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Chancellor Nadhim Zahawi has reportedly drawn up plans for a multi-billion pound tax cut package to help businesses amid rising energy costs.
According to The Times, the chancellor said the government could “learn a lesson” from the pandemic by introducing targeted reductions in VAT and business rates to help both the retail and hospitality sectors.
The outlet reports that as part of the new cuts package, Zahawi has suggested that tax breaks could also be given to “energy-intensive” industries.
It comes as Zahawi has been drawing up an emergency energy strategy for the new prime minister, who will be announced in a matter of days.
While he is not expected to remain chancellor once a new PM is announced, Zahawi is understood to have discussed his plans with the frontrunner, Liz Truss.
He reportedly warned that many companies would be forced into bankruptcy if no action was taken, adding that Truss, if elected, would “deliver help” to families and businesses, despite the fact she has not made specific commitments during her campaign, The Times said.
The chancellor was also said to have stressed that the next chancellor must provide economic support to families as well as businesses.
According to The Times, 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 £25 million a year to £75 million. This is a perfectly viable business. We have to make sure we support businesses as well as households.
“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.”
