Chancellor Nadhim Zahawi has drawn up plans for a multibillion-pound package of tax cuts to help businesses pushed to the brink by rising energy costs.
He is working on an emergency energy strategy for the new Prime Minister and said the government could learn the “lesson from Covid” and introduce targeted reductions in VAT and business rates to help the retail and hospitality sectors.
In an interview with The Times, he said that tax breaks could also be given to energy-intensive industries and urged people not to “panic” about the cost of living crisis.
'Help is coming'
Mr Zahawi said Ms Truss would ensure that the government acted to minimise the impact of the increase next month as well as a further expected rise in January.
“My responsibility is to make sure I share with her where I think the pressure is on families, on households and on business, then give her the options as to what we can do,” he said.
“The one thing she has said is that help is coming and I am confident that Liz means what she says. She will deliver that help.”
He added that his “very strong advice” to people was not to “feel panicked or nervous”.
Targeted approach
The Chancellor said it was vital that as well as supporting families, the next chancellor should help businesses.
He said: “If we don’t support businesses I worry about the longer-term scarring of the economy. I had an example given to me the other day from EDF. One of their clients, their bills have gone from £25million a year to £75million. This is a perfectly viable business. We have to make sure we support businesses as well as households.”
Zahawi said he was in favour of a targeted approach that helped those worst hit, similar to measures introduced during the Covid crisis.
“The lesson from Covid is that actually there are some levers like VAT, like business rates. Targeting particular sectors of the economy, whether it’s hospitality or high energy use sectors, can be done very effectively. But as I say there are no easy options,” he said.