UK PM race: Liz Truss rules out new taxes, energy rationing in last pitch


Liz Truss ruled out introducing any new or rationing energy this winter if she becomes the UK’s next prime minister, making two eye-catching pledges in her final pitch to win the post.

Truss, who is the bookmakers’ favorite to succeed Boris Johnson, made the commitments at the last leadership hustings in London on Wednesday, ahead of the victor being announced Sept 5.

Truss was asked if she’d make a “read my lips” promise not to raise in government, a reference to a famous pledge made — and then broken — by former US President George H. W. Bush. She replied: “Yes. No new .” She specifically ruled out introducing any new windfall taxes on the energy sector.

Should she win the race for 10 Downing Street, Truss will have to confront a looming economic crisis in Britain, with households facing a record squeeze on the cost of living amid a surge in energy prices. Truss is planning an emergency mini-budget within her first month in office but is yet to detail an extensive plan for how she’d ease the pain.

Britons are set for the biggest squeeze on their living standards in a century unless the next prime minister delivers tens of billions of pounds of extra support, according to new analysis published by the Resolution Foundation think tank on Thursday.

“If the government does want to substantially cut the price of energy faced by households, then it should look to offset some of the cost with increases in taxes, particularly on better-off households,” Resolution Foundation Chief Economist Mike Brewer told Bloomberg Radio on Thursday.

Truss’s opposition to a further windfall tax on extraordinary profits linked to high gas prices caused by Russia’s war in Ukraine may come under pressure in the coming months. The Treasury forecasts as much as £170 billion of profit for gas producers and electricity generators over the next two years, according to a person familiar with the matter. Johnson’s Tories introduced an initial 25% levy on the profits of oil and gas firms in May after months of pressure from the opposition Labour Party.

Labour is arguing for a freeze on energy bills in the this winter, funded by an expanded windfall tax. Without new taxes, Truss will need to lean on extra government borrowing or cuts to spending elsewhere to finance further household support. Former Bank of England Deputy Governor Charlie Bean said Wednesday that investors are starting to see assets as more risky because of signals coming from Truss about her plans to cut taxes and raise spending.

The UK government is also planning to offer fixed-price contracts to more renewable-energy producers as a way to cap profits without imposing a windfall tax, people familiar with the plans told Bloomberg.

And even as the British government works on contingency planning to secure energy supplies for the winter — under a worst-case scenario officials predict blackouts — Truss ruled out the prospect of needing to ration energy, without giving further details. Her leadership rival, Rishi Sunak, said nothing could be ruled out.

“Many European countries are looking at how we can all optimize our energy usage,” Sunak said at the hustings at Wembley Arena in London. “That is a sensible thing for us to be doing as a country.”

Truss also signaled that she would look at reforming business rates, a form of property tax on commercial premises. Bloomberg reported Wednesday afternoon that she was weighing a cut to rates.

The winner of the leadership race will be announced on Monday and they will formally become prime minister after seeing the Queen on Tuesday.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor


Source link

Comments are closed.