Truss promises energy fix, tax cuts and action on NHS

Liz Truss has vowed that Britain will “ride out the storm”, as the new UK prime minister began the task of confronting an economic crisis with a massive package of energy support for families and businesses.

Truss dodged torrential downpours sweeping Downing Street to tell the country that she would create an “aspiration nation”, adding: “As strong as the storm may be, I know that the British people are stronger.”

Within minutes of entering Number 10, Truss set about forming a cabinet and finalising an energy relief package that could cost more than £100bn and will set the tone for her premiership.

Earlier Truss met the Queen at Balmoral, as the transfer of power from Boris Johnson to Britain’s third female prime minister took place against the backdrop of the Scottish highlands.

Truss, speaking in front of supporters in Downing Street, said she had three priorities, including dealing with the energy crisis, which she said was “caused by Putin’s war” in Ukraine.

“I will take action this week to deal with energy bills and secure this country’s energy supply,” she said.

Truss also vowed to pursue growth-related policies, including cuts to personal and business taxes, and to address the crisis in the National Health Service.

Truss will on Tuesday appoint a number of rightwing supporters to fill the top cabinet posts, but her first major act as prime minister will be to oversee a massive debt-funded state intervention in the energy market.

The self-proclaimed small-state Conservative is drawing up a two-year energy relief package, intended to shield households and companies from soaring bills.

Kwasi Kwarteng, who is expected to become her new chancellor, and Jacob Rees-Mogg, who is widely tipped to become business secretary, are among the new members of her senior team working on the package.

Kwasi Kwarteng is said to be headed for 11 Downing St as the new chancellor © Dan Kitwood/Getty Images

Truss intends to cap household energy bills at around £2,500, compared with the current cap of £1,971, with the estimated cost of about £90bn funded through government borrowing. Consumers will also receive a previously announced one-off payment of £400 to help offset rises.

The cap had previously been scheduled to leap to £3,549 next month, with a projected increase to above £6,000 in 2023.

A separate set of measures to stop businesses going to the wall will add tens of billions of pounds to the total bill, with the taxpayer exposed to the risk of much bigger costs if wholesale gas prices remain high.

“It will be extraordinarily huge,” said one ally of the new prime minister of the overall plan.

Truss will link the energy package, which is expected to be announced this week, to long-term market reforms and a commitment to increase oil and gas production, along with fracking for shale gas if local communities approve.

Kwarteng is expected to hold a mini-Budget later this month to push through tax cuts, including a £30bn reversal of National Insurance and corporation tax rises, that the new PM claims will boost growth.

Sterling hovered at $1.15 on Tuesday as Truss became prime minister — slightly up from its lows of $1.1444 the previous day, but still around levels last regularly seen during the mid-1980s.

Earlier on Tuesday, Johnson made a defiant farewell speech in Downing Street, claiming that he had delivered Brexit, a successful Covid-19 vaccine rollout and a series of infrastructure projects — although few of the projects have actually been built.

He did not apologise for the series of scandals, including partygate, that led to his downfall. The outgoing prime minister also dropped a classical hint that he might yet make a comeback.

“Like Cincinnatus, I am returning to my plough and will be offering this government nothing but the most fervent support,” he said. Historians pointed out that Cincinnatus later returned to Rome as ruler.

Angela Rayner, deputy Labour leader, said Johnson’s legacy included “scandal, sleaze, the highest inflation for decades, a cost of living crisis” and a collapse in public services.