Rishi Sunak’s last-minute proposal to cut VAT on energy bills has been described as “a blatant handbrake U-turn” by Business Secretary Kwasi Kwarteng.
Kwarteng, who is backing Liz Truss in the race to become prime minister, said on Wednesday: “If that’s not a turnaround, I don’t know what is.”
But Sunak ally Grant Shapps defended the former chancellor’s stance, saying a cut in VAT on energy bills was worthwhile and would not be inflationary.
Sunak had previously been the only candidate in the Conservative leadership contest not to pledge to cut taxes. But on Tuesday evening, as his chances of leading the country appeared to be slipping in the polls, he announced he would scrap VAT on energy bills, saving the average household £160.
In a series of interviews broadcast Wednesday morning, Kwarteng was condemning Sunak’s change of position.
He told Sky News he was “delighted to see that Rishi Sunak has come late to the party and decided that tax cuts are a good idea and not a fairy tale. And that being a big… it means you can have tax cuts.”
Sunak had argued against the tax cut in question in February when he was chancellor, telling the Commons that the policy would “disproportionately benefit the wealthiest households”. Sunak said the cut was “targeted and temporary” and called it a winter plan to deal with rising energy bills.
Kwarteng said: “Let’s not beat around the bush – this is a U-turn. He said a few months ago that VAT on energy bills would disproportionately help wealthier people – it wasn’t aimed hard enough at vulnerable people and that’s why he decided not to go. People suggested it. He rejected it.
“Just last week he said that the tax cuts were part of a fairy tale, that he was the only big one in the race because he was raising taxes where all the other candidates were proposing tax cuts. So I’m delighted to announce today that he wants to remove VAT from energy bills. It’s a U-turn. I mean, if that’s not a U-turn, I don’t know what is.
Shapps hit back, telling ITV’s Good Morning Britain: “The point is, with this particular cut, what it doesn’t do is increase inflation. In fact in the short term it would be deflationary because it would reduce people’s costs , in the medium term it would have no impact on the consumer price index.
“[Sunak] is saying, “Here’s something that won’t add to inflation and would save everyone who watches your show £160 on their energy bills.” I think it’s worth it.”
Before a TalkTV debate between the two candidates on Tuesday night was interrupted after the host, Kate McCann, fainted, Truss had attacked Sunak for increasing National Insurance to fund the NHS and social care in the wake of of Covid-19.
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Truss said: “I think it’s morally wrong at the moment when families are struggling to pay for food that we’ve taxed ordinary people when we said we wouldn’t in our manifesto and when we didn’t have to. So. “
Throughout the contest, Sunak has positioned himself as the candidate prepared to make unpopular fiscal decisions to keep the economy stable and curb debt.
In Tuesday’s debate, he appeared to stick to his guns in criticizing Truss for proposing to delay the payment of debts accrued during Covid. “What’s morally wrong is asking our children and grandchildren to pick up the tab for bills we’re not willing to pay,” he said.