LIZ Truss and Rishi Sunak have been condemned for “fantasy land tax promises” and failing to come up with a proper cost-of-living plan throughout the Tory leadership contest.
With just one week of the campaign left to go before the next prime minister is chosen by Tory party members – the SNP have demanded action and an “adequate” solution to the soaring costs facing households.
Last week, Ofgem announced the price cap on energy bills is set to rocket to £3549 in October and inflation is predicted to reach a staggering 13%.
The SNP said the lack of action from the Tories is “dangerous” and called for “immediate radical” moves from Westminster to use reserved powers to find a solution to the crisis.
Truss has so far “ruled out” direct support for every household to assist with soaring bills, but her team insisted she was in favour of “targeted” support for those set to be hit hardest by the price rises.
The Sunday Telegraph reported that one option being drawn up by the Treasury for the new prime minister to address the crisis is a 5% cut to the 20% headline rate of VAT, reportedly saving the average household more than £1300 per year.
Some Truss supporters have urged her to go as far as cutting 10%, which Sunak’s team has described as “regressive”.
Meanwhile, Paul Johnson, director of the Institute for Fiscal Studies (IFS), said the proposal was “inappropriate” and risked exacerbating inflation, as he also warned against slashing income tax on top of other tax cuts.
He said: “You clearly can’t do all of this without completely crashing the public finances.
“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”.
A report from the IFS has said that providing support that “covers the same proportion of the increase in bills as intended back in May”, would now cost a further £18 billion.
In May, then chancellor Rishi Sunak put together a £15bn package to support those on lower incomes to pay their energy bills, equating to around £1200.
Shadow SNP chancellor Alison Thewliss blasted the lack of action so far from Truss and Sunak.
She said: “The best either PM hopeful has come up with is to scrap the 5% VAT on domestic energy and axe the green energy levy.
"To be clear, there isn’t just one single green energy levy, and scrapping any green energy policy is pointless when the record-high increase to energy bills has absolutely nothing to do with the cost of decarbonisation.
“Truss and Sunak are living in fantasy land with their tax promises, or they are knowingly misleading the public on how effective they will be. Either way, their actions - or lack of - are dangerous for the millions who are struggling to make ends meet in this cost-of-living crisis.”
Thewliss said the UK Government should take “immediate and radical” action to support households.
She added: “That means reversing the energy price cap rise, and recalling parliament immediately to deliver an emergency budget that provides the support people need - including scrapping VAT on fuel, doubling support for households, and introducing an energy price cap and grants for businesses.
“The meagre support currently available from the UK Government won’t even scrape the sides for millions. With every day they fail to act, the Tories are demonstrating why Scotland needs to escape Westminster control and gain the full powers of independence.”
Former chancellor Alistair Darling also condemned the Government for “fiddling around with small measures that won’t make any difference at all”.
He told BBC Radio 4’s Today programme: “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.
“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.”
Darling said cutting income tax, a measure Truss is reportedly considering, would benefit people at the higher end of the income chain, but not those paying little or no tax.
Truss and Sunak have been contacted for comment.
