Truss ‘will deliver bold plan’ as new Tory leader
Liz Truss is expected to freeze energy bills for every household and business in the country and load the burden of wholesale price rises on the taxpayer.
However, it may still not be enough to save thousands of businesses from ruin as many are already locked into a new deals that will see bills rise by as much as seven times.
Ms Truss was confirmed as the new leader of the Tory party on Monday and will become Prime Minister on Tuesday with the nation anxious to hear how she will tackle a bulging in-tray of pressing issues.
Top of the pile is the cost of living crisis which she has pledged to tackle “within a week” with a new package of support for households and businesses.
It is thought to include some further help towards bills, a deal with the power companies and a version of the Covid furlough scheme to help struggling businesses. A key request among small firms is for a price cap to be applied similar to that which helps consumers.
Under the rumoured plans to freeze bills the government would directly intervene in the wholesale energy market, subsidising the cost of gas being bought by electricity generators and suppliers.
It would give consumers and businesses certainty over the cost of power this winter. However, the bill of between £60bn and £90bn will fall on the taxpayer with no clarity on how this will be paid.
Kwasi Kwarteng, who is expected to become Ms Truss’s chancellor, has said that the government will offer support for families and businesses “through this winter and the next”.
Paul Johnson, director of the Institute for Fiscal Studies, said a freeze may be unavoidable despite its enormous cost and the risk of producing blackouts by reducing incentives to save energy. He added: “It’s really hard to think of something else you can make work this winter.”
Ms Truss, 47, who served as Trade Secretary and Foreign Secretary under Boris Johnson, secured the leadership with 81,326 votes (57%) of Tory party members to Rishi Sunak’s 60,399. There was an 82.6% turnout.
After being announced the winner she told party members gathered in London:”I campaigned as a Conservative and I will govern as a Conservative… I will deliver a bold plan to cut taxes and grow our economy.”
She added: ‘We will deliver a great victory for the Conservative Party in 2024.”
The market responded with benign caution to her appointment and plans with London’s blue chip FTSE 100 index ending the session 6.24 points up at 7,287.43.
Ms Truss’s tax cuts are likely to include reversing some tax changes, including the hike in national insurance contributions – though possibly limited to the lower paid – and trimming the planned increases in corporation tax. She may also tackle the energy levy.
There is keen interest in whether she brings forward planned income tax cuts announced by her leadership rival and former Chancellor Rishi Sunak in the Spring Statement. She is said to be favouring a substantial increase to the basic rate threshold, possibly as high as £80,000 as proposed by Mr Johnson.
Her policies on Scotland, particularly Scottish independence, will be a key point of tension, with talk of the UK government planning to introduce new voting thresholds around a new referendum.
She is also expected to play hard ball on granting more licences for North Sea drillers, nuclear power and fracking as she unveils her plan to tackle the UK’s energy supply issues. This likely to create division with the Scottish Government over climate change and energy strategy.
Any changes to taxes will pose significant challenges for the Scottish government which has already made Scots the highest taxpayers in the UK.
Ms Truss will travel to Scotland on Tuesday for an audience with the Queen at Balmoral Castle.
One of her other key tasks will be to reunite a party which has been at loggerheads through the long campaign to elect a new leader.
She is credited with being a hard worker and states that she is a free marketeer who will look to run her government with smaller, more agile teams. She also has the benefit of a large majority in the Commons, secured by Boris Johnson in 2019.
A new Cabinet is likely to include Kwasi Kwarteng as Chancellor in place of Nadhim Zahawi who on Friday said an “oven ready” set of plans for dealing with the energy crisis had been put in place for the new PM.
Therese Coffey, currently Work and Pensions Secretary, could be moved to Health and James Cleverly is likely to step up to Foreign Secretary.
Brexit Opportiunities minister Jacob Rees-Mogg is predicted to take over from Mr Kwarteng after helping to co-ordinate meetings with oil and gas firms over the energy crisis.
Suella Braverman is likely to replace Priti Patel who resigned as Home Secretary in anticipation that she would be sacked. It was expected that she would be followed out of the Cabinet by Culture Secretary Nadine Dorries.
Conservative Party co-chair Ben Elliott and Cabinet minister Nigel Adams also resigned ahead of Ms Truss’s formal appointment as PM tomorrow at Balmoral when she meets the Queen.
In a letter to Boris Johnson, Ms Patel said it had been “an honour and a privilege to serve”.
However, she has been the focus of criticism over the Channel refugee crisis and the Rwanda deportation scheme.
Ms Patel had considered running for the top job until it became clear that her divisive policies would not enable her to muster enough support in the party.