Keir Starmer has accused Liz Truss of relying on “the Tory fantasy of trickle-down economics” as he used her first outing at prime minister’s questions to set out clear policy dividing lines on a windfall tax on energy firms and cuts to corporation tax. Truss, who was cheered into a packed chamber by Conservative MPs, responded by repeatedly stressing her focus on low taxes, and accusing the Labour leader of advocating “the same old tax and spend” instead.
In response to a question from Theresa May, Truss said it was “extraordinary” that Labour had not yet elected a female leader, when she was the Tories’ third. Truss confirmed she would set out her plans for helping people with soaring energy bills on Thursday, expected to involve a two-year price freeze. Truss gave no details but said this would involve “giving people certainty to make sure they are able to get through this winter”. But with Treasury forecasts estimating that the higher prices could result in oil and gas firms making £170bn in profits beyond previous forecasts in the next two years, Starmer repeatedly pushed Truss on how a price freeze would be financed, seen by Labour as a vulnerability for the government given worries about public debt. “When she said in her leadership campaign that she was against windfall taxes, did she mean it?” he began with his first question. Truss replied: “I am against a windfall tax. I believe it is the wrong thing to be putting companies off investing in the United Kingdom, just when we need to be growing the economy.” Starmer said it seemed that Truss, who during the campaign had talked down the idea of direct help on bills, had now concluded she had “no choice but to back a freeze”. He went on: “But it won’t be cheap, and the real choice, the political choice, is who is going to pay. Is she really telling us that she’s going to leave these vast excess profits on the table and make working people foot the bill for decades to come?” He added: “More borrowing than is needed – that’s the true cost of her choice to protect oil and gas profits, isn’t it?” In exchanges based more on ideology than Starmer’s often personality-focused contests against Boris Johnson, Truss stuck by her insistence that cutting tax was the only way forward. “The reality is that this country will not be able to tax its way to growth,” she said. “The way we will grow our economy is by attracting investment, keeping taxes low, delivering the reforms to build projects quicker. That is the way that we will create jobs and opportunity across our country.” Focusing also on Truss’s intention to cut corporation tax, Starmer raised concern about the likely impact on the scale of debt, saying this was an irresponsible approach at a time when the NHS and tackling crime were in crisis. “Families and public services need every penny they can get,” he said. “How on earth does she think that now is the right time to protect Shell’s profits, and give Amazon a tax break?” He continued: “She’s the fourth Tory prime minister in six years. The face at the top may change but the story remains the same. There is nothing new about the Tory fantasy of trickle-down economics. Nothing new about this Tory prime minister who nodded through every single decision that got us into this mess and now says how terrible it is. “Can’t she see, there’s nothing new about a Tory prime minister who, when asked ‘who pays?’ says: ‘It’s you, working people of Britain’?” Truss replied, to cheers from her benches: “Well, there’s nothing new about a Labour leader calling for more tax rises.”