Team Truss accuses Sunak of U-turn on tax pledge after VAT energy cut announcement

A row has erupted over whether Rishi Sunak U-turned on his pledge to not cut taxes after announcing he would slash VAT on energy bills.

The former chancellor said if he becomes prime minister, he would implement the temporary measure to save the average household £160.

Throughout his campaign to become Tory leader, he has repeatedly said he wants to hold off on tax cuts until inflation is under control, while calling other candidates’ plans for tax cuts irresponsible.

He also argued against a VAT cut on energy when he was chancellor, telling the House of Commons in February: “That policy would disproportionately benefit wealthier households.”

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But on Tuesday night he said because the energy price cap is now expected to rise from just under £2,000 a year to above £3,000 in October, more help was needed to reduce the cost of living crisis.

While Mr Sunak claimed it would be “temporary and targeted”, Liz Truss’ team jumped on the announcement and said it was definitely a U-turn.

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However, Transport Secretary Mr Shapps – who backs Mr Sunak – insisted it was “consistent with what he said all along, which is to always keep these things under review”.

He told Sky News’ Kay Burley: “He always said he would keep a very close eye on this.

“We now know the position coming up to this autumn with regard to gas prices in particular.

“And so, you know, he said he can do something further on energy bills. This would be a one-off.”

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Sunak hasn’t U-turned on energy bills, claims Shapps

But senior Truss ally and Business Secretary Mr Kwarteng said it was clearly a U-turn.

Mr Kwarteng told Kay Burley: “This is a U-turn.

“A few months ago, he said that [a VAT cut] on energy bills would disproportionately help rich people – it wasn’t targeted enough at people who are vulnerable and that’s why he decided not to go with it.

“People were suggesting it, he rejected it.

“Only last week he said tax cuts were part of a fairy tale, that he was the only grown-up in the contest because he was lifting taxes where all the other candidates were suggesting tax cuts.

“So I’m delighted that today he’s announcing that he wants to remove VAT on energy bills.

“It is a U-turn. I mean, if it isn’t a U-turn, I don’t know what it is.”

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Mr Sunak’s team said his new “winter plan” to tackle inflation and the cost of living crisis is in stark contrast to the inflationary £55bn of fiscal commitments Ms Truss has made.

The former chancellor said about his proposals: “This additional VAT cut will help deal with the current emergency.

“I will also begin undertaking major supply-side reforms targeted at the rising cost pressures families are facing.

“That means urgently getting more people off welfare and into work and tackling the supply chain crunch.”

Conservative leadership debate: be in the audience

Rishi Sunak and Liz Truss will take part in a head-to-head debate on Sky News on Thursday 4th August at 8pm hosted by Kay Burley.

If you would like to be a member of the live studio audience and be in with a chance of asking a question, please apply here.