‘Visionary’ LIZ: my ‘radical’ plan to fix economy’

The Foreign Secretary stands ready to help those hardest hit by the energy crisis with immediate support when she carries out an emergency budget if she becomes the next Prime Minister.

But Ms Truss believes the country must be putting on a sounder long-term footing to stop it being caught in a cycle where massive state support packages need to be deployed.

“Liz’s solution to the cost of living is not just short-termist to deal with the current problems,” a campaign spokesperson said. 

“She will offer immediate support to hard-pressed families to help with rising energy costs, calling an emergency budget to cut taxes on income and bills to alleviate some of the pressure, and she has been clear that she will look at what more can be done too.”

“But instead of just moving from one support package to the next, Liz’s plan will get us out of this crisis and make us more resilient for the next; through dynamic action on tax cuts, better regulation and supply-side reform to grow the economy.”

A source on the campaign (NOT SPOKESPERSON) said: “Liz understands the need to act from day one on this and help people struggling with their bills. She’s got a bold plan that will offer immediate support.”

Earlier this year, the government announced a £400 energy discount, which goes to all households regardless of wealth, and a £150 council tax rebate that would cover around half of the increase in energy costs for a typical family over the year.

Analysis by the Institute of Fiscal Studies found that if the new Prime Minister wants to continue to cover half the cost of increased bills support, the package would need to rise by a further £260 at a cost of around another £7 billion.

But it warned extra spending of that magnitude funded by further borrowing could add to the inflationary pressures in the economy. 

IFS director Paul Johnson said: “The government is still playing catch up as inflation and the cost of energy continue to spiral upwards.”

“Just achieving what they wanted to achieve back in May will cost an additional £12 billion, and a package on that scale will still leave many households much worse off.”

“Given the costs there are genuine and difficult trade-offs here. For both households managing their budgets and the government managing the economy’s finances some clarity on strategy is urgently needed.”

A one-off £300 pensioner cost of living payment will be made to more than eight million households alongside the Winter Fuel Payment to help ease the pressures in the coming months.

The government’s support package also includes extra measures that take the total amount of help to families on benefits to £1,200. 

But charities today (Mon) warned those households still face a £1,600 shortfall over the coming months.

Seventy organisations signed an open letter to Ms Truss and Mr Sunak low-income homes will need more help.

In the letter, co-ordinated by the Joseph Rowntree Foundation (JRF), they said: “We ask you both to pledge that, under your premiership, everyone who needs it will be properly supported when they hit hard times.”

“This means ensuring that, at a minimum, the social security system always provides people with enough to be able to afford the essentials.”

Paul Kissack, chief executive at the Joseph Rowntree Foundation, said: “People are already selling their possessions, taking on risky debt and building up arrears they may never be able to pay back.”

“And things are about to get far worse.”

“Planning for a substantial support package needs to start immediately.”

“Without it, vulnerable people will face a catastrophe on a vast scale when winter sets in.’

“The consequences of sitting idly by are unthinkable.”

Dan Paskins of Save The Children, which is also backing the letter, said: “When energy bills rocket in the autumn, families who already have it tough are going to find things even harder.”

“Parents will face impossible choices over whether to prioritise feeding their children or heating their homes.”

“At the very least, the Government should double the emergency support package announced in May to ensure families are shielded from a catastrophic winter.”

Other signatories to the letter include the Trussell Trust, the Children’s Society, Age UK, Shelter, Oxfam GB and the TUC.

Mr Sunak, who drew up the last support package, has committed to providing additional support targeted at the most vulnerable if he becomes Prime Minister.

Business Minister Greg Hands, who is backing Mr Sunak in the leadership race, said: “Rishi has been clear, he is not denying the fact that there is going to be a big rise and we’re talking big numbers here. 

But Rishi, as you saw during the pandemic, is not afraid to commit big numbers to support the economy and support people at difficult times. 

“That is what the Rishi Sunak track record on the economy is all about is delivering for people at times of need.”

“I don’t think Rishi Sunak is the candidate to be showering money around. I think he is the candidate to be saying these are exceptional times. And we need to take exceptional actions. That is what he’s saying while still being fiscally responsible.”

One of Ms Truss’s key supporters suggested she could take the £400 discount on energy bills away from high earners, who do not need the extra cash.

Treasury Chief Secretary Simon Clarke said the payment was “not really an authentically Conservative solution to this problem”. 

“I do find it pretty odd that high earners are receiving £400 off their bills,” he told a Sunday newspaper.

“It is not an ideal outcome, putting it very mildly, that people who don’t need it are receiving quite substantial sums of money from the state. That is not, frankly, a targeted package, is it?”

Meanwhile, Chancellor Nadhim Zahawi has asked officials to look at options to slash £400 from energy bills from winter bills.

A government-backed lending scheme for suppliers is being discussed that could lead to a reduction in the energy price cap from January if the new Prime Minister backs the proposal.

Sir Keir Starmer will set out a £29 billion plan to stop the energy price cap rising through winter, claiming he “wouldn’t let people pay a penny more” on their fuel bills.

He wants to impose the retrospective windfall tax on oil and gas producers from an earlier date to increase the amount raised, bringing in £8.1 billon among other measures to raise the cash.

The Labour leader said his plan would save the typical family £1,000 now.

He said the emergency package would reduce energy demand and lower bills in the longer term by insulating 19 million homes across the country over the next decade.

Sir Keir also claimed freezing the current energy price cap at £1,971, which has been predicted to rise to £3,582 in October by some analysts, would bring inflation down by four percent.

He said: “Labour’s fully-funded plan would fix the problems immediately and for the future – helping people get through the winter while providing the foundations for a stronger, more secure economy.”