The trouble with Truss’s ‘no handouts’ stance

This article is an on-site version of our Inside Politics newsletter. Sign up here to get the newsletter sent straight to your inbox every weekday.

Good morning. Liz Truss’s interview with the FT continues to make waves at Westminster. I know that sounds like the kind of thing that I’m contractually obliged to write, but it’s really true!

The foreign secretary’s commitment to avoid further “handouts” to help vulnerable households as the cost of living crisis bites has flummoxed some of her supporters and given something for the Sunak campaign to attack consistently for the first time.

Some thoughts on that, on Ed Davey’s preferred solution to it, and on the sound of silence coming from Labour in today’s newsletter.

Inside Politics is edited by Georgina Quach. Follow Stephen on Twitter @stephenkb and please send gossip, thoughts and feedback to insidepolitics@ft.com.

Hands up for handouts

In her big interview with George Parker and Seb Payne, the foreign secretary stated that there would be no further handouts to help households struggling with rising energy prices. Here’s the quote:

Of course I will look at what more can be done. But the way I would do things is in a Conservative way of lowering the tax burden, not giving out handouts.

Now, there is a lot to get into here. The policy problem with dealing with the problem of rising energy prices through tax cuts is that the UK tax regime for income is already pretty progressive (the amount of tax you pay is proportionate to what you earn). If you are giving people money through cutting those taxes you are not going to be touching the sides as far as that problem is concerned.

She has also promised to cut fuel duty and temporarily suspend green levies. But these are a comparatively trivial part of the cost of either filling up at the pump or household energy bills more broadly. Today’s estimate from Cornwall Insight sees the annual bill rising above £4,200 by January next year. As this chart by the energy sector researcher shows, painful prices will stick around for the whole winter:

If you want to support households, it is hard to see a way you can do that without recourse to something resembling “handouts”.

The intriguing political problem for Truss here, too, is that broadly speaking, if you had asked the average Conservative MP which one out of Truss or Sunak would be more likely to do something big and expansive to help UK households pay their energy bills, most would have said “Truss”.

But now it’s Truss arguing against handouts and Sunak who is making the argument for greater largesse. The former chancellor has delivered a stinging rebuke to Truss’s plans in the Sun:

Worse still, she has said she will not provide direct support payments to those who are feeling the pinch most.

Scrapping the health and social care levy will give the average worker around £170.

But someone on the national living wage will get less than £60 for the year.

Pensioners will not get a penny.

And her corporation tax cuts don’t benefit small businesses — they just put money back in the coffers of the biggest companies with the largest profits.

Now I don’t think the politics of this are easy for Sunak either. You can easily imagine this line of attack against Truss’s plan coming from Keir Starmer, Rachel Reeves, Ed Davey or John McDonnell. That risks reinforcing the charge against him that his stint at the Treasury was Gordon Brown’s second term. It’s easy, too, to paint it as another U-turn by his campaign, whose subtext has been “we’ll have tax cuts but we need spending restraint first”.

My assumption is that most Conservative members have already cast their votes and are tuning out of this contest. But if anything can change the direction of the Tory leadership race, that Truss suddenly sounds a bit more like the “eat your greens and wear a jumper” candidate and Sunak sounds like the candidate of higher spending is surely it.

But does Sunak grasp that? I’m not sure he does. He is attacking Truss for not committing to further handouts, but his own commitment is vague and lacking in detail. He may need to get louder if he wants to change the trajectory of the contest.

How to divvy economic pain

One politician who spots a political opportunity here is Liberal Democrat leader Ed Davey, who has told the Guardian’s Jessica Elgot that the Conservatives should cancel the looming increase in the UK energy price cap with the government picking up the £36bn tab instead.

Of course, that £36bn does not help if you are a business or, indeed, a school or a hospital, all of which are also going to struggle with mounting energy costs. But it does provide some help to households.

Now, an even better and more efficient approach than giving energy companies £36bn would be to give households money directly. In general, as I wrote in my column recently, cash transfers are a great policy lever.

You really only need one household to spend that cash on insulating their home or reducing their energy usage over the long term for a cash transfer to be a more positive solution to the crisis. Also, the advantage with this relief method is that you can maintain the message that energy is hard to come by right now, and that we need to use less of it, and diversify our supplies of it.

But say what you like about Davey’s plan: it’s a hell of a lot closer to grasping the scale of the problem than Truss’s “no handouts” approach or Sunak’s “some handouts, detail to follow”. Or, indeed, the Labour party’s “cut VAT from energy bills”.

Does it matter that Labour is getting left behind on all this? I think it probably does. It doesn’t help the opposition to look ready for government if they don’t seem to have ideas for how to deal with the biggest item in the new prime minister’s inbox.

Now try this

At the Tate Modern gallery until October 2: the Lubaina Himid exhibition. It’s very, very good: features a brilliant range of paintings, sculptures and even the soundscapes are wonderful.

You have just 20 days left to see Surrealism Beyond Borders, also at the Tate Modern. I had a somewhat higher opinion of the art itself than our chief art critic Jackie Wullschläger in her excellent review, but think she is exactly right about the exhibition’s overarching problem: surrealism “won’t play” by the rules of the show’s rather narrow political focus.

Surrealism has often been a way for artists to say things that they can’t for one reason or another, but confining the scope of the exhibition to the political left is a mistake, in part because in modern politics it is so often the political right which hides behind strange images and memes in order to speak in code.

I’m reminded of the Picasso: 1932 exhibition, also at the Tate, which was a powerful show in part because it did not spare the visitor from the reality of who Pablo Picasso was: a first-class artist but as a human, something of a monster. That unsparing eye and willingness to look at art in all its messiness is a sad absence from Surrealism Beyond Borders, which ends up being an all-too-partial account of Surrealism’s impact and legacy.

Everything Everywhere All At Once is back in cinemas, in case you missed it the first time or want to see it again. I was a bit nervous about the words “extended version” appearing in the description (my general view is that everyone needs an editor and that unless the original film has been cut to ribbons by an interfering studio, the “director’s cut” is almost always inferior to the theatrical cut). But I needn’t have worried, because the extra footage is a rather sweet opening video from the film’s directors, and then 10 minutes of out-takes after the film has finished.

Hands up for handouts

How to divvy economic pain

Now try this

Top stories today