Cost of living crisis: what does Liz Truss have planned for your money?
As the new prime minister picks up the keys to Number 10 – what might Liz Truss have planned for cash-strapped households?
Liz Truss has been confirmed as the new leader of the Conservatives, as was widely expected.
The new Prime Minister will undoubtedly be under pressure to hit the ground running, given the ongoing - and rapidly escalating - cost of living crisis that's gripping the country.
With energy bills set to run into the hundreds of pounds a month from October and various other bills soaring, millions of households are desperate for more help to make ends meet this winter.
So what kind of help might we expect from the new Prime Minister?
Let's take a closer look at the various pledges she's made in recent weeks to get an idea of what her election might mean for your money.
But before we do, we wanted to stress that none of the things below are guaranteed to happen.
Promises made on the campaign trail may never see the light of day, after all.
Having said that, it would be a surprise if the PM didn't follow up on at least some of the pledges she's made.
Cost of living crisis
With inflation currently 10.1% and rise further still, coupled with the 80% hike in the energy price cap next month – financially squeezed households want to know if there’s going to be more financial support on the way.
‘Putting money in people’s pockets’ - with a promise of tax cuts worth £30 billion, as opposed to cash handouts, has been the Liz Truss pledge throughout the leadership contest.
However, at the final hustings in London there was an indication of something of a u-turn with more money to come when Liz Truss said her chancellor would look to ‘address the issue of household support’.
This could come in an emergency budget as early as this month.
Sticking with the promise made by Rishi Sunak in the Spring Statement, this means a 1p cut in the basic rate of Income Tax is on the cards; down from 20p to 19p in the pound - although this won’t come into effect until 2024.
The energy crisis
Some energy suppliers, including the boss of Ovo, have publicly suggested ways to help households with energy costs this Winter so what does Liz Truss have up her sleeve on this one?
We know she’s not a fan of freezing the energy price cap which she’s dismissed as a ‘sticking plaster that will cost money, but isn’t actually addressing the root cause’ of the problem.
Her plan is to scrap the ‘green levy’ on energy bills. This is worth around 8% of the bill and goes towards boosting energy efficiency and social and green schemes. Scrapping it could save households around £150.
‘Fixing’ the energy supply is another of her priorities with long-term plans to reduce reliance on overseas producers.
This would be done by maximising North Sea oil and gas production and issuing up to 130 new drilling licences for oil and gas companies to explore new fields in the North Sea.
She has also promised to boost our gas supplies by ending the ban on fracking, although this would only take place in areas where plans have the support of local communities.
This could see fracking firms offer cash incentives for nearby local communities along with reductions on local household energy bills.
The decision on whether to go nuclear could be a more immediate one on her desk as Boris Johnson has just pledged £700 million for a new nuclear plant on the Suffolk coast.
Any new windfall tax on energy company profits has been ruled out with Truss saying this could discourage future investment.
And when it comes to whether we should expect energy rationing this Winter – it’s not something Liz Truss proposes – although, without it, there’s concern the country could experience blackouts from a combination of cold weather and gas shortages.
Whatever her plans, it's expected they'll be announced to the public this Thursday (8 September).
Pensions
The Government’s ‘triple lock’ on the State Pension was downgraded this year to a double lock but Liz Truss has made it clear that going forward she fully supports the triple lock.
This boosts the State Pension each year by one of three factors, wages, inflation or 2.5% depending on which is the highest.
Right now this could mean pensioners see a bumper boost to their State Pension next year of over 10%.
Taxes and National Insurance
Cutting taxes coupled with a public pledge not to introduce new ones is the Liz Truss promise.
This includes plans to scrap the 1.25% rise in National Insurance for health and social care.
However, critics say this may only benefit the lowest earners by 76p a month while boosting the bank balance of the better off by nearly £100 a month.
A planned hike in Corporation Tax is also set to be scrapped.
This tax imposed on business profits was due to rise from 19% to 25% next April. Scrapping it would save businesses money but cost the Government around £17 billion.
And there’s also the promise of a ‘full review of our tax system’, including ways to look at easing the tax burden on families who take time out to care for children or elderly relatives.
Inheritance tax could also be up for review as Liz Truss said at a hustings in Leeds, she wants to reward people who ‘work hard, earn money and want to pass it on to their children’.
Cuts to VAT
There’s an expectation VAT rates could be cut from 20% down to 15%.
However, Liz Truss’s supporters have implied she may go even further and even halve the rate of VAT – from 20% to 10%.
Motorways and speed limits
Scrapping the rollout of smart motorways is another job Liz Truss has given herself.
Currently, there are around 400 miles of smart motorways across the UK.
Scrapping speed limits on motorways was raised during the final hustings securing a promise from Liz Truss that she will look at changing the rules.
This would mean drivers using their own judgment.
Help for the self-employed
The self-employed may be pleased to hear Liz Truss has pledged to review the IR35 tax rules.
It’s designed to stop people playing the system so they pay less tax, by employing themselves, typically through a limited company, but current rules have been criticised as it can boost the tax bills of some small traders.
Will we go cashless?
It seems that going cashless isn’t on the cards.
At the leadership hustings in Belfast, Liz Truss said that people need to be able to use cash if they’re unable to use other payment options.
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