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Rishi Sunak’s tax cut U-turn means he knows he is losing

The former chancellor’s pledge to cut VAT on energy bills shows he is dancing to Liz Truss’s tune.

By Rachel Wearmouth

Rishi Sunak has tried to reverse his faltering campaign by pledging a tax cut. The former chancellor has said he will cut VAT on energy bills in 2023, which he believes will save households that are struggling with the cost of living £160.

Liz Truss’s team accused him of a “screeching U-turn” and will be delighted they have shifted the tax debate closer to the Foreign Secretary’s strengths. Sunak’s announcement comes after Truss challenged him during the TalkTV debate last night (26 July), which was prematurely cut short when its host Kate McCann fainted, to say what he would do “immediately” to help Brits struggling with bills.

Sunak rejected the same policy when he was in office, telling Labour’s shadow chancellor Rachel Reeves earlier this year that it amounted to a tax cut for the most wealthy as well as the poorest. He will hope that delaying the measure until 2023 – and limiting it to one year only – will keep his campaign for fiscal conservatism on-brand, but this back-track indicates how far behind he is with Tory members. Cutting VAT will be contrasted with Truss’s promise to save people £153 on their bills by taking away green energy levies, which could be introduced immediately – though it would be a move hated by environmentalists.

Keir Starmer may want to make the most of Tory divisions, but the Labour leader has problems of his own today. The Rail, Maritime and Transport (RMT) and Transport Salaried Staffs’ Association (TSSA) trade unions are taking part in a fresh round of strikes over pay; in response Starmer warned his frontbenchers that “a government does not go on picket lines”.

That warning has been ignored by the shadow transport minister Sam Tarry, who is locked in a separate dispute with the Labour leader over a selection battle in his constituency of Ilford South. Tarry gave an interview to Good Morning Britain from… a picket line. Tarry admitted he had “no idea what Keir will decide to do” but said the strikes “would not be happening” if Labour was in government. At the time of writing, Starmer had not responded to what can only be seen as a direct challenge to his authority.

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The Transport Secretary Grant Shapps wasted no time in telling Sky News: “If Labour frontbenchers want to go and join the picket line, people will come to their own conclusions and I’ve no doubt Sir Keir Starmer will want to sack him.”

This piece first appeared in the Morning Call newsletter; subscribe here.

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