Rishi Sunak's VAT plans discussed by Tom Harwood

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In a major policy shift, Conservative leadership hopeful Rishi Sunak has pledged to scrap the 5 percent VAT rate on household energy bills for one year from October if the price cap on bills – currently just under £2,000 – rises above £3,000 for the typical household. So far, the former Chancellor had been reluctant to come forward with tax cuts, arguing the move would spiral inflation out of control. Opponent Liz Truss’ campaign described the move as desperate and accused him of a “screeching U-turn”.

GB News Political Correspondent Tom Harwood slammed: “Today, we’re seeing that Rishi Sunak has come out with a new policy, and guess what? It’s a tax cut.

“After weeks and weeks and weeks of saying that the country couldn’t afford tax cuts, that it would be fiscally irresponsible, that it would be fairy-tale economics to pursue a tax cut, Rishi Sunak seems to be believing these polls that put him 20 points behind amongst the membership.

“He is now coming forward with a tax cut. However, he justifies it by saying that it’ll be temporary and targeted.

“Taking VAT off fuel bills for a limited amount of time if fuel bills go above £3,000 on average when the price cap readjusts in the autumn.”

Mr Harwood said: “The Liz Truss campaign for their part in response to this points towards Rishi Sunak used from the dispatch box – it was only a few months ago – saying that a VAT cut would be wrong, that it would give subsidies to the best-off. And it would not be targeted.

“Because the Labour party of course suggested this at the start of the year. Rishi Sunak opposed it then. Now, he’s supporting it.” 

Since the start of the leadership contest, Rishi Sunak has criticised Liz Tuss’ tax cut plan as a “fairytale” and said her plan would “tip millions of people into misery” and cost the Conservatives the next election.

Rishi Sunak’s U-turn comes after he fell in the polls far behind his opponent Liz Truss. According to the latest YouGov poll, Foreign Secretary Liz Truss was the best performer at the BBC leadership debate for 50 percent of respondents, whereas former Chancellor Rishi Sunak lags behind with 39 percent.

The survey says Truss came across as more “in touch, likeable and trustworthy” during the BBC debate. 

It remains unclear whether Rishi Sunak will be able to close the gap in the polls.

An early favourite in the race, he has so far failed to gain momentum and make a case for his campaign to become the next Prime Minister.

After a few exchanges on their respective tax cut plans, Liz Truss and Rishi Sunak were halted halfway through the second one-to-one televised debate, as TalkTV’s political editor Kate McCann fainted on the set.

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Rishi Sunak’s VAT cut announcement is seen as a way to distance himself from his unpopular tax cut plan and gain the Conservative party’s support amid the cost-of-living crisis and skyrocketing inflation. Inflation is not expected to slow down until next year.

However, mood among the party members is traditionally more difficult to gauge – in contrast with the general public, where pollsters have access to a wealth of official information. 

Tory party members will start voting in August and will have until 5 pm on September 2 to return their ballots.

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