Sunak Vows to Scrap VAT on Household Energy Bills as He Trails Truss Amid Tory Leadership Race

While still chancellor, Rishi Sunak repeatedly resisted the pressure to remove the value added tax on domestic fuel bills, telling the House of Commons in February that the move would “disproportionately benefit wealthier households”.

UK former chancellor Rishi Sunak has vowed to scrap the VAT on all household energy bills if he becomes prime minister, in a move that followed his second TV debate with Foreign Secretary Liz Truss being canceled after TalkTV presenter Kate McCann suddenly fainted live on air.

Announcing the move, Sunak – who continues to trail Truss in polls of Tory members, said that “tackling inflation and getting people the support they need to help with the cost of living is critical.”

“That’s why, with the price cap expected to rise above £3,000 in October, I will move immediately to scrap VAT on everyone’s domestic energy bills for the next year, saving the average household £160. This temporary and targeted tax cut will get people the support they need whilst also – critically – bearing down on price pressures,” The Tory leadership hopeful stressed.

The 42-year-old also promised “to begin undertaking major supply side reforms targeted at the rising cost pressures families are facing,” adding, “that means urgently getting more people off welfare and into work and tackling the supply chain crunch.”

The remarks come as unnamed No 10 sources told the Daily Mail that a plan to scrap the VAT on domestic energy bills was something that outgoing Prime Minister Boris Johnson tried to implement to ease the burden on consumers, but was blocked by Sunak.

“Boris begged him to do it – but he wouldn't budge. “It's astonishing that he's now claiming it as his own policy,” the source claimed, referring to the former UK chancellor.

The Telegraph, in turn, quoted an unnamed source close to the Liz Truss campaign as saying that “it's good that Rishi has finally woken up and decided to offer something to people struggling with the rising cost of living.”

“However, this feels like a screeching U-turn from someone who has spent the last few weeks of the leadership campaign branding everyone else's tax cuts immoral and fairytales,” the source argued.

As chancellor, Sunak repeatedly opposed a move to scrap the VAT on domestic fuel bills. Speaking to MPs in February, he said that he knows that “some in this House have argued for a cut in the VAT on energy; however, that policy would disproportionately benefit wealthier households”.

Later in the same debate, when Conservative MP Kevin Hollinrake described the policy as completely flawed, Sunak said that Hollinrake was “absolutely right.”

Earlier in July, the ex-chancellor asserted that tax reductions are “immoral because there is nothing noble or good about racking up bills on the country's credit card that we then pass on to our children and grandchildren.”

His latest promise pertaining to VAT cuts came as part of what his campaign team called his “Winter Plan”, aimed at tackling inflation and the cost of living.

Meanwhile, a YouGov survey of Conservative members, who are due to receive their ballot papers next week, put Truss at 62% and Sunak at just 38%. They will face each other at a Conservative party hustings in Leeds on Thursday, the first of a dozen such events to be held ahead of the September 5 announcement of the results of the Tory leadership contest.