Liz Truss has rejected helping everyone with rocketing winter energy bills and is mulling further tax cuts instead if she reaches No 10, her allies say.
The Tory leadership favourite is under intense pressure to end her silence on what support she will provide for the cost of living emergency, but she revealed that options were still on the table.
They include a 5 per cent VAT cut and reversing the decision to freeze income tax thresholds until 2026, which will drag millions more people into paying higher-rate tax.
The Truss camp did not dispute a BBC report that she had “ruled out” help for every Briton, regardless of wealth, the policy favoured by her rival Rishi Sunak.
Despite the foreign secretary being on course to become prime minister in just nine days’ time, “no decisions have been made” about other options still on the table.
Ms Truss could opt to simply give more support to the poorest, through higher benefits, or exclude the richest from across-the-board help, as a key ally has hinted previously.
The chancellor, Nadhim Zahawi, a Truss backer, has warned that even those earning £45,000 – 50 per cent more than the average wage – would need significant help within weeks.
Jake Berry, the chair of the Northern Research Group of Tory MPs, who is also supporting Ms Truss, said the next prime minister should be “rapidly coming up with solutions”.
“This is probably the greatest crisis of my political career. And nothing in terms of the government supporting families in this country and businesses should be off the table,” he told Times Radio.
Ms Truss has said only that she will reverse the national insurance rise – a policy that will overwhelmingly favour the rich – and waive the green levies on energy bills.
That would shave around £150 from annual household bills, only a slice of the looming hike to an average of £3,549 from October and to a predicted £5,300-plus from January.
An emergency budget is planned for later in September, rebranded as a “fiscal event” in order to avoid detailed scrutiny from the Treasury watchdog.
Mr Sunak’s team has dismissed a cut to all VAT as being “incredibly regressive” and warned it would cost more than £30bn a year, on top of Ms Truss’s existing £30bn of unfunded tax cuts.
A source on his campaign team told the BBC: “It also means the worst off this winter are hardworking families and pensioners on middle incomes, which are Conservative and swing voters. Truss’s plan is a gift to Labour.”
The race favourite has already rejected Labour’s £29bn plan to freeze energy bills, to be partly funded by a bigger windfall tax on the excess profits of the energy giants.
But Pat McFadden, the shadow Treasury chief secretary, said: “We are looking at energy bills of hundreds of pounds per month for households around the country.
“The conversation that’s taking place, of course, is ‘how can we afford this; what else can we cut?’ And for some people it will simply be impossible.”