Truss vows to slash taxes and insists soaring energy bills are a 'price worth paying' to stop Putin

20 September 2022, 16:35

Liz Truss has vowed to slash taxes as she admitted her tax cuts will initially benefit the rich more than the poor.

Speaking in New York, where she is on her first overseas trip as Prime Minister, she denied that cutting taxes was “unfair”, because they would help the economy to grow - something which will benefit everyone in society.

And she insisted she will not ask Brits to ration their energy usage and claimed high energy bills are a "price worth paying" for the UK's security.

On Friday, her new chancellor Kwasi Kwarteng will deliver a mini-budget which is expected to see bankers' bonuses, corporation tax increases and the planned national insurance hike all scrapped.

Ms Truss said: “The number one thing we need to deliver as a government, and in fact as a country, is economic growth.

“Lower taxes lead to economic growth, there is no doubt in my mind about that. Now, there are of course other measures that we have to take to spur economic growth as well.

“During the [leadership] campaign I talked about moving faster in getting growth projects going, mobile broadband fixing, the arteries of the economy — we need to do that too.

“But having the highest taxes in 70 years and putting up corporation tax at a time when we’re trying to attract investment to this country isn’t going to deliver growth. We need to be competitive.”

Defending the controversial move to remove the cap on bankers' bonuses, she said: “We are on the side of delivering a high-wage economy.

“That’s what we need to do. We’ll take every measure, not every measure will be popular. And there are always vested interests, people who oppose measures that increase economic growth."

Putin is limiting gas supplies to Europe, causing other countries to ask people to limit their energy usage.

But Ms Truss has refused to implement similar measures in the UK, and has instead hailed her radical tax plans as an antidote to the crippling effect soaring gas prices are having on the economy.

Her multibillion-pound price guarantee will prevent average annual household bills going past £2,500.

As well as this she plans to cut corporation tax and reduce the cap on bankers' bonuses - although she has conceded her plans will, at least initially, benefit the rich more than the poor.

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The UK and European allies have been seeking to divest from Russia's fossil fuels, and Mr Putin has ratcheted up the pain as he turns the taps off on the Nord Stream 2 gas pipeline.

Ms Truss told reporters travelling with her to a United Nations summit in New York that the UK "cannot jeopardise our security for the sake of cheap energy".

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"The point I'm the point that I'm making is that it's a price worth paying for Britain, because our long-term security is paramount," she added.

"But what I don't want to happen is that to be passed on to bill-payers who beyond that energy guarantee that I've outlined because I don't think that's right."

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French President Emmanuel Macron has urged a 10 per cent reduction in energy usage in the coming months as the EU tells member states to lower consumption this winter.

But Ms Truss is leaving it up to consumers to choose whether they want to go easy on heating and other power usage in the difficult months to come.

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"No, we are not talking about rationing of energy," she told reporters.

"Of course, I always support energy efficiency measures like home insulation, that makes sense, and energy prices are higher than they were.

"There is a strong incentive for businesses and households to invest in energy efficiency, but we do have reliable supplies of energy but ultimately everyone makes their own decisions about how they decide to do those things."

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Ms Truss will later meet with US President Joe Biden - who on Tuesday, ahead of their meeting, hit out at "trickle-down economics".

Trickle-down economics is an economic theory stating that tax breaks handed to big corporations and wealthy individuals 'trickle down' to everyone else - a theory Ms Truss has employed to explain her fiscal plans.

But ahead of his meeting with the UK Prime Minister, Mr Biden said he was "sick and tired" of the theory that cutting taxes for businesses and the wealthy will benefit poorer workers.

In a message on Twitter, Mr Biden said: "I am sick and tired of trickle-down economics. It has never worked.

"We're building an economy from the bottom up and middle out."

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While the message was presumably intended for a domestic US audience, it underlines the economic and political divide between the Democrat in the White House and the free-market Tory in No 10.

The two leaders will meet in New York on Wednesday, where they are both attending events as part of the United Nations general assembly.