Rishi Sunak vows to cut VAT on energy to revive UK Tory leadership bid

Rishi Sunak (Image: Chris McAndrew via Wikimedia Commons 3.0)

Rishi Sunak has pledged to scrap the value added tax on all domestic energy bills for the next year if he becomes UK prime minister, in a move his leadership rival, Liz Truss, criticized as a U-turn.

Announcing a “winter plan” to address inflation and the cost of living, Sunak’s campaign said he would introduce a “targeted, temporary and timely tax cut” by removing VAT on domestic energy bills if the energy price cap rises above 3,000 pounds ($3,610) as expected later this year.

Sunak’s campaign argued the policy would “bear down on prices,” insisting this contrasted with tax cuts promised by Truss that they warned would “stoke inflation.”

The former chancellor of the exchequer also announced he would “expand the labour force” by “tightening up the rules on out of work benefits,” doubling the number of hours a week someone on welfare has to work to avoid looking for a full time job.

Completing the series of policy announcements that seek to revive his campaign as he trails the foreign minister in the opinion polls, Sunak added that he would reduce Britain’s dependence on Britain’s ports, which have been mired by disruption in recent days.

The Truss campaign hit back by accusing Sunak of changing his mind, pointing to comments he made in the House of Commons in February when he rejected the idea of a VAT cut on energy bills as something that would “disproportionately benefit wealthier households.”

Pat McFadden, Labour’s shadow chief secretary to the Treasury, said that Sunak was guilty of “playing hokey cokey with our taxes” and “acting as his own personal rebuttal unit -- attacking a policy for months then adopting it.”

Work and Pensions Secretary Therese Coffey, a Truss supporter, also accused Sunak of blocking the very same changes to benefit rules while he was chancellor.

Separately, Truss’ campaign announced a new policy on crime, setting a target for police to cut homicide, serious violence and neighborhood crime by 20% by the end of the Parliament.

Her campaign also said she would publish league tables showing how police forces are performing against the national trend.