Liz Truss could ‘strip high earners of £400 energy bill help’

·8 min read
Liz Truss - Ian Forsyth/Getty Images
Liz Truss - Ian Forsyth/Getty Images

Liz Truss could strip the planned £400 energy bills discount from “high earners”, The Telegraph can disclose.

Simon Clarke, the chief secretary to the Treasury and a key backer of Ms Truss, said it was “odd” that wealthy people would also benefit from the handout, and suggested that a government led by the Foreign Secretary would examine whether such payments could be stopped.

He added that Rishi Sunak’s existing plan “is not really an authentically Conservative solution to this problem”.

Every household is expected to have £400 taken off their energy bills in October as part of a support package unveiled by Mr Sunak in May before he quit as chancellor.

Last week, Mr Sunak, who would continue with the plan, said he would give his own payment to charity.

A Truss campaign source said: “Under Rishi's plans, Premier League footballers would receive a handout. How is that right?”

Mr Clarke and Jacob Rees-Mogg, the Brexit Opportunities Minister, have raised the possibility that Ms Truss could pull the UK out of a deal agreed by Mr Sunak to impose a global minimum rate of 15 per cent on corporation tax.

Mr Rees-Mogg said the agreement, which was signed last year, “works against British interests”, while Mr Clarke, who is being lined up for a prominent role in Ms Truss’s Cabinet, said that “one of the whole rationales for Brexit” was “competitive tension between countries to drive growth”.

clarke and truss - Rasid Necati Aslim/Anadolu Agency via Getty Images
clarke and truss - Rasid Necati Aslim/Anadolu Agency via Getty Images

Ms Truss and Mr Sunak have been locked in a row over their rival plans to help households. Mr Clarke said Ms Truss was right to avoid making further commitments until closer to October when more will be known about price rises and she would have civil service support.

He added: “I do find it pretty odd that high earners are receiving £400 off their bills.

“As Conservatives, we ought to surely believe in targeting taxpayer money as best we can so that we actually achieve the best value and keep the burden on the exchequer as low as we can.

“It is not an ideal outcome, putting it very mildly, that people who don’t need it are receiving quite substantial sums of money from the state. That is not, frankly, a targeted package, is it?”

Ms Truss’s team are not thought to have decided at what level of income they would stop the discount.

Asked whether there was a specific method by which everyone other than “high earners” could receive the benefit, Mr Clarke said: “This is the question we need to go back around - whether we can do more through tax, whether we can do more through the welfare system ... There are more ways that we could approach the question of how to get that help out than just going for Rishi’s bailout 3.0.”

Meanwhile, The Telegraph has revealed that Andrew Bailey, the Governor of the Bank of England, has told the Chancellor that he would be “open to a review” of the Bank of England’s mandate, following Ms Truss’s criticism of its approach to inflation.

‘Energy market reforms should be our top priority’, says Simon Clarke

For days, Liz Truss has been under pressure from Rishi Sunak to set out how she will support households facing crippling energy bills in the autumn.

But Simon Clarke, who was Mr Sunak’s number two at the Treasury for two-and-a-half years and is now a member of Ms Truss’s inner circle, thinks the Foreign Secretary should now hold firm, having previously set out plans to reverse the National Insurance increase and suspend green levies on bills.

“It is my genuine preference that we should avoid lashing ourselves too tightly to one course of action in the middle of August,” says Mr Clarke, who remains chief secretary to the Treasury.

“In just over three weeks’ time, there will be a new government, which actually has the whole civil service support and all the options that that offers, and the ability to work as a government to work out the best solutions.

“There has been a temptation... for us to sort of ‘go now, go now, go now’.  Everyone accepts there is an urgency to this situation.

“But... given that we will have the figures we need by the end of the month, and that we will then have the time that we need to respond in September ahead of that price cut coming into effect, there is time for a proper process.”

Mr Clarke, 37, has risen quickly through the Tory ranks since winning Middlesbrough South and East Cleveland from Labour in 2017. Within months he joined Freer, a pro-free markets group launched by Liz Truss and supported by MPs including Kwasi Kwarteng and Therese Coffey - two other key lieutenants in the Foreign Secretary’s leadership campaign.

Now, Mr Clarke is being touted for a prominent role such as business, trade or housing secretary in a Cabinet led by Ms Truss, with Mr Kwarteng expected to replace Nadhim Zahawi as chancellor.

‘Positive pull of Liz’

There was, he says, “never a formal conversation with Rishi” in which Mr Clarke told his former boss that he had chosen to back Ms Truss over him. Since then he has been highly critical of the ex-chancellor, including stating last week that Mr Sunak “dug his heels in” against efforts to cut EU red tape.

Mr Clarke says he and Mr Sunak, his constituency neighbour, had a “perfectly good working relationship” at the Treasury. He insists it is “the positive pull of Liz rather than anything that Rishi did when I was with him at Treasury, which has led me to this decision”.

Yet one of many criticisms of Mr Sunak’s approach includes the former chancellor’s decision - due to be implemented this autumn - to give every household an automatic £400 discount on their energy bills in October.

Mr Clarke said the plans should be “revisited”, stating: “I do find it pretty odd that high earners are receiving £400 off their bills - I will be honest.

“As Conservatives, we ought to surely believe in targeting taxpayer money as best we can so that we actually achieve the best value and keep the burden on the exchequer as low as we can.

“It is not an ideal outcome, putting it very mildly, that people who don’t need it are receiving quite substantial sums of money from the state. That is not, frankly, a targeted package is it?”

Following criticism of the plan in May, Mr Sunak said: “You can give that money to charity if you don’t need it.” Last week he said he would give his own payment to charity.

Clarke and Sunak - SIMON WALKER HM TREASURY
Clarke and Sunak - SIMON WALKER HM TREASURY

Is there a way the discounts could be offered to everyone but people classed as “high earners”?

“This is the question we need to go back around - whether we can do more through tax, whether we can do more through the welfare system,” says Mr Clarke.

“I’m not pre-committing to any response because the whole point is Liz needs to actually look at the situation as it is and what she wants to do. But there are more ways that we could approach the question of how to get that help out than just going for Rishi’s bailout 3.0, which is not a targeted mechanism and frankly is not really an authentically Conservative solution to this problem.”

Beyond this autumn, Mr Clarke suggests that a government led by Ms Truss would seek to urgently overhaul the current energy market which sees volatile gas prices setting the price of power produced by wind farms and solar farms.

“We need to decouple the two. That is something we ought to be aiming for. Our energy market is fundamentally quite broken and this is something which will need to be addressed.”

Could such reforms be in place for next winter?

“I think that needs to be a top priority... We ought to be aiming for things which can have an effect from the winter of 2023, certainly.”

‘A galvanising effect’

Another policy of Mr Sunak’s that appears to have failed to impress his chief secretary to the Treasury is the former chancellor’s decision to sign the UK up to a global minimum tax rate of 15 per cent.

Could that deal hamper Ms Truss’s plans for low-tax zones and more radical freeports?

“There is no question whatever that we didn’t come out of the European Union to fetter our discretion on issues like that,” says Mr Clarke.

He adds of Ms Truss: “I know she would not allow her government to find itself artificially constrained.”

He is dismissive of his former boss’s claims that Ms Truss wants to interfere with the independence of the Bank of England.

“Nobody is seeking to direct the bank on a day-to-day basis, how it should manage the economy.”

However, her plans to review the Bank’s mandate will have “a galvanising effect”, says Mr Clarke.

“It sends a very clear message to the institution that we aren’t happy with where we find ourselves.”