A senior ally of Liz Truss has played down suggestions she ruled out more emergency support payments to help people struggling through the worsening cost of living crisis this winter.
Penny Mordaunt, who is backing the frontrunner in the Tory leadership race, said Truss’s comments had been misinterpreted and she wanted to prioritise tax cuts.
But a Rishi Sunak supporter said Truss was “completely wrong” and the former chancellor knew that “more may well be needed and he is ready to do that as required”.
The row came after Truss gave an interview to the Financial Times on Friday, in which she said she would “look at what more can be done” in the light of warnings from the Bank of England about a 15-month recession and double-digit inflation lasting well into 2023.
However, the foreign secretary added: “The way I would do things is in a Conservative way of lowering the tax burden, not giving out handouts.”
Mordaunt told Sky News: “It’s not that she’s ruling out all future help. That’s a misinterpretation of what she said.
“What she is looking at though is enabling people to keep more of the money that they earn.
“It makes no sense to take money off of people and then to give it back in very, very complicated ways. We need to simplify this and we need to ensure that households are as resilient as possible and stopping taking large sums of tax on people is one way of doing that.”
Mordaunt also suggested long-term economic reform was more important, saying: “It’s all very well alleviating a problem and the squeeze that people are feeling but we’ve got to get growth back into the economy if we don’t want that to become the norm.”
After Sunak claimed Truss’s plans for vast tax cuts would fuel inflation, Mordaunt said: “Tax cuts don’t have to be inflationary because we’re dealing with the twin problems of inflation but also weak demand in the economy.”
Damian Hinds, the former security minister, who is backing Sunak, said his candidate was ready to do more.
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While he said the measures announced by Sunak in the spring were targeted to help “the most vulnerable households”, Hinds admitted: “Things have been getting worse even since that was put into place in terms of projections for what energy bills are going to be in future and he’s been clear that more may well be needed and he is ready to do that as required.”
In a swipe at Truss’s antipathy to “handouts”, Hinds said: “It’s completely wrong to rule out that kind of direct support.”
Truss has vowed to reverse the national insurance rise from April implemented by Sunak to pay for changes to social care, temporarily scrap green levies on energy bills and scrap a hike in corporation tax.
She said the money would come from around £30bn of fiscal headroom, but Sunak has warned that could quickly be wiped out by worsening economic headwinds.
Sunak’s team said removing the national insurance rise would give a full-time worker on the national living wage just £59, while someone on a six-figure salary would get more than £1,000.
While there are still around four weeks left of the Tory leadership race, Truss’s team are already drawing up plans for an emergency budget that would be delivered within weeks of her taking power.
