Row over chancellor’s US ‘junket’ while government silent over energy crisis

Nadhim Zahawi is under fire for flying to the US for a “junket” in his dying days as chancellor, while the public is in the dark about help with rocketing energy bills.

The chancellor is spending several days across the Atlantic for discussions about financial services co-operation, support for Ukraine and energy security, the Treasury said.

But the visit comes when Mr Zahawi has no real power in the job he was handed by Boris Johnson in early July, because he is almost certain to be removed whoever wins the Tory leadership race next Monday.

Liz Truss, the overwhelming favourite, is expected to appoint business secretary Kwasi Kwarteng to No 11 – with Mr Zahawi tipped to be demoted to health secretary.

Labour attacked the visit while the public is “desperately worried about the massive rise in energy bills” and both the government and the leadership contenders are silent.

“We’re stuck with this do-nothing Tory government. Now we discover the chancellor is jetting off to an international chinwag,” said James Murray, a shadow Treasury minister.

“Rather than going on another junket at the taxpayer’s expense, the chancellor should start listening to people here at home and implementing Labour’s fully funded plan to freeze energy bills.”

But the Treasury is pointing to Mr Zahawi meeting banking chiefs at the New York Stock Exchange to discuss the “aim” of new standards for US-UK financial services tie-ups.

He will then head to Washington to discuss support for Ukraine in the face of Russia’s assault and “the global economic outlook” with the US central bank, the US Treasury and international financial institutions.

Mr Zahawi is “expected to indicate a desire for increased civil nuclear co-operation and closer working between the UK and US nuclear industries on developing technologies, such as small and advanced modular reactors”.

He will also hold talks about the UK economy becoming “a competitive economic and green technology hub” and visit a biopharmaceutical facility, the Treasury said.

At the weekend, Mr Zahawi piled pressure on Ms Truss to beef up her plans for the cost of living emergency, saying people earning £45,000 will need government help.

The leadership frontrunner has stoked confusion about her intentions – first briefing that she has “ruled out” help for every household, before rowing back on that stance.

The outgoing chancellor warned the crisis – with average annual bills set to be £3,549 from October and predicted to top £5,300 from January – means the next prime minister will need to do much more.

Meanwhile, Victoria Prentis, a minister at the Department for Environment, Food and Rural Affairs, told Times Radio on Monday that the government was working on plans to help households. “It’s right that people need help and I’m really here to try to reassure that the government is making plans to help people as they will need it with energy bills this winter,” she said.

It comes as Alistair Darling, Labour’s chancellor during the 2008 meltdown, joined calls for bold action to avoid a “lethal cocktail” of recession and high inflation.

“You need something significant and substantial and you need it now, because people’s bills are going to start coming in in a few weeks’ time,” he told the BBC.

“If you don’t do that then you have the risks that I’ve been describing, that the economy will slip into recession with all that entails.”

Ms Truss has also been warned by a leading economist that she will “crash the public finances” if she pursues a huge VAT cut. The likely next prime minister has floated a plan to slash 5 per cent off the 20 per cent sales tax – but Paul Johnson, director of the Institute for Fiscal Studies, has accused Ms Truss of a “simplistic” view that reducing taxes can deal with plunging living standards – putting the cost of a 5 per cent VAT cut alone at £39bn.

“You clearly can’t do all of this without completely crashing the public finances,” he told The Times.

“This simplistic mantra that you cut taxes and the economy grows more, that you cut taxes when you have a big deficit and high inflation, and you don’t do it with any other part of the plan, is quite worrying.”

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