Tory frontrunner Liz Truss under pressure over help on cost of living

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Liz Truss has promised an immediate cut to National Insurance rates if she becomes prime minister in September, but faced claims from her Tory leadership rival Rishi Sunak that the change would “not touch the sides” for many poorer households battling a crisis in living costs.

Truss, foreign secretary, told the Financial Times on Friday that while she did not exclude offering more financial support, she favoured tax cuts over “handouts” as the best way to help struggling households.

On Sunday Truss said she would scrap the 1.25 percentage point NI rate rise introduced by Sunak, former chancellor, straight away with the cut feeding into pay packets this autumn — instead of waiting for the start of the next tax year in April 2023.

“I will look at what more can be done, but the way I would do things is in a Conservative way,” she wrote in the Sunday Telegraph. “We would be able to put more money back in the pockets of hard working people without delay.”

Sunak put up NI rates in April, branding the move a “health and social care levy”, but then in July softened its impact on lower income households by raising the threshold at which most people pay NI on their earnings from £9,880 to £12,570 a year.

The former chancellor’s team say that the £13bn cut in NI rates would not help the poorest and most of the benefits would accrue to higher earners. “Her tax cut won’t touch the sides for most families who will need the most help,” said one Sunak ally.

Rishi Sunak at an event in Edinburgh, as part of the campaign to be leader of the Conservative Party and the next prime ministe
Rishi Sunak campaigning in Edinburgh © PA

Sunak’s team said a person working full time on the national minimum wage would save £59 a year, while a person on median earnings of £26,000 would save £170. A person earning £100,000 would save over £1,000.

Truss insisted on Sunday that her priority was cutting taxes and introducing supply side reforms to get the economy growing.

Sunak says he is prepared to offer more targeted help beyond the £1,200 already earmarked for vulnerable households and Truss’s critics say she will have to offer a massive package of help to households too poor to pay income tax or national insurance.

“I would hit the ground running by bringing in an emergency Budget, charting a firm course to get our economy growing in order to help fund our public services and the NHS,” Truss wrote.

“I would use this immediately to tackle the cost of living crisis by cutting taxes, reversing the rise on National Insurance and suspending the green levy on green bills.”

Meanwhile Gordon Brown, former prime minister, has said Boris Johnson, prime minister, should sit down with Truss and Sunak and agree an emergency Budget now, ahead of the outcome of the Tory leadership contest on September 5.

Brown wrote in Sunday’s Observer that delay risked “condemning millions of vulnerable and blameless children and pensioners to a winter of dire poverty”.

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