The two Tory leadership contenders compared
New figures show UK energy bills are expected to reach over £4,000 in January, with the cost of living crisis expected to mount through the autumn and winter months.
Pollsters constantly find rising prices, particularly energy bills, are voters’ main concern. In September we’ll have a new prime minister: what are the two candidates – Rishi Sunak and Liz Truss – planning to do about it?
Rishi Sunak, who is trailing Liz Truss in the race, has explicitly pledged more government support for households going into winter.
The former chancellor, whose resignation spelled the beginning of the end for Boris Johnson, hasn’t yet said exactly how much help he would give.
Mr Sunak said there was “no doubt in my mind that more support will be needed” but said he would need to wait until he knew how much the energy price cap would be going up by.
This is set by the regulator Ofgem, with more details expected this month about a rise in October.
The cap is expected to go to well over £3,000 per year, compared with £1,971 for a typical household currently; a further rise is also expected to take place in the Spring.
In addition to non-specific government support, Mr Sunak has also pledged tax cuts.
These would include a temporary cut in VAT to help with energy bills. However, the rate is just 5 per cent on household bills, with bills having increased by many times that.
Mr Sunak’s ally Dominic Raab has said it would be wrong to rule out further direct support, in the form of payments, suggesting this would be an “electoral suicide note” for the Tories.
Liz Truss is the frontrunner in the leadership race and is now widely predicted to become prime minister. She has said she will look at “what more can be done” to help families.
But the foreign secretary told Financial Times last week that she favoured tax cuts over what she described as “handouts” – public spending measures.
This was widely taken to mean she would not give direct support to families, though her ally Penny Mordaunt has claimed she has been misinterpreted.
Specifically on tax, Ms Truss has said she will prioritise stopping a planned corporation tax rise, as well as planned hike in National Insurance.
This measure will do nothing to cut bills but could stop people paying more tax in the future, though it will mostly benefit families on higher incomes and the owners of profitable corporations.
On energy specifically the foreign secretary has said she will scrap green levies on energy bills, representing around 8 per cent of the total dual fuel bill.
For comparison, the energy price cap increase by 54 per cent in April, with expectations that it will go up by a similar amount in October and again next year.
Experts have also warned that cutting green levies baking in higher bills for longer as it will reduce investment in alternatives to gas, whose price increases are largely driving bills.