Liz Truss’s criticism of ‘handouts’ is playing politics with poverty

The probable next prime minister was asked how she intended to help people facing rising energy bills this winter. She replied: “The way I would do things is in a Conservative way of lowering the tax burden, not giving out handouts.”

We have to hope that she does not mean it because if she does, she is promising hardship for millions. She must know – at least we must hope she does – that most of the people who will be hit hardest by further rises in gas and electricity prices will be on pensions or benefits. A cut in national insurance contributions or corporation tax is no good to them.

That is why Rishi Sunak, as chancellor, ended up helping people through the benefits system, including pension credit. He announced the scheme after he had tried “Conservative ways” of avoiding using the benefits system, including a loan to all domestic energy customers and a council tax rebate for people in houses in bands A to D.

He was criticised for failing to raise benefits by more than an out-of-date rate of inflation, and for failing to restore the £20 a week uplift in universal credit paid during the pandemic. Then, when world energy prices really started to take off, he belatedly did the right thing. He increased the loan to help everyone with their bills and converted it into a grant; he announced a cash payment for everyone on benefits, half of which was paid last month; and he announced extra help for all pensioners as a top-up to the winter fuel payment.

These payments, which will make the difference between difficulty and destitution for millions of people, are insultingly referred to as “handouts” by Ms Truss. Yet they are insufficient in the face of the further price rises expected this winter. What she is offering, if we are to take her words at face value, is the temporary abolition of the green levies on energy bills.

This is a tax cut but it is not enough, and it is not the best way to help people with the further increases in bills that have been predicted since Mr Sunak announced the most recent help with the cost of living in May. It would be worth about £150 a year off the average bill; it would be worth more to the better off, who tend to use more energy; and it cannot be brought in quickly.

Mr Sunak, on the other hand, proposes the temporary abolition of VAT on energy bills. That is also a tax cut and, again, it would tend to benefit the better off disproportionately, as he used to explain when he was against the idea, but it could at least be implemented straight away.

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But the best way to help the people who need help the most would be by further payments through the benefits system. That would be targeted at the most vulnerable, it would be fast, and it would have the same effect economically as cutting the green levies or VAT on bills. That is what the chancellor, whoever that may be, will have to announce in the emergency Budget that will follow the appointment of a new prime minister, so it is mere posturing before an unrepresentative fraction of the population to pretend otherwise.

Mr Sunak may be guilty of cowardice in keeping quiet on the subject but Ms Truss appears to be engaged in actually misleading people. She claimed at one of the party hustings that “forecasts are not destiny”, as if she had access to knowledge of a future in which difficult choices can be magicked away by tax cuts. After the boosterism, nonsense and evasions of the outgoing prime minister, this is not a good way for her to offer a fresh start.