Truss’s premiership ‘will be defined by response to cost-of-living crisis’
As Liz Truss grapples with the economic situation, planned measures may be postponed or cancelled, and others may be introduced, experts suggested.
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Your support makes all the difference.Liz Truss’s premiership will be framed by how she tackles the cost-of-living crisis, it has been suggested.
Ms Truss, who will take over as prime minister on Tuesday, has campaigned on a promise to cut taxes.
After her Conservative leadership win was announced, finance experts suggested some other potential options that may be considered.
A package of cost-of-living support measures, including a £400 energy bill discount for households plus targeted support, was previously announced by Rishi Sunak, a rival of Ms Truss in the Conservative leadership race, when he was chancellor.
But in recent months some economic indicators have become more grim.
Tax cuts provide support more gradually than fiscal transfers would, and households' need is urgent
The Bank of England has warned that inflation is set to soar to more than 13% and average annual energy bills are set to jump by 80% in October from £1,971 to £3,549.
Industrial unrest has also been mounting.
Citizens Advice says it is helping more than two people every minute typically with crisis support during the working day.
Andrew Goodwin, chief UK economist at Oxford Economics, said: “Liz Truss’s term as UK prime minister will be defined by her response to the cost-of-living crisis.”
He said he expected Ms Truss to “quickly pivot towards making large direct payments to households”.
Mr Goodwin continued: “Tax cuts provide support more gradually than fiscal transfers would, and households’ need is urgent given they face very large increases in their bills in October, January, and potentially April as well.”
Tom Selby, head of retirement policy at AJ Bell said tax cuts would “do little for those on the lowest incomes who most need support”.
Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, suggested further potential support could include “bringing in new subsidised energy tariffs for those facing the biggest financial challenges, or it could mean additional payments for those on the very lowest incomes through the Universal Credit system”.
She also also highlighted the risk of tax cuts adding to inflation woes, saying: “The risk is that an awful lot of potential tax cuts will do more than offset rising prices for higher earners.
“While it would be a welcome boost for them, it could mean pushing prices up even further, which could leave us all worse off.”
Sian Steele, head of tax at wealth managers Evelyn Partners said: “Despite the focus on tax during the leadership campaign, all announcements are of course subject to change when formal plans are drawn up.
“As our new PM grapples with the economic situation, currently planned measures may be postponed or cancelled, and other measures introduced.”
Heidi Chow, executive director at campaigning organisation Debt Justice, called for an expansion of tax on energy producers in order to freeze energy prices and pay off households’ energy debts “to give everyone a fighting chance of keeping the lights on this winter”.