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Truss rejects energy windfall tax as Sunak denies backtracking on VAT

Foreign secretary Liz Truss has rejected suggestions of a windfall tax on the profits of energy companies, despite British Gas owner Centrica’s announcement of huge earnings amid calls for increased support with fuel bills for struggling UK households.

Truss, who in recent weeks has led the polling in the race to become leader of the Tory party and the next prime minister, said the move would “send the wrong message” to the world, adding that the government should be encouraging Shell and other companies to invest in the UK.

Speaking to Conservative members in Leeds on Thursday during the first of 12 party hustings, Truss argued that, in the face of a global economic crisis and war in Ukraine, now was “not the time for the status quo”, as she outlined policies to boost growth and rein in the cost of living crisis.

“What I would do is create low-tax investment zones, encouraging those companies to invest in our country,” she told the audience.

The foreign secretary added: “Actually, what we need to be doing now is using more of our North Sea reserves to help people with the cost of living and that’s what I’ve been doing alongside having a temporary moratorium on the green energy levy to really help people with their bills.”

Her comments were made as Centrica’s operating profits surged to £1.3bn in the first six months of the year, compared with £262mn in the same period last year. The company, the UK’s biggest energy retailer, is expected to pay a dividend of 1p a share, amounting to £59mn.

Chief executive Chris O’Shea is among those calling on the government to provide more support to energy customers, stating: “You look at the average household income in the UK [and] you can see it’s going to put a lot of pressure on people.”

Consultancy BFY Group has warned that the UK’s energy price cap will surge to an average of £3,840 next January, with gas and electricity bills predicted to rise to an average of £500 per month.

Meanwhile, rival Rishi Sunak pushed back on criticisms that his pledge to cut VAT on domestic fuel was a U-turn, as he reiterated the importance of remaining fiscally responsible.

“What I won’t do is embark on a spree borrowing tens and tens of billions of pounds of unfunded promises and put them on the country’s credit card, and pass them on to our children and our grandchildren,” he said.

Sunak added: “But of course, once we grip inflation and ensure that mortgage rates don’t rise and cripple people, I’m going to cut taxes.”

The former chancellor also proposed the notion of a “buyers’ cartel” on energy prices as a means to clamp down on president Vladimir Putin’s regime in Russia and tackle energy prices.

“We can have a buyers’ cartel in the world where everyone would agree to pay a fixed amount for Russian energy, and enforce that through secondary sanctions . . . That would be a way to make sure we get the energy we need at prices that are far better for us and deprive Russia of revenue that is funding its war effort,” he said.

Next week more than 150,000 Conservative party members will receive ballot papers to vote on the next party leader and prime minister, with the results due to be announced on September 5.

Early polling has placed Truss in the lead. Data published by YouGov this month showed that 62 per cent of Tory members polled would vote for her, while 38 per cent would vote for Sunak.

However, Sunak’s allies have argued that he is beginning to narrow the gap. Notably, polling from YouGov published on Wednesday showed that Sunak has an edge among swing voters.

In a wide-ranging hustings, the candidates were quizzed on topics ranging from immigration to the Scottish independence referendum.

Sunak rejected suggestions from an audience member that he had “stabbed” Boris Johnson in the back through his resignation as chancellor this month.

He argued that the decision to step down was “difficult”, adding that the move was driven by differences in economic policy with the prime minister.

Both Sunak and Truss on Thursday outlined new policy announcements in a bid to shore up their support.

The foreign secretary reiterated her commitment to tackling Russian aggression in Ukraine, pledging that as prime minister she would update the integrated review on security and defence and commit Britain to a “new Marshall Plan” for Ukraine as part of reconstruction efforts.

Sunak, as part of his domestic agenda, has pledged to double the number of foreign national offenders deported every year.

Defence secretary Ben Wallace has meanwhile come out in favour of Truss in a newspaper interview.

“I’ve sat next to Liz in the cabinet for two and a half years. I’ve sat next to her in National Security Councils. I’ve sat next to her at Nato and international summits. I’ve seen her in action,” he told the Sun on Thursday. “And, you know, she’s authentic. She’s honest. And she’s experienced.”

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