will do and I make no apology for concentrating on what matters most."

Meanwhile, Ms Truss said she would “absolutely” not support a windfall tax.

“One thing I absolutely don’t support is a windfall tax,” the foreign secretary said. "I think it’s a Labour idea.

"It’s all about bashing business and it sends the wrong message to international investors and to the public."

On the billions of pounds in profit made by energy giants, Ms Truss said she would ensure companies in an oligopoly were held to account.

But she said profit was not a “dirty word” and treating it as such is “a massive problem”.

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The hustings came hours after energy companies agreed to work with the UK government to help the people who need it the most, before a further surge in energy bills going into the winter.

The UK’s departing Prime Minister Boris Johnson and Chancellor Nadhim Zahawi led emergency talks with energy companies to discuss how they plan to spend their bumper profits and explore ways to help customers struggling with the soaring cost of living, but no immediate assistance for hard-hit customers was forthcoming.

Instead, ministers were reduced to pleading with companies to act “in the national interest” and help ease the pressure on vulnerable consumers in the face of soaring energy prices.

Officials said Mr Johnson made clear it was vital the Western world continues to stand by Ukraine, even as the war helps drive energy prices up to record levels.

“The government continues to evaluate the extraordinary profits seen in certain parts of the electricity generation sector and the appropriate and proportionate steps to take,” an official statement read.

At Thursday's hustings event for party members in Cheltenham, Mr Sunak said the government would need to provide more support than previously thought to look after vulnerable people with bills.

With a dire new warning that energy bills could top £5,000 ($6,100) by the spring, the cost of living issue continues to dominate the exchanges in the battle to succeed Prime Minister Boris Johnson.

The two contenders faced further questions on the matter during the hustings on Thursday evening.

Mr Sunak said that if Ms Truss’s plan was followed and financial support not offered, then: "We are going to, as a Conservative government, leave millions of incredibly vulnerable people at the risk of real destitution."

He said this would be a “moral failure” and warned that Ms Truss’s tax plan would not help pensioners and people on “very low incomes”.

“No tax cut, and Liz’s tax plan, is not going to help those groups of people,” Mr Sunak said.

“So scrapping the health and social care levy, as she wants to do, is worth £1,700 to her on her salary.

“For someone working really hard on the national living wage, it’s worth just over a quid a week. And for someone who’s a pensioner, without any earnings, it’s worth zero.

“Now I want to provide direct support to those groups of people.”

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But Ms Truss stood by her tax-cutting plans, warning against “Gordon Brown economics”.

She said that increasing taxes would “choke off economic growth” and send the country to “penury”.

Ms Truss wants to reverse the national insurance rise and planned increase in corporation tax, both of which were introduced by Mr Sunak as chancellor.

Asked if she was for or against “handouts”, she stressed that her “first preference” has always been to “reduce taxes”.

Ms Truss previously hinted she would consider further support for struggling households if she were made prime minister.

She criticised the media, two days after apologising for the same act during the last hustings.

“Today we’re sponsored by the Telegraph and I would love the media to spend more time talking about trade deals,” Ms Truss said.

After the paper’s Camilla Tominey reminded Ms Truss that “you have written for us about trade deals”, she said: “I have written for you on trade deals.

“But the point is that trade deals open the doors for business, but then we need to help businesses actually get their product into market.

“We set up the exports support service to help do that, but I would love to see the press write about that rather than about political rows.”

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At the event, Ms Truss said she would not hold an election before 2024.

“I think that’s a very important point because we’ve got to deliver for people,” she told Tory members in Cheltenham.

Meanwhile, Mr Sunak said scrapping the independence of the Bank of England would be “a massive mistake”.

“I’m very nervous about things I hear elsewhere, about people who seem to think that from Liz’s camp and her that we should scrap Bank of England independence,” he said.

“I think that would be a massive mistake for our country and international investors would not look very highly on it at all.”

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On the defence budget, Mr Sunak said he would invest “whatever it takes to keep all of you and our country safe” but did not give a figure, after Ms Truss said she would increase the defence budget by 3 per cent.

“I’m not going to sit here and tell you 3 per cent, because I don’t believe in arbitrary targets when it comes to something as important as our security.

“What I will tell you is simple: I will invest whatever it takes to keep all of you and our country safe, because that is the first duty of a prime minister, and it’s certainly the first duty of a Conservative prime minister.”