Tory leadership hopeful Rishi Sunak tonight unveiled plans to scrap VAT on domestic energy bills – months after opposing the move.
The former Chancellor said the measure would save the average household around £160 in the next year.
Mr Sunak, who polls suggest is trailing rival Liz Truss among Tory party members, described it as a “targeted, temporary and timely tax cut”.
But it stands in start contrast to the views he stated earlier this year, when he told the Commons: “I know that some in this House have argued for a cut in VAT on energy. However, that policy would disproportionately benefit wealthier households.”
Tonight he also said he plans to double the number of hours those on welfare have to work each week in order to avoid having to look for a full time job.
The ex-cabinet member also announced he would “look at new incentives” to support older people returning to work – but has again been accused of flip-flopping by Ms Truss’s supporters.
In January a Labour motion to force a cut in VAT on energy bills was voted down by Tories, with Boris Johnson previously branding the move a “blunt instrument”.
Mr Sunak said last night: “Tackling inflation and getting people the support they need to help with the cost of living is critical.
“That’s why, with the price cap expected to rise above £3,000 in October, I will move immediately to scrap VAT on everyone’s domestic energy bills for the next year, saving the average household £160.
“This temporary and targeted tax cut will get people the support they need whilst also – critically – bearing down on price pressures.”
And he continued: “As Chancellor I knocked £400 off everyone’s energy bill and provided support of £1,200 for the most vulnerable households. This additional VAT cut will help deal with the current emergency.”
Just one Tory MP – Anne-Marie Morris – backed the non-binding motion for a debate on cutting VAT on energy bills in January – meaning it was defeated by 319 votes to 229.
Work and Pensions Secretary Therese Coffey – who has backed Liz Truss – said: “Helping people progress in work by getting better jobs and more hours is a key role of jobcentres. DWP will shortly change the rules to ensure people keep looking for extra work until they have at least 12 hours a week with an ambition to increase that in the future.
“DWP had hoped to get this underway earlier this year but unfortunately was blocked by the former Chancellor.
“I share the ambition to go further but these new proposals require extra £210m funding. In the meantime, we need to get on so we can help people be more prosperous and help grow the economy.”
Sources within Ms Truss’s camp claim that by delaying extra career support, Mr Sunak denied it to potentially hundreds of thousands of people.
It comes as the two remaining candidates continue to clash over their economic policies.
Earlier today Ms Truss suggested a Sunak government would be a “disaster” for homeowners, workers and businesses.
Speaking to Sky News, the Foreign Secretary was asked about the IMF world economic update, which implied that not cutting taxes and keeping spending down is the way forward.
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She said: “Let’s be clear, his (Rishi Sunak’s) plan is to raise taxes. He is planning to raise taxes on corporations, putting our taxes up to the same level as France. That is going to put off people who want to invest in Britain. And I know there are masses of opportunities right across the country.
“Less investment will mean fewer jobs, fewer opportunities, lower wages and lower productivity in the future. So it’s cutting off our nose to spite our face. The fact is that we promised in our manifesto not to raise national insurance. I thought it was wrong at the time to do so, and that is why I would reverse that.
“I also want to put money into people’s pockets. I could quote the OECD who said that our current policy is contractionary. And what that means is it will lead to a recession. A recession would be a disaster, it would be a disaster for people who are homeowners. It would be a disaster for people who go out to work. It would be a disaster for people who run businesses.
“That is why I want to keep taxes low, attract the investment, get the growth. That’s the best way to pay down our debt.”