Sunak told screeching VAT U-turn ‘does not deal with crisis’ as he scrambles to beat Truss

Energy: Voter criticises using VAT ‘as an election tool’

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The former Chancellor previously appeared to be against the measure that would save households up to £160 on their bills. But after Liz Truss, his last remaining opponent in the Tory leadership contest, pulled ahead in the polls, Mr Sunak appeared to change course. It comes after he claimed the measure “would disproportionately benefit wealthier households” when questioned on the matter in February.

Mr Sunak previously warned MPs: “There would be no guarantee that suppliers would pass on the discounts to all customers, and we should be honest with ourselves: this would become a permanent Government subsidy on everyone’s bills, a permanent subsidy worth £2.5billion every year, at a time when we are trying to rebuild the public finances.”

Mike Foster, head of the Energy and Utilities alliance, said he is “delighted” that Mr Sunak has now changed his tone, but he warned that the measure is not enough to deal with the energy crisis alone.

He told “I am delighted at the sudden conversion of Rishi Sunak to cut VAT on energy bills.

“We have been calling for this for over a year. He had the chance to do something and he didn’t.

“But now he is calling for it and that is great. He is a convert and that is £160 more in peoples’ pockets to pay the bills.

“In the grand scheme of things it does not deal with it (the energy crisis), but it is a good thing.”

It comes after another horror price cap warning was issued this week, with experts predicting that the annual maximum tariff could reach almost £4,000 by January.

And Mr Foster was not the only one surprised by the former Chancellor’s “screeching” U-turn.

He was mocked by a wave of Liz Truss supporters for the move, including Prime Minister Boris Johnson.

Speaking at the Commonwealth Business Forum in Birmingham, Mr Johnson said: “We come now to the next stage in the great relay race of politics.

“I didn’t think it was meant to be a relay race, by the way, when I started.

“I can assure you that the baton is going to be passed seamlessly and invisibly to the hand of somebody else.”

The Prime Minister added: “I’ll give you this assurance, they will continue with the same programme, cutting taxes, simplifying regulation as much as possible, taking advantage of all our new regulatory freedoms, getting rid of every encumbrance from solvency to MiFID [financial regulation] to VAT on fuel – turns out to be easier than we thought.”

Business Secretary Kwasi Kwarteng, who is also backing Ms Truss to become the next Prime Minister, also took aim at Mr Sunak.

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He said: “Let’s not beat about the bush: this is a U-turn.

“A few months ago, he said that VAT on energy bills would disproportionately help richer 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 that.”

Mr Kwarteng added: “Only last week he said that tax cuts were part of a fairytale, that he was the only grownup 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 this isn’t a U-turn, I don’t know what is.”

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