Liz Truss rejects ‘handouts’ as way to tackle cost of living crisis

·3-min read
<span>Photograph: Jacob King/PA</span>
Photograph: Jacob King/PA

The Conservative leadership frontrunner, Liz Truss, has rejected “handouts” as a way of helping people affected by the cost of living crisis.

Truss said she would press ahead with proposed tax cuts despite claims they would fuel inflation and “kiss goodbye” to the Conservatives’ chances of winning the next election.

With mounting pressure as households face a financial squeeze, the foreign secretary rejected handouts and insisted on tax cuts costing more than £30bn as the country spirals towards a recession.

“Of course I will look at what more can be done,” Truss told the Financial Times. “But the way I would do things is in a Conservative way of lowering the tax burden, not giving out handouts.”

Truss’s Tory leadership rival, Rishi Sunak, said it was wrong to rule out direct support for households as he hit out at her tax-cutting plans.

According to his campaign, the former chancellor said: “As we heard from the Bank of England earlier this week, inflation is a major danger to our economy, particularly with energy bills now expected to be higher than we previously thought.

“We need to get real about this situation. It’s simply wrong to rule out further direct support at this time as Liz Truss has done, and what’s more, her tax proposals are not going to help very significantly people like pensioners or those on low incomes who are exactly the kind of families that are going to need help.”

He also said he would “go further” than the support of up to £1,200 for people that he announced as chancellor if he becomes prime minister, once there is “certainty about exactly what bills are going to be in the autumn”.

He added: “I will look at doing more and particularly for families like pensioners, for example, where I said that this winter they can get an extra payment worth up to £300.”

Earlier, Sunak, who has proposed tackling rising prices before tax cuts, said the party could “kiss goodbye” to the chance of winning the next election should they not bring inflation under control quickly.

Speaking at a leadership hustings in Eastbourne on Friday, the former chancellor said there would be “no hope that we’re going to win that next election” amid rising prices.

On Thursday, the Bank of England forecast inflation would soar to 13% in October, as it raised interest rates for a sixth successive time. The Bank’s inflation target is 2%.

Workers have been warned against asking for pay rises and more than half of Britons are cutting back on gas and electricity usage at home because of the worsening cost of living crisis, according to the Office for National Statistics.

“If we don’t act now to prevent inflation becoming persistent, the consequences later will be worse and will require larger increases in interest rates,” said Andrew Bailey, the Bank’s governor. “Returning inflation to its 2% target remains our absolute priority, no ifs, no buts.”

The news comes after the UK business secretary, Kwasi Kwarteng, admitted it would be more than a month before ministers can introduce any measures to tackle the rising cost of living.

Kwarteng, who is backing Truss as next leader of the Conservative party, said the expected “support package” from Boris Johnson would come after his holiday. Both Johnson and the chancellor, Nadhim Zahawi, were on holiday as the Bank of England warned the economy would enter the longest recession since the 2008 financial crisis.

Truss, who has already promised to reverse an increase in national insurance rates, is expected to outline further proposals for boosting economic growth as she attends the Commonwealth Games in Birmingham on Saturday, the BBC reports.

“One of the issues I want to look at is the control of the money supply and particularly the quantitative easing policy and the impact that’s had,” Truss told the Financial Times.

The winner of the Conservative leadership contest will be announced on 5 September.