Liz Truss 'considers 5 per cent VAT cut' as Boris vows UK will emerge 'stronger' from cost of living crisis

27 August 2022, 23:04 | Updated: 27 August 2022, 23:20

Liz Truss is considering a large VAT cut, whilst Boris Johnson has said the UK will emerge from the cost of living crisis 'stronger'
Liz Truss is considering a large VAT cut, whilst Boris Johnson has said the UK will emerge from the cost of living crisis 'stronger'. Picture: Alamy

By Daisy Stephens

Tory leadership candidate Liz Truss is considering a VAT cut of five per cent to tackle the cost of living crisis.

Listen to this article

Loading audio...

Ms Truss, who is currently favoured to win the Tory leadership contest, has discussed the option with her top advisers, the Telegraph reports.

The across-the-board tax cut would be the biggest reduction ever, according to the paper, and could save the average household more than £1,300 a year.

Such a tax cut could also be a lifeline for businesses struggling to make ends meet.

The paper says it could come alongside more targeted measures to help lower-income families struggling with the cost of living crisis.

Liz Truss is reportedly considering slashing VAT to help Brits cope with the cost of living
Liz Truss is reportedly considering slashing VAT to help Brits cope with the cost of living. Picture: Alamy

Outgoing Prime Minister Boris Johnson has meanwhile struck an optimistic tone, promising the UK will emerge from the crisis "stronger and more prosperous".

In an article for Mail+, Mr Johnson said the world was beginning to remedy supply chain pressures sparked by the aftershocks of Covid by the end of last year, but "what no-one had bargained for" was Russian President Vladimir Putin deciding to invade Ukraine.

Read more: Even well-off Brits earning £45,000 a year will suffer in coming months, chancellor warns

Read more: Six million households could have savings wiped out by energy bills - but PM promises 'pipeline of cash' soon

He said this "vicious and irrational" move "spooked the energy markets" and ended up costing consumers at home.

Mr Johnson said "we must and we will help people through the crisis", with "colossal sums of taxpayers' money" already committed to the cause.

He added that whoever succeeds him in the top job, the Government will announce "another huge package of financial support".

'I survived last Tuesday to Friday on just tea and coffee.'

Making reference to a bleak economic briefing he said he received as Covid swept the world in 2020, Mr Johnson argued the UK has already "proved the pessimists wrong".

"They told me UK unemployment would top 14 per cent," he said.

"They said that millions would be thrown on to the economic scrapheap - with all the consequent costs to the Exchequer.

"They were wrong. After becoming the first country in the world to approve an effective vaccine, we staged the fastest vaccine rollout in Europe, the fastest exit from Covid.

"As a result we had the fastest growth in the G7 last year and instead of mass unemployment we have about 640,000 more people in payrolled employment than before the pandemic began."

Mr Johnson said the UK has the "fundamental economic strength" to endure the cost of living crisis, even if the Russian leader "wants us to buckle".

Read more: Hundreds gather at Ofgem HQs to protest 'catastrophic' energy price hike

Read more: Backlash after Chancellor tells people to cut back as energy prices rocket

"In this brutal arm-wrestle, the Ukrainian people can and will win. And so will Britain," he said.

He added: "We have laid the foundations for long-term gains in prosperity and productivity.

"We know we will bounce back from the crisis in the cost of energy as we rapidly build up our own UK supplies.

"That is why we will succeed and why we cannot flinch now."

Mr Johnson stressed it is time for the West to "double down" on its support for Ukraine, and not "go wobbly".

"We have made the long term decisions - including on domestic energy supply - to ensure that our bounceback can and should be remarkable and that our future will be golden," he said.

Protesters gathered outside Ofgem's London HQ after the price cap increase was announced on Friday
Protesters gathered outside Ofgem's London HQ after the price cap increase was announced on Friday. Picture: Alamy

It comes after the Chancellor Nadhim Zahawi suggested people earning around £45,000 per year could be among those struggling to cope with soaring living costs as the energy price cap is hiked again.

"My concern is there are those who aren't on benefits," Mr Zahawi told the Telegraph on Friday night.

"If you are a senior nurse or a senior teacher on £45,000 a year, you're having your energy bills go up by 80 per cent and will probably rise even higher in the new year - it's really hard.

Read more: 'Lives will be lost': Dire warnings as Ofgem boss says energy price rises will get 'much, much' worse

Read more: Two men arrested over shooting of Olivia Pratt-Korbel, 9, released on bail as police warn 'silence is not an option'

"If you're a pensioner, it's really hard.

"So Universal Credit is a really effective way of targeting, but I'm looking at what else we can do to make sure we help those who really need the help.

"We're looking at all the options."

Regulator Ofgem warned the Government on Friday it must act urgently to "match the scale of the crisis we have before us" as Britain faced the news the average household's yearly bill will rise from £1,971 to £3,549.

More Latest News

See more More Latest News

Breaking
Breaking News

Man arrested after man ‘threatened to blow himself up’ outside Iranian consulate in Paris

The Canary Islands tourism minister has urged British holidaymakers not to cancel their trips.

Canary Islands plead with British holidaymakers not to cancel trips despite surge in anti-tourism protests

Breaking
Nicola Sturgeon speaks to the media (l) after husband Peter Murrell (pictured with her right) charged over SNP finance probe

Nicola Sturgeon breaks silence after husband Peter Murrell charged in SNP finance probe

Women who have been filmed covertly on nights out are being asked to contact police

Women urged to contact police over 'misogynistic' Manchester nightlife videos as clips surface from other cities

Italy G7 Foreign Ministers

Israel ‘gave US last-minute warning about drone attack on Iran’

Pictures of the Week Global Photo Gallery

Iran fires air defence batteries at two sites after drones spotted

Building on fire

Ukraine claims it shot down Russian bomber as Moscow’s missiles kill eight

Signs twinning Bournemouth with Israeli city mysteriously vanish as police probe apparent hate crime

Signs twinning Bournemouth with Israeli city mysteriously vanish as police probe apparent hate crime

Antonio Tajani

G7 foreign ministers warns of new sanctions on Iran and urge de-escalation

Boris Johnson breached rules for former ministers, watchdog rules

Boris Johnson breached government rules by being ‘evasive’ about links to hedge fund

The Tortured Poets Department: The Anthology has 31 tracks

The hidden meaning behind tracks on Taylor Swift's new album as superstar blasts exes Joe Alwyn and Matty Healy

Passengers on London's transport network should be thrown off if they play music out loud, Susan Hall says

People who play music out loud on London transport ‘to be thrown off’ says Tory Susan Hall as mayoral race hots up

Google HQ

Japanese doctors demand damages from Google over ‘groundless’ reviews

EU proposes a deal on free movement for young people

Brussels offers the UK a free movement deal that would give young Britons the right to live in the EU

‘Not fair on taxpayers’: PM to unleash ‘sick-note squads’ as he tells Brits ‘you don’t get anything in life without hard work’

PM to unleash ‘sick-note squads’ as he tells Brits ‘you don’t get anything in life without hard work’

Air defences

Russia pummels exhausted Ukrainian forces ahead of springtime advance